Fair Work Ombudsman v Happy Cabby Pty Ltd &
Anor  FCCA 397
A company and its director have been fined more than $286,000
for breaches of the Fair Work Act, stemming from the incorrect
classification and payment of its employees as independent
The fines are a record for Fair Work Ombudsman (FWO) proceedings
in NSW and is one of the largest ever obtained by the FWO
Happy Cabby Pty Ltd was the operator of a business offering
airport shuttle services. The FWO commenced proceedings against
Happy Cabby for contraventions of the Fair Work Act relating
primarily to Happy Cabby's incorrect classification of its bus
drivers as independent contractors rather than casual
Happy Cabby admitted to 17 contraventions of the Fair Work Act
relating to sham contracting, breaches of a modern award and record
keeping/pay slip requirements. Its director also admitted his
involvement in the 17 contraventions under the "involvement in
a contravention" personal liability provisions of the Fair
Work Act (he was personally fined approximately $48,000).
The Federal Circuit Court heard that Happy Cabby continued to
classify and pay its employees as independent contractors in breach
of the sham contracting provisions of the Fair Work Act, despite
being issued with a letter of caution by the FWO and determinations
made by the Australian Taxation Office, Administrative Appeals
Tribunal and Fair Work Australia.
The Court found that Happy Cabby's refusal to acknowledge
the drivers as employees was deliberate and based on wilful
blindness and further that the Court will not tolerate
"attempts to disguise employment relationships and thus deny
employees their required minimum entitlements".
Happy Cabby was also ordered to pay its employees approximately
$26,000 plus interest in underpayments. The Court stated that had a
full set of records been available, the amounts owing to drivers
could have been significantly higher.
Lessons for business
While there were aggravating factors resulting in the record
fines, the case serves as an important reminder to businesses to
correctly engage and remunerate employees and the perils associated
with sham contracting arrangements.
There is no single test to determine whether a relationship is
truly one of employment or that of an independent contractor. The
courts look at a range of factors to determine the issue and while
what the parties call themselves and the contractual arrangements
entered into are relevant, they are not determinative. As the Court
has previously held:
"Parties cannot create something which has every
feature of a rooster, but call it a duck and insist that everybody
else recognise it as a duck".
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