Statutory Construction – When a Sole-Principal Contractor is a WCRA “Worker”

In Baigori v Workers’ Compensation Regulator [2024] ICQ 2 (28 February 2024) – a decision of the Industrial Court of Queensland – Justice Davis, President, concluded that a contractor providing courier services to a sole principal – including provision of his own truck which was paid for and depreciated by him – was a “worker” within the meaning of the Workers’ Compensation and Rehabilitation Act 2003 (Qld).  His Honour’s decision is instructive both as to the modern law of statutory construction and its application and also the circumstances in which a contractor conducting their own business, and using their own equipment, will be a “worker” within the “deeming” definitional framework of the Workers’ Compensation and Rehabilitation Act 2003 (Qld).  President Davis wrote:

[1]  Horacio Augusto Baigorri appeals the decision of the Queensland Industrial Relations Commission which upheld a decision by Workers’ Compensation Regulator (the Regulator) to deny him compensation under the Workers Compensation and Rehabilitation Act 2003 (WCR Act).

[2]  The appeal is brought under s 561 of the WCR Act. It is an appeal by way of rehearing as that term is generally understood and is not limited by s 557 of the Industrial Relations Act 2016 to errors of law or jurisdiction. Here, the facts are not in dispute and the decision of the QIRC primarily turned on the construction of provisions of the WCR Act.

The facts

[3]  Allied Express Transport Pty Ltd (Allied) operates a carrier transport business.

[4]  Mr Baigorri was for a number of years employed by a company called Technofibre. He sustained an injury while working and, upon his return to work, learned that Technofibre had relocated its business to Western Australia. Mr Baigorri declined an offer of employment in Western Australia.

[5]  By late 2014 Mr Baigorri was looking for other employment. For various personal reasons, he thought he would turn to courier driving. He made enquiries of a company other than Allied but that came to nothing. He did though, acquire a van and some other equipment for use as a courier.

[6]  Allied advertised for drivers and Mr Baigorri responded. Mr Baigorri signed a contract with Allied. By that point, he had not done any work as a courier.

[7]  The general structure of the contractual arrangements is;

(a) Mr Baigorri is a “contract carrier” (Recital B);

(b) Allied contracts with its customers to arrange for a contract carrier to courier their goods (Recital A);

(c) Mr Baigorri is an “independent contractor” (clause 8.1);

(d) Allied will allocate the performance of its contracts of carriage with its clients to Mr Baigorri (and no doubt others) (clause 3.1(a));

(e) Mr Baigorri is to provide and maintain a vehicle for his use as a contract carrier (clauses 3.2–3.7); and

(f) Allied will pay prescribed rates of remuneration to Mr Baigorri as a contract carrier (clause 4.1).

[8]  The clear intention of the contract is that Mr Baigorri will only perform work for Allied, at least with the vehicle he supplies, in order to fulfil his obligations under the contract. In particular;

(a) he must wear an Allied uniform (clause 2.1); and

(b) the vehicle may be painted, signed and fitted with decals “in Allied Express’s colours” and at Allied’s discretion (clauses 3.20 and 4.6).

[9]  Mr Baigorri, as a contract carrier, is in many ways under the direction and control of Allied;

(i) he must wear an Allied uniform (clause 2.1) and other nominated clothing (clause 2.4);

(ii) he must perform the work himself rather than through any employee, unless consent is obtained from Allied (clause 3.8);

(iii) he must provide nominated paperwork, together with “any other document(s) reasonably requested by Allied Express” (clauses 3.1 and 3.25);

(iv) Allied may fit signs to Mr Baigorri’s vehicle (clauses 3.20 and 4.6). That is at Allied’s “discretion” (clauses 4.4(d) and 4.5);

(v) Allied may paint and otherwise decorate the outside of Mr Baigorri’s van as its sees fit (clause 4.6);

(vi) the allocation of contracts of carriage is in the discretion of Allied (clause 3.1); and

(vii) either party may terminate the contract at will; Allied may do so on only 7 days’ notice (clause 11.2).

[10]  Various provisions concern personal insurance:

(a)Mr Baigorri must maintain a personal accident and sickness policy in a sum not less than $100,000 (clause 5.1(c));

(b)Mr Baigorri must maintain a worker’s compensation insurance policy covering him and any employees (clause 5.2(c) and clause 3.8).

[11]  From the time Mr Baigorri commenced couriering for Allied he only delivered parcels for Allied. Over the period from commencement with Allied, Mr Baigorri’s activities demonstrated various incidents of conducting a business, as was explained by the QIRC in these terms:

[107] Mr Baigorri’s evidence was that:

• the Mercedes Vito van was his vehicle and it was being used in his business;
• he claimed, as a business expense on his tax returns, the cost of maintenance and repairs for the vehicle;
• he claimed depreciation on the vehicles he used over time;
• he received a fuel tax credit from the ATO because his vehicles was being used in his business;
• he had an accountant acting for the business who presented the paper work to the ATO;
• Allied gave him a tax invoice in respect of the work he performed;
• he claimed all relevant business expenses and depreciation;
• for the 2021 financial year:
  • in addition to ordinary business income, he declared fuel tax credits, the sale of a truck and the rent of a truck as business income; and
  • he claimed business expenses, including, but not limited to motor vehicle expenses, advertising, insurance and mobile phone;

• he used an ABN in respect of the work he did pursuant to the contract with Allied, and, over the period of that work, he collected GST on sales and claimed GST credits on purchases;
• he bought a second truck ‘… to upgrade the business’; and
• for a period of time in 2020, took out workers’ compensation insurance under the Act because he was ‘… going to — hire my friend and it didn’t work out because he got a job.” (footnotes omitted)

[12]  None of those findings by the QIRC are contested on appeal.

[13]  Part of the arrangement with Allied was for Mr Baigorri to collect parcels from Allied’s warehouse at Rocklea.

[14]  On 9 February 2021, Mr Baigorri was at the warehouse sorting through stacked items to locate those which he was to deliver. Items fell on him, injuring his left shoulder and lower back.

[15]  Mr Baigorri made claim for workers’ compensation as a result of his injuries. The application has some history, but in summary;

(i) on 4 June 2021, WorkCover rejected the claim, finding that he was not a “worker”;

(ii) on 23 November 2021, the Regulator confirmed WorkCover’s decision;

(iii) on 22 June 2023, the QIRC dismissed Mr Baigorri’s appeal from the decision of the Regulator; and

(iv) Mr Baigorri appealed the QIRC’s decision to this Court.

Relevant statutory provisions

[16]  The WCR Act sets up a scheme to provide compensation for “workers” who are injured at work. The scheme pivots on the definition of “worker”. Section 11 of the WCR Act defines “worker” as:

11 Who is a worker

(1) A worker is a person who—

(a) works under a contract; and

(b) in relation to the work, is an employee for the purpose of assessment for PAYG withholding under the Taxation Administration Act 1953 (Cwlth), schedule 1, part 2–5.

(2) Also, schedule 2, part 1 sets out who is a worker in particular circumstances.

(3) However, schedule 2, part 2 sets out who is not a worker in particular circumstances.

(4) Only an individual can be a worker for this Act.

[17]  The term “contract” is not defined. The term “contract of service” is defined in an inclusive, but not exhaustive way, and is as follows:

contract of service includes an apprenticeship contract or traineeship contract under the Vocational Education, Training and Employment Act 2000. 

[18]  The term “contract of service” is well known to the law. It arises for consideration not only in industrial disputes but also in copyright cases. It is usually distinguished from a contract for services. A satisfactory consideration of the meaning of “contract of service” was given in University of London Press Ltd v University Tutorial Press Ltd where it was explained:

… The meaning of the words ‘contract of service’ has been considered on several occasions, and it has been found difficult, if not impossible to frame a satisfactory definition for them. In Simmons v Heath Laundry Co, in which the meaning of these words in the Workmen’s Compensation Act, 1906, was discussed, Fletcher Moulton L.J. pointed out that a contract of service was not the same thing as a contract for service, and that the existence of direct control by the employer, the degree of independence on the part of the person who renders services, the place where the service is rendered, are all matters to be considered in determining whether there is a contract of service. As Buckley L.J. indicated in the same case, a contract of service involves the existence of a servant, and imports that there exists in the person serving an obligation to obey the orders of the person served. A servant is a person who is subject to the commands of his master as to the manner in which he shall do his work. 

[19]  The term “contractor” is defined in the WCR Act in these terms:

“contractor means a person who has contracted with someone else for the performance of work or provision of a service.”

[20]  By s 11(2) of the WRC Act, the pool of persons who are “workers” is extended to include the persons described in Part 1 of Schedule 2. By s 11(3) the pool is restricted by eliminating the persons described in Part 2. Part 1 of Schedule 2 provides:

Part 1 Persons who are workers

1A person who works a farm as a sharefarmer is a worker if—

(a) the sharefarmer does not provide and use in the sharefarming operations farm machinery driven or drawn by mechanical power; and

(b) the sharefarmer is entitled to not more than 1/3 of the proceeds of the sharefarming operations under the sharefarming agreement with the owner of the farm.

2A salesperson, canvasser, collector or other person (salesperson) paid entirely or partly by commission is a worker, if the commission is not received for or in connection with work incident to a trade or business regularly carried on by the salesperson, individually or by way of a partnership.

3A contractor, other than a contractor mentioned in part 2, section 4 of this schedule, is a worker if—

(a) the contractor makes a contract with someone else for the performance of work that is not incident to a trade or business regularly carried on by the contractor, individually or by way of a partnership ; and

(b) the contractor—

(i) does not sublet the contract; or

(ii) does not employ a worker; or

(iii) if the contractor employs a worker, performs part of the work personally.

4A person who is party to a contract of service with another person who lends or lets on hire the person’s services to someone else is a worker.

5A person who is party to a contract of service with a labour hire agency or a group training organisation that arranges for the person to do work for someone else under an arrangement made between the agency or organisation and the other person is a worker.

6A person who is party to a contract of service with a holding company whose services are let on hire by the holding company to another person is a worker.

7A person (an intern), other than a person mentioned in chapter 1, part 4, division 3, subdivision 1, 2, 3 or 4, is a worker if the person—

(a) is performing work for a business or undertaking without payment of wages to gain practical experience in the type of work performed by the business or undertaking, or to seek to obtain a qualification; and

(b) would be a worker if the work performed by the person were for the payment of wages. (emphasis added)

[21]  Part 2 of Schedule 2 provides:

Part 2 Persons who are not workers

1A person is not a worker if the person performs work under a contract of service with—

(a) a corporation of which the person is a director; or

(b) a trust of which the person is a trustee; or

(c) a partnership of which the person is a member; or

(d) the Commonwealth or a Commonwealth authority.

2A person who performs work under a contract of service as a professional sportsperson is not a worker while the person is—

(a) participating in a sporting or athletic activity as a contestant; or

(b) training or preparing for participation in a sporting or athletic activity as a contestant; or

(c) performing promotional activities offered to the person because of the person’s standing as a sportsperson; or

(d) engaging on any daily or other periodic journey in connection with the participation, training, preparation or performance.

3A member of the crew of a fishing ship is not a worker if—

(a) the member’s entitlement to remuneration is contingent upon the working of the ship producing gross earnings or profits; and

(b) the remuneration is wholly or mainly a share of the gross earnings or profits.

4A person who, in performing work under a contract, other than a contract of service, supplies and uses a motor vehicle for driving tuition is not a worker.

5A person participating in an approved program or work for unemployment payment under the Social Security Act 1991 (Cwlth), section 601 or 606 is not a worker.

6A person is not a worker if—

(a) the person works for another person under a contract; and

(b) a personal services business determination is in effect for the person performing the work under the Income Tax Assessment Act 1997 (Cwlth), section 87–60.

…

Consideration

[31]  Over the last quarter of a century or so, the High Court has, in a number of cases, considered the appropriate approach of Australian courts to statutory construction. 18

[32]  In R v A2; R v Magennis; R v Vaziri 19 the High Court authoritatively summarised and stated these principles as follows:

32  “32 The method to be applied in construing a statute to ascertain the intended meaning of the words used is well settled. It commences with a consideration of the words of the provision itself, but it does not end there. A literal approach to construction, which requires the courts to obey the ordinary meaning or usage of the words of a provision, even if the result is improbable, has long been eschewed by this Court. It is now accepted that even words having an apparently clear ordinary or grammatical meaning may be ascribed a different legal meaning after the process of construction is complete. This is because consideration of the context for the provision may point to factors that tend against the ordinary usage of the words of the provision.

33  Consideration of the context for the provision is undertaken at the first stage of the process of construction. Context is to be understood in its widest sense. It includes surrounding statutory provisions, what may be drawn from other aspects of the statute and the statute as a whole. It extends to the mischief which it may be seen that the statute is intended to remedy. “Mischief” is an old expression. It may be understood to refer to a state of affairs which to date the law has not addressed. It is in that sense a defect in the law which is now sought to be remedied. The mischief may point most clearly to what it is that the statute seeks to achieve.

34  This is not to suggest that a very general purpose of a statute will necessarily provide much context for a particular provision or that the words of the provision should be lost sight of in the process of construction. These considerations were emphasised in the decisions of this Court upon which the Court of Criminal Appeal placed some weight.

35  The joint judgment in Alcan (NT) Alumina Pty Ltd v Cmr of Territory Revenue rejected an approach which paid no regard to the words of the provision and sought to apply the general purpose of the statute, to raise revenue, to derive a very different meaning from that which could be drawn from the terms of the provision. The general purpose said nothing meaningful about the provision, the text of which clearly enough conveyed its intended operation. Similarly, in Saeed v Minister for Immigration and Citizenship the court below was held to have failed to consider the actual terms of the section. A general purpose of the statute, to address shortcomings identified in an earlier decision of this Court, was not as useful as the intention revealed by the terms of the statute itself. In Baini v R , it was necessary to reiterate that the question of whether there had been a ‘substantial miscarriage of justice’ within the meaning of the relevant provision required consideration of the text of the provision, not resort to paraphrases of the statutory language in extrinsic materials, other cases and different legislation.

36  These cases serve to remind that the text of a statute is important, for it contains the words being construed, and that a very general purpose may not detract from the meaning of those words. As always with statutory construction, much depends upon the terms of the particular statute and what may be drawn from the context for and purpose of the provision.

37  None of these cases suggest a return to a literal approach to construction. They do not suggest that the text should not be read in context and by reference to the mischief to which the provision is directed. They do not deny the possibility, adverted to in CIC Insurance Ltd v Bankstown Football Club Ltd , that in a particular case, ‘if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance’. When a literal meaning of words in a statute does not conform to the evident purpose or policy of the particular provision, it is entirely appropriate for the courts to depart from the literal meaning. A construction which promotes the purpose of a statute is to be preferred.” 20 (footnotes omitted)

[33]  In summary, the task of construing a statutory provision involves discerning the meaning of the actual text against the statute as a whole and in the context of purpose, statutory history and any relevant extrinsic materials.

…

[40]  It is well established that the term of a worker’s employment is derived from the contract of employment, industrial instruments, statutes and ministerial directions.  Here, the question is whether Mr Baigorri falls within a particular statutory definition to bring him within a statutory scheme. Those issues will be determined upon a proper construction of the relevant statutory provisions, not a consideration of common law notions of the distinction between an employee and an independent contractor.

[41]  I disagree with the QIRC’s determination that, in order for element 1 to be fulfilled, Mr Baigorri had to have the status of “contractor” before entering into the contract with Allied to perform the courier work.

[42]  Section 11 and Schedule 2 of the WCR Act, like their predecessors, are concerned with the status of a potential employee and a potential employer while the work is being performed. It is while the work is being performed that a compensable injury could occur.

[43]  Section 11 and Schedule 2 draw a distinction between a “worker” and “contractor”. By s 11, a person who contracts with the employee is a “worker”, provided PAYG is payable. That person is a “worker” upon being employed, regardless of whether the person was previously employed and was previously a “worker”. The question is whether the person has the status of “worker” once employed, i.e. when they perform “works under a contract”. 

…

[47]  If a person contracts with another for the performance of work, they are a “contractor” by definition and they are also a “worker” if, in relation to that contract, the work which is to be undertaken “is not incident to a trade or business regularly carried on by the contractor, individually or by way of a partnership”.

…

[49]  In summary, Mr Baigorri contracted to do courier work for Allied. As to his relationship with Allied, he was thereby “a contractor” regardless of whether he previously had been a “contractor” with any other entity.

…

[64]  In construing s 3 of Part 1 of Schedule 2, the starting point is the making of a contract with another party “for the performance of work”. That contract is entered into at a particular point in time and is the act which potentially constitutes a contractor as a “worker”. At that point in time, the person does not become a “worker” if the work that he has contracted to perform is “incidental to a trade or business regularly carried on by the contractor”. In other words, if there is an existing business for “the performance of work” and the person enters into a contract with someone for “the performance of work” incidental to the business, then the person does not become a “worker”.

[65]  In the present case, there was no existing business. Any “business” of Mr Baigorri was constituted by performance of the “contract with [Allied] for the performance of work”. He had no business before he made a contract with Allied for the performance of courier work. 

[66]  The fact that Mr Baigorri is described in his contract with Allied as an independent contractor is of no relevance. Schedule 2 of the WCR Act does not draw a distinction between an “independent contractor” and a “worker”. It defines a “worker” and then provides when a “contractor” becomes a “worker”. The critical issue is not whether Mr Baigorri was a contractor but whether as a contractor, he was also a “worker”. If the preconditions are fulfilled, Mr Baigorri is a “worker” no matter what the contract provides.

[67]  It is also beside the point that Mr Baigorri agreed by his contract with Allied to insure himself. The issue is whether a statutory benefit enures to him. If he satisfies the preconditions, it does, whether or not there were other covenants in the contract dealing with workers’ compensation.

[68]  The fact that the “contract … for the performance of work” may lead to the establishment of a “business” does not disqualify a contractor from qualifying as a worker. In fact that is clearly contemplated by the legislation. The repeated performance of work for reward under contracts for services, especially where the contractor employs a worker, will often be a “business”. Yet, s 3(b)(iii) of Part 1 of Schedule 2 contemplates that, even in those circumstances, and where the contractor himself has employees, the contractor may be a “worker” provided that he performs part of the work himself.

[69]  That construction is consistent with the general policy of the provisions and with what decided cases there are. The general policy of the provisions is to look past the particular legal structure of the arrangements, which might constitute a “contract for services” and include the person as a “worker” where if, in substance, the contract is one of service. That is so the statute provides where the work is not incident to a business “regularly carried on by the contractor”.

Conclusions

[70]  Mr Baigorri does not qualify as a “worker” by force of s 11(1) of the WCR Act.

[71]  Mr Baigorri qualifies as a “worker” by force of s 3 of Part 1 of Schedule 2 of the WCR Act because:

(a) He made a contract with Allied for the performance of work. 

(b) The contract was not a contract of service but a contract for services.

(c) He was thereby a “contractor”.

(d) He did not conduct a business beyond the “contract for the performance of work” with Allied.

(e) The work to be performed pursuant to the contract with Allied was not incident to a business regularly carried on by him.

(f) Therefore, he was a “worker” within the meaning of the WCR Act.

18  K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 ; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 ; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 ; Alcan (NT) Aluminia Pty Ltd v Cmr of Territory Revenue (2009) 239 CLR 27 ; SZTAL v Minister for Immigration & Border Protection (2017) 262 CLR 362 ; SAS Trustee Corporation v Miles (2018) 265 CLR 137 ; and Unions NSW v New South Wales (2019) 264 CLR 595 .

19  (2019) 269 CLR 507 .

20  Followed in Minister for Immigration Citizenship Migrant Services & Multicultural Affairs v Thornton (2023) 97 ALJR 488 at [54] .

(some footnotes deleted; emphasis added)

The full text of the decision may be found here.