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Employer to pay worker $139k for unpaid leave over 21 years

049EmployerToPayWorker$139kForUnpaidLeaveOver21YearsAn employer has been ordered to pay more than $139,000 to a friend and former employee for 425 days’ unpaid annual leave and entitlements stretching back 21 years. Federal Circuit Court Judge Norah Hartnett found cabinet-maker Garo Balemian was not an independent contractor as employer, Mobilia Manufacturing Pty Ltd, claimed.

Mobilia cited Balemian’s fortnightly GST-inclusive invoices for work dating back to 1994 to support its claim.

Judge Hartnett considered the totality of what she described as a “unique” relationship.

Balemian had first worked with fellow Armenian and friend Bedros Bahar’s company, Auscraft Constructions, in 1994.

When Auscraft went into liquidation in March 2015 the working relationship transferred to another company owned by Bahar, Mobilia Manufacturing.

Balemian told the court his working relationship with Bahar was based on “word of mouth and trust”. “We never had any agreement at all.”

Bahar was the sole director of both companies.

Balemian was told all his Auscraft entitlements would be transferred to the new entity, and to submit all future invoices to Mobilia via Bahar.

Balemian ceased his employment with Mobilia in May 2015, and Bahar went bankrupt three months later.

Employee relationship “recklessly disguised”

In considering whether Balemian was an employee or an independent contractor, Judge Hartnett found that the “arrangement” of the transfer of business from Auscraft to Mobilia “at the very least recklessly disguised the true legal nature of the relationship”.

The judge looked at the “control test” discussions in Stevens v Brodribb Sawmilling Company [1986], and in Roy Morgan Research Pty Ltd v Federal Commission of Taxation [2010] where the Full Court of the Federal Court said the “object of the exercise is to paint a picture from the accumulation of detail”.

Judge Hartnett found that the accumulation of detail showed Bahar and his companies had the power “at all times” to direct Balemian “as to what work was to be performed, how it was to be performed and generally when it was to be performed”.

She ruled that therefore Balemian was “at all material times” an employee, and that Bahar and Mobilia had “misrepresented” the true nature of the employment relationship.

Balemian had received no annual leave, personal leave or long service leave entitlements during his working relationship with Bahar’s two companies, nor did they pay him for public holidays and overtime.

The court found Balemian was owed 425 days’ unpaid annual leave, and ordered he be paid $67,830, plus $17,020 for long service leave, plus accumulated pre-judgment interest of $12,206.

The Judge fined Mobilia $35,700, and Bahar $7,140, with both sums to be paid to Balemian.

The court awarded Balemian $139,896 in total.

(Balemian v Mobilia Manufacturing Pty Ltd & Anor (No.2) [2017], FCCA 2566, 26/10/17)