LAWS1003A Lecture Notes - Forklift, Independent Contractor, Pay-As-You-Earn Tax
2 Jul 2018
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Week 10 Topic Vicarious Liability
Tracy Thompson is a fully qualified forklift operator who has been working in the food packaging
industry for some 10 years. For the last 5 years she has been working for U-Neek Biscuits Pty Ltd in
their production and packaging facility. At first the arrangement was a standard employment one-
Tracy was paid a weekly wage, PAYE tax was taken out, she worked standard hours. Two years ago,
however, U-Neek’s accountants decided that there would be financial benefits for the company if
many of the employees were no longer regarded as such. Tracy accepted the company’s offer of a
higher hourly rate to move to a different contractual arrangement. She and her husband Ted decided
to form a partnership that would issue invoices on a monthly basis to U-Neek. They charged for
Tracy’s services according to a flat hourly rate based on hours worked. Tax was withheld from
payments under the prescribed payments system applicable to contractors, not the normal PAYG
deductions. Tracy and Ted submitted partnership tax returns. Tracy signed a letter to the company
acknowledging that she was now working as a “contractor”.
Her hours of work have not changed since the new arrangement took effect. She continues to report
in the mornings to the U-Neek supervisor, Vernon Vile, whom she reported to previously. She
continues to wear the bright pink shirt with a large U-Neek Biscuits logo on the back that all staff
working in the plant are required to wear. Obviously, the company provides the forklift she drives. She
does not work for any other company. Over Christmas and New Year Tracy takes 3 weeks holidays
and the company pays her an amount equivalent to her normal amount received for 3 week’s work,
described as “Contractor’s Christmas Bonus”.
Unfortunately, all is not well between Tracy and Vernon. Over a period of weeks Vernon is
continually critical of Tracy’s forklift driving and the state of her forklift. At the end of one particularly
busy shift Tracy is carefully maneuvering her machine into its overnight parking spot when Vernon
suddenly jumps in front of her and with a few well-chosen obscenities orders her to go back and move
a pallet of biscuits she had just placed on the loading bay, because it was crooked. Tracy is flustered
and quickly reverses. Unfortunately because she is not looking where she is going she runs into
Wendy Wicella, a U-Neek employee who is a close friend who happens to be walking past at the
time. Wendy is severely injured.
U-Neek’s liability to Wendy will partly depend on Tracy’s employment status.
(a) Is Tracy likely to be regarded as an employee or an independent contractor?
(b) If Tracy is an employee, what else will need to be shown for U-Neek to be held vicariously
liable for the injury to Wendy? {You do not need to resolve the question whether Wendy’s action will
ultimately succeed.}
What are the material facts in the problem?
Tracy Thompson was yelled at by Vernon (boss of U-Neek Biscuits Pty Ltd) to go
back and move a pallet.
Tracy, consequently, is flustered and reverses without full attention to what is behind
her, and as such, hits Wendy Wicella- an employee of U-Neek Biscuits.
Wendy is severely injured
Prior to this incident, U-Neek had employed Tracy as a ‘standard employee’ with
standard weekly wage and hours, and PAYE tax taken out. Two years before this
incident, she was urged to sign a different contractual arrangement- as a contractor.
The company offered this as it had financial benefits, and as such offered her a higher
hourly rate, charging Tracy according to a flat hourly rate based on hours worked,
with tax being withheld- she signed an agreement acknowledging that she was now
working as a contractor. Tracy and her husband decided to form a partnership in
response in order to issue monthly invoices to U-Neek.
oHours have not changed.
oContinues to report each morning to the U-Neek supervisor, Vernon- to whom
she reported to previously.
oContinues to wear work uniform.
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Document Summary
Tracy thompson is a fully qualified forklift operator who has been working in the food packaging industry for some 10 years. For the last 5 years she has been working for u-neek biscuits pty ltd in their production and packaging facility. At first the arrangement was a standard employment one- Tracy was paid a weekly wage, paye tax was taken out, she worked standard hours. Two years ago, however, u-neek"s accountants decided that there would be financial benefits for the company if many of the employees were no longer regarded as such. Tracy accepted the company"s offer of a higher hourly rate to move to a different contractual arrangement. She and her husband ted decided to form a partnership that would issue invoices on a monthly basis to u-neek. Tracy"s services according to a flat hourly rate based on hours worked. Tax was withheld from payments under the prescribed payments system applicable to contractors, not the normal payg deductions.
