Fair Work Act 2009
s.365—General protections

Geoffrey James McMahon
v
Red And White Star Cabs Co-Operative Limited T/A Maitland Taxi Service
(C2021/6512)

Application to deal with a general protections contravention involving a dismissal – applicant engaged by the respondent to drive a taxi – applicant not employed and therefore not dismissed by respondent – application dismissed.

Introduction and background

[1] On 21 September 2021, Mr Geoffrey McMahon lodged an application pursuant to s 365 of the Fair Work Act 2009 (Act) for the Fair Work Commission (Commission) to deal with a general protections dispute involving a dismissal. The respondent to the dispute is Red and White Star Cabs Co-operative Limited trading as Maitland Taxi Service (MTS).

[2] Mr McMahon contends that he was employed by MTS and MTS contravened one or more of the general protections provisions in dismissing him from his employment.

[3] MTS raised a jurisdictional objection to the application. MTS contends that it neither employed nor dismissed Mr McMahon.

[4] I conducted a hearing in relation to the question of whether Mr McMahon was dismissed by MTS. Mr McMahon gave evidence in support of his case, as did Mr Gregory Steel, Base Operator employed by MTS, and Ms Joelle Bear, Finance Administrator employed by MTS. Evidence was given on behalf of MTS by Mr Mark Marland, director, secretary, shareholder and taxi licence plate holder of MTS.

Relevant facts

[5] MTS has operated a taxi network in the Maitland area for over 68 years. It has always consisted of taxi licence plate holders (who are also shareholders in MTS), bailee drivers of taxis, call centre employees and administration employees.

[6] Mr McMahon has driven taxis in the MTS network for in excess of 22 years. During that period, he has driven taxis owned by MTS as well as taxis owned by individuals who are both taxi licence plate holders and shareholders in MTS. Until recently, Mr McMahon did not question that he was engaged as a bailee when he drove taxis on the MTS network. However, Mr McMahon now alleges that he was employed by MTS when he drove a taxi owned by MTS in the period from August 2019 until his alleged dismissal on 2 September 2021. Mr McMahon has never had a written agreement in relation to his driving of taxis on the MTS network.

[7] Prior to about July 2020, the well-understood and agreed arrangement between a taxi driver such as Mr McMahon and the owner of the taxi on the MTS network was that any taxi fare paid by a customer would be shared 50% to the driver and 50% to the owner of the taxi, with the owner of the taxi responsible for paying for fuel and all servicing and repair costs. The taxi was returned to the owner or MTS depot when the driver finished driving it each day.

[8] In about July 2020, Mr McMahon had a discussion with Mr Marland about Mr McMahon driving one of five wheelchair accessible transport (WAT) taxis (car 29) owned by MTS. There is a dispute as to who initiated this discussion. I do not need to resolve that dispute. Whether Mr McMahon asked to drive car 29 or Mr Marland asked him whether he would do so is not relevant to the issue I need to determine. Mr McMahon and Mr Marland did not discuss the particular terms that would apply when Mr McMahon drove car 29. No doubt that was because Mr McMahon had been driving taxis on the MTS network for about 20 years. For example, they did not discuss how taxi fares paid by customers would be shared between Mr McMahon and MTS. I find that there was no discussion about whether Mr McMahon would be engaged as a bailee or an employee when he drove car 29. It was clear from Mr Marland’s oral evidence that he had a very limited recollection of his conversation with Mr McMahon in about July 2020. For that reason, I do not accept the parts of Mr Marland’s witness statement where he contends or suggests he spoke to Mr McMahon in about July 2020 about him being engaged as a bailee or him bailing a WAT taxi. 1 Mr Marland did inform Mr McMahon that he would need to undertake training for Wheelchair Assisted Transport if he was to drive car 29. Mr McMahon agreed to undertake the training. MTS paid for the cost of the training course, in light of the financial issues impacting taxi drivers due to COVID-19 restrictions.

[9] Apart from car 29, there were four other WAT taxis owned by MTS and operated on the MTS network. When Mr McMahon started driving car 29, he was informed by the other drivers of WAT taxis on the MTS network that his share of any taxi fare paid by a customer of a WAT taxi was 55%, rather than the usual 50%, with the other 45% being paid to the owner of the taxi, MTS. The other drivers of WAT taxis explained to Mr McMahon that in exchange for the extra 5% of taxi fares, Mr McMahon was expected to take the taxi in for servicing and keep the taxi in a clean state. MTS paid for the servicing, registration, fuel and other costs associated with car 29. These aspects of the arrangement described to Mr McMahon by other drivers of WAT taxis turned out to be accurate in practice.

[10] Mr McMahon was permitted to take the WAT taxi home each day and keep it at his premises until he next used it.

[11] Mr McMahon’s usual practice was to drive car 29 from Monday to Friday each week. He usually got into the taxi at about 6:45am each morning. At about 6:55am each morning Mr McMahon received a communication from MTS in relation to the school run which was available for that morning. That came about because MTS had a contract to provide WAT taxis to transport eligible students with a disability to and from school. Taxis owned by MTS were allocated ‘jobs’ on the school run in the first instance. Other taxis owned by individuals in the MTS network were then allocated any available ‘jobs’ on the school run. 2 Mr McMahon was required to have a working with children check in order to provide taxi services to school children. For WAT taxi runs which fell under the Taxi Transport Subsidy Scheme, Mr McMahon received an extra $16.50 (tax free) per ‘job’ paid by Transport NSW.3 If Mr McMahon was unable to do these school runs, he informed MTS and the ‘jobs’ would be picked up by another WAT driver.4

[12] Mr McMahon usually collected the first student for the school pick up at about 7:30am and completed his last school drop off at about 8:50am in the morning. In the afternoon, from Monday to Friday, Mr McMahon usually did his first school pick up at about 2:55pm and his last school drop off at about 4pm. After his last school drop off at about 4pm, Mr McMahon would decide whether he wanted to drive any longer that day or not, and if so, for how long. Mr McMahon explained that on some days he felt morally obliged to keep driving car 29, or return to operate car 29 after he had gone home. This was because the other drivers of WAT taxis would often decide to cease providing taxi services after the afternoon school run and Mr McMahon would receive a request from MTS to provide a taxi service to a person in a wheelchair. Mr McMahon did not want to let the person down, so he would often provide the taxi service to the customer in the wheelchair. I accept Mr Steel’s evidence that some drivers of WAT taxis on the MTS network would continue providing taxi services to assist customers in a wheelchair, while others would not; it was their choice.

[13] I accept Mr McMahon’s evidence that he sometimes accepted wheelchair ‘jobs’ when he was driving car 29 and forewent more profitable ‘jobs’ 5 at the request of MTS.

[14] Apart from the contract MTS had to provide school runs, MTS also had contracts to provide taxi services to the Department of Veterans Affairs (DVA) and with Maitland private and public hospitals to transport customers to or from hospital or other medical services. WAT taxis were often needed to provide these services because of the needs of the customers. Mr McMahon was often requested by MTS to provide taxi services to customers pursuant to these contracts. Mr McMahon gave evidence, which I accept, that when he drove car 29, between 65% and 100% of his takings for the day would be derived from MTS’s contracts and, on average, these contracts accounted for about 70% to 80% of his income from car 29. 6

[15] Each day on which he drove car 29, Mr McMahon completed an end of shift report, which included information as to Mr McMahon’s ‘total takings’ for the day. The ‘total takings’ were comprised of account jobs, credit dockets and cash takings. Because most of the ‘total takings’ were account jobs or customers using credit cards, Eftpos or cabcharges, the net result was that payments were made by MTS to Mr McMahon during each week when he drove car 29.If Mr McMahon had received more cash than the value of his account jobs and credit payments in a particular week, he would have been required to pay money to MTS for that week.

[16] MTS invoiced its contract clients each month for the taxi services provided to them during the month. MTS paid drivers of taxis owned by MTS, such as Mr McMahon, their share as a result of their total weekly takings each week.

[17] Mr McMahon did not drive car 29 on a weekend. Instead, he chose to be engaged by owners of other taxis on the MTS network to drive their taxis on a weekend. Mr McMahon shared his receipts with those owners on the usual basis.

[18] Mr Steel gave evidence, which I accept, that it was common for drivers of taxis on the MTS network to not accept ‘jobs’ allotted to them. By way of background, the MTS computer system is set up such that when a customer requests a taxi service, the ‘job’ is allotted to the taxi which is closest to the customer. If the driver does not accept the ‘job’, it is allotted to the next closest driver and the default setting is for the first driver to be suspended from the network for 20 seconds and placed at the bottom of the queue for the next available ‘job’. As a Base Operator, Mr Steel’s practice when a taxi driver does not accept a ‘job’ which has been allotted to them is to allot the ‘job’ to another taxi driver on the MTS network and apply the default suspension of the first driver for 20 seconds and place them at the end of the queue for the next available ‘job’. If no such taxis are in the vicinity of the customer, Mr Steel’s practice is to go back to the driver who originally did not accept the ‘job’ and request that they do the ‘job’ because no other taxis are available. Mr Steel has had success with that approach, with the result that he has never suspended or locked any taxi driver out of the MTS network for two hours or more.

[19] Mr McMahon accepts that he refused ‘jobs’ allotted to him by MTS when he was driving car 29. He knew that he was entitled to refuse such ‘jobs’ when he did not wish to work, such as when he was having lunch, voting or attending to some other personal matter. Mr McMahon also understood that the usual consequence of refusing a ‘job’ which had been allotted to him by MTS was a 20 second suspension from the MTS network and being placed at the bottom of the queue of taxis in the MTS network for the next available ‘job’. This default setting in the MTS system was used as a means of encouraging drivers to accept ‘jobs’ allotted to them by MTS. Mr McMahon also understood that MTS could impose longer suspensions for various conduct, but this did not happen to him.

[20] Mr Marland gave evidence to the following effect in his witness statement: 7

“17. The network would put out jobs and Mr McMahon would determine whether to accept them or not. He performed as much or as little work as he liked. Mr McMahon’s income varied from day to day, week to week depending on how many jobs he accepted.”

[21] Apart from the threat and imposition of sanctions for not accepting ‘jobs’ allotted to him and the moral responsibility Mr McMahon felt to accept ‘jobs’ for a person in a wheelchair, Mr McMahon did not seriously challenge this evidence. Subject to these qualifications, I accept this evidence from Mr Marland.

[22] Mr McMahon’s practice was to let MTS know when he was not available to drive car 29 on a particular weekday or during a particular time on a weekday. 8

[23] In February 2021, the Chairman of MTS organised a meeting of the drivers of WAT taxis owned by MTS. The Chairman explained that the WAT taxis were not as profitable as MTS would have liked. The Chairman made reference to the WAT taxis needing to be operated for at least 38 hours a week in order to make a profit. This was the first occasion on which anything had been communicated to Mr McMahon about operating car 29 for at least 38 hours per week. Mr McMahon was not concerned by this comment because he usually operated car 29 for more than 38 hours from Monday to Friday each week. On 3 August 2021, Mr McMahon received an email from MTS which included the following statement:

“3. The 55% verbal agreement Red and White Star Cabs (trading as Maitland Taxi Service) has with you, as the Bailee of TC1325, includes the vehicle working at least 38 hours per week in order to make an income for the Co-operative (noting the expenses Wheelchair Accessible Transport (WAT) Vehicles incur as well as you, and for you acting to ensure the maintenance of the vehicle safety standards was completed in accordance with the Point to Point Transport (Taxis and Hire Vehicles) Act 2016 and the Maitland Taxi Service Operations and WHS Management System Policy.”

[24] I accept Mr McMahon’s evidence that he usually operated car 29 for more than 38 hours a week, but in some weeks he did not do so; he was not disciplined or subjected to any sanction when he operated car 29 for less than 38 hours in a week. In the result, I find that there was no term of any legally binding agreement between Mr McMahon and MTS which obliged Mr McMahon to drive car 29 for at least 38 hours a week.

[25] Mr McMahon took holidays at a time of his choosing. For example, he had a holiday for about 10 weeks from about 28 March 2021 until about 9 June 2021. Mr McMahon returned car 29 to MTS when he was on holidays. Mr McMahon did not organise a replacement driver for car 29 when he was on holidays.

[26] Mr McMahon did not receive holiday pay, sick leave or superannuation from MTS. Mr McMahon was responsible for his own taxation. MTS did not withhold any tax from payments made to Mr McMahon. He has his own Australian Business Number.

[27] Other persons had the use of car 29 to provide taxi services to third parties in the period from July 2020 to 2 September 2021.

[28] I do not accept Mr Marland’s assertion that Mr McMahon had his own business cards. No such cards were produced to the Commission. Mr Marland has not seen any such cards, but he says he has been told about them. Mr McMahon denies that he had his own business cards when he operated car 29.

[29] Mr McMahon accepts that he has his own clients, many of whom are friends. They contact him directly to arrange for Mr McMahon to transport them by taxi to an airport or other location of their choosing. Mr McMahon gave evidence, which I accept, that when he was driving car 29 during the week he was not asked to, and did not, do any work for his private clients.

[30] MTS has a manual. Amongst other things, the manual contains ‘rules’, which Mr Marland described as ‘guidelines’. The manual includes the following relevant provisions:

“INTRODUCTION

1. Employment is a relationship between two parties, usually based on a contract where work is paid for. Owners, Operators, Bailee Drivers and a number of Drivers (full – time, fixed – term, part – time, casual and contracted) received payment for services through the Maitland Taxi Service Network.

AIM

2. The aim is to ensure Owners, Operators, Bailee Drivers and Drivers understand what is required when working for, representing and promoting Maitland Taxi Service.

…

Maitland Taxi Service Network Code of Conduct

9. The Maitland Taxi Service Code of Conduct informs Owners, Operators, Bailee Drivers, cabdrivers and workers of the Network’s expectations. Failure to follow the Code of Conduct may result in disciplinary action being taken.

10. The Maitland Taxi Service Code of Conduct is:

a. Behave honestly, lawfully, professionally, reasonably and with integrity when working for Maitland Taxi Service;

b. Maintain the integrity, confidentiality and security of Maitland Taxi Service information;

c. Treat everyone with dignity, respect and courtesy, and without discrimination, bullying or harassment;

d. Owners, Operators, Bailee Drivers, Drivers and workers are not to engage in inappropriate workplace conduct;

e. Comply with Maitland Taxi Service policies and procedures, as well as relevant legislative and industrial requirements;

f. Comply with any lawful and reasonable direction or instruction given by the Red and White Star Cabs Cooperative Limited Board or workplace supervisors;

g. Use Maitland Taxi Service resources in a proper manner and for their proper purpose;

h. Owners, Operators, Bailee Drivers, Drivers and workers are to understand the duties, responsibilities and accountabilities of their roles and perform them safely, honestly, courteously and fairly;

i. Report unethical, dishonest and/or corrupt conduct; and

j. Owners, Operators, Bailee Drivers, Drivers and workers of Maitland Taxi Service are to present themselves in a professional manner, including the wearing of the designated uniform to those required to wear one (i.e. drivers).

TAXI DRIVER RULES

19. A taxi driver who operates a taxi within the Maitland Taxi Service network must:

…

g. Not, unless directed by the duty dispatch operator:

…

v. Without a genuine reason, fail to carry out a hiring allotted by the duty dispatch operator.

…

k. Accept that the decision of the duty dispatch operator, in relation to the allotment of hiring, is final;

l. Comply immediately with any direction of the duty dispatch operator.

…

23. All drivers (Bailee and Network) within the Maitland Taxi Service are to have signed contracts between themselves and the Owner, Lessee (when plates are leased from an Owner) or Maitland Taxi Service (for drivers engaged to operate Network vehicles).”

[31] It is clear from the evidence to which I have referred above that MTS did not consistently enforce the ‘rule’ whereby drivers of taxis on the MTS network must not “without a genuine reason, fail to carry out a hiring allotted by the duty dispatch operator”.

[32] Mr McMahon wore an MTS uniform when he drove car 29.

[33] Mr McMahon’s engagement to drive car 29 came to an end on 2 September 2021. MTS characterised its decision in that regard as a “decision to release you [Mr McMahon] from your Casual Bailee Agreement with the Co-operative”. 9 Notwithstanding the cessation of that engagement, Mr McMahon continues to drive taxis on the MTS network. Those taxis are owned by individuals who are both taxi licence plate holders and shareholders in MTS. Mr McMahon does so on the basis that he shares the fares paid by customers on the usual 50% share basis with the owner of the taxi.

Legislative framework

[34] A person may make an application to the Commission for it to deal with a dispute if they have been dismissed and the person, or another on their behalf, alleges that the person was dismissed in contravention of Part 3-1 (general protections) of the Act. 10 The meaning of dismissed is governed by s 386 of the Act. Subsection 386(1) relevantly provides:

“A person has been dismissed if:

a. the person’s employment with his or her employer has been terminated on the employer’s initiative; or

b. the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.”

Relevant principles

[35] It is possible for a taxi owner to engage a person as an employee to drive their taxi. However, to conclude that a particular taxi driver is engaged as an employee it is necessary to identify a type of working relationship which is very different to that dealt with in the long line of cases in which it has been held that the relationship between taxi owner and taxi driver is commonly that of bailor and bailee, not employer and employee. 11

[36] Certain fundamental elements must exist for an employment relationship to exist. 12 Because an employment contract is, at its essence, a work-wages bargain, the “irreducible minimum of mutual obligation” necessary to create such a contract is an obligation on the one side to perform the work or services that may reasonably be demanded under the contract, and on the other side to pay for such work or services.13

[37] The use of common law criteria developed to distinguish between an employer-employee relationship and a principal-independent contractor relationship is a distraction to the question of whether an owner of a taxi and a driver of the taxi are in an employment relationship. 14

[38] The relevant circumstances pertaining to a taxi driver and the owner of the taxi must be viewed in their “well established general law and statutory setting”. 15 When viewed in that context, a conclusion that a taxi driver is a bailee in a joint venture with the owner/bailor may be appropriate, notwithstanding a degree of control being reserved to the owner/bailor.16

Consideration

[39] There is no suggestion in this case that Mr McMahon resigned from his position with MTS. Nor is there any doubt that MTS terminated its relationship with Mr McMahon with effect on 2 September 2021. What is in issue between the parties is whether Mr McMahon was employed by MTS. If he was not, then he cannot have been dismissed within the meaning of s 386 of the Act.

[40] Mr McMahon submits that his experience and relationship with MTS from about July 2020 until 2 September 2021, during which time he operated car 29, a WAT taxi, was very different from that which had taken place during the previous 20 years when he operated various taxis on the MTS network. In particular, Mr McMahon points to the fact that most of the work he did, together with the income he earned, in car 29 was on contracts which MTS had with third parties in relation to the provision of taxi services to school students, patients of Maitland public and private hospital and recipients of DVA benefits. In addition, Mr McMahon points to the fact that he usually worked from Monday to Friday, at least 38 hours per week, in car 29, was paid weekly by MTS, and was, so he contends, subjected to significant control by MTS, including by the default penalty system which suspended him from the network for 20 seconds and placed him at the bottom of the queue for the next available ‘job’ whenever he did not accept a ‘job’ which had been allotted to him. Mr McMahon contends that he had a continuous casual employment relationship with MTS in the period from at least about July 2020 until 2 September 2021, at which time he was dismissed by MTS.

[41] MTS relies on the long line of authority which supports the proposition that taxi drivers are usually engaged as bailees, and contends that its relationship with Mr McMahon in relation to his use of car 29 was one of bailment at all times.

[42] On the facts of this case, I am of the firm opinion that the fundamental elements of an employment relationship did not exist between Mr McMahon and MTS. First, Mr McMahon was not required to perform any work or provide any services for the benefit of MTS. He was free to not to accept any ‘job’ allotted to him by MTS or not to drive car 29 on any day, or part thereof, of his choosing, whether that ‘job’ arose out of a contract MTS had with a client or otherwise. I accept that it was not in Mr McMahon’s economic interests, and he did not want to be suspended from the MTS network, placed to the bottom of the queue for available jobs or have any other sanction taken against him. To his credit, Mr McMahon also felt a moral obligation to accept requests by MTS to provide taxi services in car 29 to persons in a wheelchair. Those reasons provide the rational explanation as to why Mr McMahon usually did accept the ‘jobs’ allotted to him, and why he usually, but not always, provided taxi services for at least 38 hours per week in car 29. He was not obliged to work any particular hours, or number of hours, each week in which he had possession of car 29.

[43] Secondly, there was no obligation on MTS to pay Mr McMahon for his occupancy, use, or driving of car 29. Instead, there was an arrangement, with which Mr McMahon was well familiar from his two decades of experience driving taxis on the MTS network, whereby Mr McMahon and MTS agreed to share the taxi fares paid by or on behalf of persons who used the taxi services provided by Mr McMahon. MTS was responsible for paying all servicing, registration, fuel and other costs associated with car 29. Mr McMahon was responsible for arranging for the vehicle and lift within it to be serviced, as well as keeping the vehicle in a clean state. Mr McMahon was given the benefit of taking the vehicle home each day, albeit that was not a significant advantage to Mr McMahon because he lives in close proximity to the MTS depot. The arrangement between the parties was truly one of a joint venture for their common profit on agreed terms. That payments were made by MTS to Mr McMahon each week, rather than the other way around, is simply a function of the fact that most of the taxi services that Mr McMahon provided in car 29 were paid for by passengers by electronic means or by clients direct to MTS pursuant to contractual arrangements. The fact that contracted clients were invoiced monthly by MTS, yet it made payments to Mr McMahon on a weekly basis, does not alter the character of the payments or the nature of the arrangement pursuant to which the revenue was shared.

[44] Thirdly, it would be impossible for the operator of a taxi network to conduct an efficient or effective taxi service to customers if it could not exercise some control or method by which it could encourage taxi drivers to accept particular ‘jobs’ allotted to them, particularly where the taxi in question was located closest to the customer. Viewed in the context of the “well established general law and statutory setting”, 17 the degree of control reserved to and exercised by MTS over drivers such as Mr McMahon is not inconsistent with a bailment relationship and does not warrant a conclusion that the parties were in an employment relationship.

[45] In my view, MTS terminated its bailment agreement with Mr McMahon with effect on 2 September 2021; it did not dismiss him under a contract of employment.

Conclusion

[46] For the reasons given, Mr McMahon was not employed by MTS. He therefore could not have been dismissed within the meaning of s 386 of the Act. It follows that Mr McMahon was not eligible to make a general protections application involving a dismissal. Ergo, his application must be dismissed for want of jurisdiction

DEPUTY PRESIDENT

Appearances:

Mr G McMahon appeared for himself
Mr O’Brien, solicitor, appeared on behalf of the Respondent.

Hearing details:

2021.
Newcastle (by video conference):
December 6.

Printed by authority of the Commonwealth Government Printer

<PR736988>

 1   Exhibit R1 at [5] & [8]

 2   Exhibit A1 at [5]-[6]

 3   Exhibit R1 at [19]

 4   Exhibit R1 at [19]

 5   Exhibit A1 at [13]

 6   Exhibit A2

 7   Exhibit R1 at [17]

 8   Exhibit A1 at [12]

 9   Exhibit A2 at Email 4

 10   Section 365 of the Act

 11   Voros v Dick [2013] FWCFB 9339 (Voros) at [24]

 12   Voros at [13]

 13   Voros at [13]

 14   Voros at [16]

 15   Voros at [23], applying Commissioner of Taxation of the Commonwealth of Australia v De Luxe Red & Yellow Cabs Co-operative (Trading) Society Ltd (1998) 82 FCR 507

 16   Voros at [22]-[23]

 17   Voros at [23], applying Commissioner of Taxation of the Commonwealth of Australia v De Luxe Red & Yellow Cabs Co-operative (Trading) Society Ltd (1998) 82 FCR 507