New South Wales Taxi Industry Association v Transport Workers' Union of New South Wales [2005] NSWIRComm 1039 (4 May 2005)

Last Updated: 4 May 2005

NEW SOUTH WALES INDUSTRIAL RELATIONS COMMISSION

CITATION : New South Wales Taxi Industry Association v. Transport Workers' Union of New South Wales [2005] NSWIRComm 1039

FILE NUMBER(S): 544

HEARING DATE(S): 22/07/2004, 10/02/2005

DECISION DATE: 04/05/2005

PARTIES:

APPLICANT

New South Wales Taxi Industry Association

RESPONDENT

Transport Workers' Union of New South Wales

JUDGMENT OF: Connor C

LEGAL REPRESENTATIVES

APPLICANT

Louise Clegg

Counsel

RESPONDENT

Adam Hatcher

Counsel

CASES CITED: Appeal by Haraszti against the Taxi Industry (Contract Drivers) Contract Determination (1996) 40 AILR Rep.5-105

Australian Provincial Assurance Company Limited v. Coroneo (1938) 38 SR(NSW) 700

Leigh v. Taylor (1902) AC 157

Pacific Publications Pty Limited v. Cantlon (1983) 4 IR 415

Patmore v. Fletcher Fotographics Pty Limited (1984) 26 AILR Rep.104

Ray v. Radano (1967) AR 471

Reid v. Smith (1906) 3 CLR 656

LEGISLATION CITED: Annual Holidays Act 1944

Industrial Relations Act 1996

JUDGMENT:

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

CORAM: CONNOR C

Wednesday, 4 May, 2005

Matter No IRC 544 of 2004

New South Wales Taxi Industry Association and the Transport Workers' Union of New South Wales

Application under S.312 of the Industrial Relations Act, 1996 for variation of the Taxi Industry (Contract Drivers) Contract Determination re E-Tags, annual leave and the method of calculating remuneration

DECISION

[2005] NSWIRComm 1039

Preliminary

1 Two separate applications lodged for variation of the Taxi Industry (Contract Drivers) Contract Determination under Part 2, Contract Determinations, of Chapter 6, Public Vehicles and Carriers [Ss.311 to 331], of the 1996 Industrial Relations Act have been allocated to me, viz:

(i) an application by the TWU seeking to provide occupational superannuation for bailee taxi drivers (which I have determined in a separate decision which I have handed down together with this decision, essentially granting the TWU application); and

(ii) an application by the TIA concerning a range of matters: a) the adoption of appropriate procedure for the operation of E-Tags in taxi cabs (b) a cap of two years instead of six years for the recovery of accrued annual leave entitlements for bailee taxi drivers and (c) a new method for calculating annual leave, sick leave and long service leave entitlements for bailee taxi drivers based on a copy of the Business Activity Statement that they furnish to the Australian Taxation Office (which is the subject of this decision).

2 Although the two applications were unrelated, they were heard together. The TWU application was mentioned before me on Friday, 22 August, 2003 and Wednesday, 29 October, 2003 and the conference required by S.315 occurred on Wednesday, 29 October, 2003. The matter was further mentioned on Friday, 5 December, 2003, Wednesday, 14 January, 2004, Thursday, 12 February, 2003 and Wednesday, 3 March, 2004. The TIA application came before me for a mention on Thursday, 12 February, 2004 and the conference required by S.315 occurred on Wednesday, 3 March, 2004.

3 When conciliation failed to settle the two separate applications I programmed them for arbitration and it was convenient to deal with all issues in dispute over the two applications at the same time. The hearing was originally scheduled for Wednesday, 21 July, 2004 and Thursday, 22 July, 2004 but it became necessary to vacate the first of those two days for the hearing due to my commitment on a Full Bench. It was not possible to conclude the matter in one day, however, and I found it necessary to allocate a further day for hearing. I mentioned the matters again on Wednesday, 11 August, 2004 for programming purposes and ultimately the further hearing took place on Thursday, 10 February, 2005 with written submissions being provided subsequently by the parties.

4 In the hearing Ms Clegg represented the TIA and Mr Hatcher represented the TWU. Annexed to this decision is a list of witnesses called to give evidence by either Ms Clegg or Mr Hatcher. Mr Faruque Ahmed purported to represent an organisation described as the New South Wales Cabbie Welfare Association in the proceedings. He sought initially to intervene in the proceedings and had filed a document purporting to outline a position on a range of matters before me (and other issues not necessarily open to me to consider within the ambit of these current proceedings). Ultimately, he did not pursue his intervention, however - and he has no standing to do so, at least acting for the Cabbie Welfare Association [Appeal by Haraszti against the Taxi Industry (Contract Drivers) Contract Determination (1996) 40 AILR Rep.5-105]. The parties to these proceedings are confined to the TWU (on behalf of the bailee taxi drivers) and the TIA (on behalf of the bailor taxi owners).

5 The background to this decision I outlined in some detail in my decision on the TWU application for occupational superannuation for taxi driver bailees. I do not propose to repeat that background information again in this decision except to say that the evidence before me highlighted significant problems being experienced by both taxi drivers and taxi owners alike - a shortage of available drivers for taxi cabs, complaints over the level of remuneration available to taxi drivers and operators alike, problems associated with the new taxation regime flowing from the Goods and Services Tax and the excessive "casualization" of the taxi industry. I believe that the TIA and the TWU share much common ground in attempts to overcome those problems.

6 For present purposes, the contract determination for the taxi industry in this State has something of a 20 year history behind it and there are currently two methods of remuneration for taxi driver bailees recognised under it, viz:

(i) a sharing of the chargeable fares - 45% for the taxi driver bailee in the first year and 50% for subsequent years [Method I]; and

(ii) a fixed payment scheme whereby the taxi driver bailee retains the excess after an agreed sum has been paid to the taxi owner bailor [Method II].

Taxi driver bailees have the option of working under either Method I or Method II but (either by choice of because they are forced to accept what is available to them) taxi driver bailees in the Sydney metropolitan area invariably work under Method II and Method I has, to that extent, fallen into disuse.

7 Also there is a high level of regulation for taxi fares. Any increase in fares for taxis in New South Wales must come before the Independent Pricing and Regulatory Tribunal of New South Wales [IPART] which considers the matter and makes a recommendation on it to the Director General of the Department of Transport, acting on behalf of the State Minister for Transport, who may either accept or reject that recommendation. Ordinarily such recommendations have been accepted in the past and there is no reason to doubt that would not also occur with any further relevant variations to the contract determination for the taxi industry which increase the cost of running a taxi cab - as would the claim for occupational superannuation.

8 For taxi driver bailees on Method II, a fare increase would flow to them and the TIA, acting on behalf of taxi owner bailors, would be obliged to make application to flow on that fare increase according to an established formula. In the past the flow on of fare increases to taxi owner bailors has been with the consent of the TWU. However, there is a delay built into the process for such an application by the TIA to be prepared, filed, subject to discussions with the TWU and processed through the Commission.

E-Tags

9 The TIA has sought in its application to make provision for the installation of electronic devices to record tolls, ie E-Tags, in taxi cabs. Ms Clegg has recorded in written submissions she provided to me on Friday, 11 March, 2005 that the TIA application in that respect has:

"...been triggered by the possibility that in time the State Government may take steps to make it compulsory for taxis in the metropolitan transport district to install and use E-Tag devices. It is presently unclear what the position of the State Government is concerning the regulation of E-Tags and their compulsory phasing in for taxis. It is uncertain whether the State Government proposes to regulate at all. What is certain is that it will soon be impossible to drive on many of Sydney's major tollways without an E-Tag being installed in a vehicle. The practical import is that taxis will soon be required to operate with an E-Tag device - whether the device is owned and installed by either the driver or operator and regardless of whether the State Government regulates for compulsory use of E-Tags in taxis..."

10 It must therefore be appreciated as inevitable that in the foreseeable future all vehicles will only be able to access certain roads if they have installed an E-Tag. For instance, it has been suggested that the cross city tunnel is to be the first fully funded electronic toll road in New South Wales and there will be no cash booths at all. There will no doubt be other roads in the future where there are no cash booths, the aim being to free up travel and avoid the slow downs which cash toll booths create. Consequently, it follows that most, if not all, taxi drivers operating in the Sydney metropolitan area will need to have in their taxi cabs E-Tags at all times and it is necessary for there to be a mechanism in place to facilitate that development. The TIA application is a response to that development and its concern that the burden for the installation of E-Tags will fall entirely on taxi owner bailors.

11 There are two ways that the TIA sees that new procedure working: either the taxi driver bailee installs in the taxi, on a shift by shift basis, his own valid and operable E-Tag or, alternatively, it goes with the taxi cab and is the responsibility of the taxi owner bailors. Ms Clegg has indicated in her written submissions that:

"...it is...clear that there are a great number of taxis operating in the metropolitan transport district which currently use E-Tags. The best estimate is probably that about 70% of Sydney's taxis use E-Tags. It is unknown what proportion of taxis installed with E-Tags are taxis in which the operator installs the E-Tag as compared to the driver installing the E-Tag. The Commission could infer that the latter arrangement operates in the vast majority of cases..."

12 In her written submissions Ms Clegg has described difficulties she perceived for taxi owner bailors in installing and maintaining their own E-Tags in the taxi cabs they own, viz:

"...First, the operator is exposed to the possibility of not recovering some or all of the amounts which have been charged to the operator's E-Tag account. Whilst it is certain there would be a number of operators and drivers who work together successfully to ensure that the operator does recover amounts charged to the operator's E-Tag account, there is no system or procedure in place for doing so. Also, operators who bail taxis to casual drivers and/or drivers with whom there is no longstanding relationship are more exposed to not recovering monies which have been charged to their E-Tag accounts by reason of, for example, a driver making dishonest representations (about the amounts charged during a shift) and/or absconding without fully reimbursing (or reimbursing at all) the operator.

Second, there is a significant administrative burden placed upon the owner to track the charges (and in cases where an operator bails more than one taxi) allocate charges to drivers and recover the monies charged... Evidence has demonstrated just how time consuming, fiddly, difficult and costly the burden would be.

Third, there are the practical difficulties associated with keeping and supplying an E-Tag device and/or E-Tag account for each car or driver and keeping track of the E-Tag without the need to be physically present at every handover (which would add significantly to the administrative and cost burden). As the compulsory use of E-Tags in vehicles on Sydney tollways increases, the tolls incurred by a taxi in any given shift will continue to increase. The above problems will only be exacerbated over time..."

13 Where the taxi owner bailor has installed an E-Tag device, the TIA has proposed a bond of $200.00 per shift be impose on the taxi driver bailee for the use of the taxi owner bailor's E-Tag. That bond will be payable by the bailee taxi driver at the commencement of each shift and at the conclusion of the shift he will provide a statement of any amounts charged to the operator's E-Tag during that shift and pay such amounts to him. Ms Clegg records in her written submission that the TIA proposal is:

"...skewed in favour of encouraging drivers (or at least enabling operators to encourage drivers) to supply and install E-Tags on a shift by shift basis... It is clear that this is the desirable course... Indeed, this is the universal method of operation in Victoria - and for good reason. It is important to remember that the driver is reimbursed the toll money by the customer. That toll money is in the driver's hand at the end of the shift. It defies logic that the standard arrangement should be for the driver to calculate what amount has been incurred upon tolls during the shift and then repay that money to the operator who has incurred the E-Tag toll on the operator's own account - when the obvious and most simple answer is for drivers to regard an E-Tag device as a '...tool of trade...' and take it with them in each taxi they drive (as they might a mobile telephone)..."

14 Mr Hatcher in his written submissions provided to me on Thursday, 7 April, 2005, expressed the view that I should not entertain any variation to the contract determination for the taxi industry which has the effect of altering the fundamental nature of the bailor/bailee relationship, ie that the taxi owner bailor provides a fully equipped taxi and that the bailee uses his or her labour to earn remuneration shared with the taxi owner bailor. Mr Hatcher suggested that:

"...a change whereby the bailee is compelled to provide parts of the equipment for that taxi is a move away from a bailment relationship towards another type of relationship where the operator and the driver are jointly obliged to provide that which makes up the fully equipped taxi..."

In her written submissions in reply dated Friday, 15 April, 2005 Ms Clegg rejects that claim by Mr Hatcher. She asserts that the TIA proposal is not draconian, as Mr Hatcher has suggested, and that it does not alter the fundamental nature of the bailment relationship which exists between taxi drivers and taxi owners. It accounts for the possibility that most taxi driver bailees and taxi owner bailors will resolve the matter themselves but, in the event of their failure to do so, it provides protection to taxi owner bailors obliged to use their own E-Tag with a bond system which Ms Clegg regards as fair and reasonable in the circumstances.

15 I note that Clause 1, Minimum Conditions to be Observed, of the taxi drivers contract determination presently provides as follow:

"The bailor shall bail and the bailee shall take on bailment such duly registered and licensed taxi cab and/or cabs as during the term of this determination the bailor may make available from time to time to the bailee together with the equipment belonging thereto on the terms and conditions hereinafter appearing."

But an E-Tag devise is not attached to the vehicle in that sense. As Ms Clegg indicated in her written submissions in reply, an E-Tag device is not a fixture in a taxi, viz:

"...It is not a part of the equipment of a taxi. The only fixture associated with an E-Tag device is the plastic device on a windscreen which holds an E-Tag in place (although some drivers simply hold the E-Tag device at the windscreen as they pass through the toll gates). An E-Tag device is a small, inherently transportable personal item which operates much like a personal debit or credit card. To oblige a bailor to provide a bailee with an E-Tag is no different to requiring the bailor to give the bailee the bailor's credit card..."

16 I consider that Ms Clegg's description of an E-Tag device is the correct one. An E-Tag device is not part of the equipment of a taxi. Because it may be detached I do not believe that it is necessarily "...equipment belonging..." to the vehicle to fall under Clause 1 but rather remains the personal property of the taxi driver bailee: if I may be permitted to borrow an established concept from the law relating to real property - only that which is attached to the soil is part of the soil - "...quicquid plantatur solo, solo cedit..." [Reid v. Smith (1906) 3 CLR 656, Leigh v. Taylor (1902) AC 157 and Australian Provincial Assurance Company Limited v. Coroneo (1938) 38 SR(NSW) 700]. In this case only that which is actually attached to the taxi cab itself would "belong" to that taxi cab. The E-Tag device is portable.

17 The TWU has accepted an approach to E-Tags along the following lines, which Mr Hatcher described in his written submissions as "...a fair compromise of the respective positions of the parties...":

"The bailee shall be entitled to use the bailee's own E-Tag in a taxi during a shift instead of a bailor's E-Tag. If a bailee operates a taxi which utilises a bailor's E-Tag for the payment of tolls during the bailment then the following provisions shall apply:

(i) the bailee must at the end of each shift provide the bailor with the statement of the amount charged to the bailor's E-Tag during that shift;

(ii) the bailee must pay to the bailor at the end of each shift the amount charged to the bailor's E-Tag during that shift; and

(iii) the bailor shall be entitled to recover from the bailee any moneys not paid to the bailor which have been charged to the bailor's E-Tag by the bailee but shall not be entitled to set off any such amounts from moneys due to a bailee from the bailee's entitlement."

18 That proposal to a large extent mirrors the approach adopted by the TIA. However, the TWU approach differs from that advanced by the TIA in three important respects and a dispute still remains between the parties over those issues. The TWU rejects the payment of the bond; it also rejects the suggestion that, in effect, a taxi owner bailor may dismiss a permanent taxi driver bailee who declines to provide his own E-Tag and precludes the taxi owner bailor from any obligation to do so; it does not accept set off against entitlements to the taxi driver bailee with respect to moneys due to the taxi owner bailor on an E-Tag.

19 I acknowledge that it would be neater, and less administratively inconvenient for all parties, that the taxi driver bailee operate on his own E-Tag, taking it with him from taxi to taxi, rather than relying on the E-Tag supplied with the taxi cab by the taxi owner bailor. In Ms Clegg's opinion that, in practice, is the most likely situation and the TIA proposal is designed to encourage that practice. Ms Clegg has commented in her written submissions in reply to Mr Hatcher's written submissions:

"...If push comes to shove (and the parties appear to agree that it will usually not come to this), then the provision of an E-Tag device should obviously be the driver's responsibility..."

It would always remain open to a taxi owner bailor to make it a condition of the bailment in the first place that the taxi driver bailee engaged provide his own E-Tag device. That is something available to a taxi owner bailor at the time that the bailment commences. But that is as far as I believe the issue should go. In her written submissions Ms Clegg has suggested that taxi owner bailors are not in a strong position to make such a demand, viz:

"...Given the chronic shortage of drivers in the market, it is unlikely that this condition would be imposed by operators in vast numbers across the industry in cases where there was resistance by a driver..."

But that is the choice a taxi owner bailor would still have, in my opinion. It is his taxi cab that is being used, after all.

20 But where there is already an existing bailment relationship between a taxi operator and a taxi driver I do not believe that that relationship should be ended at the option of the operator simply because the driver refuses to provide his own E-Tag. I share with Mr Hatcher the view he expressed in his written submissions that:

"...there is no call for a provision which would allow operators to dismiss bailees simply because they do not have an E-Tag: there might be any number of legitimate reasons why a bailee has been unable to obtain one, or does not want to. This is an invitation for a rash of unfair dismissal cases brought under S.314 in which the Commission would not be bound by the provision sought by the Association in any event..."

Each case should be considered in the light of its own particular circumstances and it would not be appropriate to take a blanket approach to this particular issue. That is the standard approach of the Commission to this type of issue.

21 Concerns expressed by Ms Clegg in her written submissions that taxi driver bailees may dishonestly retain tolls recorded on a taxi owner bailor's E-Tag do not, in my opinion, justify a bond across the whole taxi industry. If a taxi driver bailee does act dishonestly, retaining such a toll, or part of it, and not recording it accurately in the statement he would be required to complete for the taxi owner bailor at the completion of his shift, it would ultimately be discovered by the taxi owner bailor when he reconciles the statements he receives from the taxi driver bailees at the completion of each shift with his E-Tag account which he subsequently receives. Dishonesty of that nature would ordinarily be misconduct and grounds for terminating the bailment.

22 As far as the bond proposed by the TIA is concerned, Mr Hatcher has indicated in his written submissions that:

"...it would be an extremely unfair imposition on a group of low-paid workers to force them to advance $200.00 in cash every time a taxi is taken out on a shift..."

I share Mr Hatcher's assessment of the situation in that respect. I do not support the concept of a bond on this occasion.

23 Nor do I believe that it is appropriate to contemplate any set off of E-Tag funds against entitlements of the taxi driver bailee. Set offs of that nature are usually restricted to those matters which are referable, expressly or by implication, to similar matters [Ray v. Radano (1967) AR 471 at p.479]. They are ordinarily not available against unrelated entitlements. For instance, the Full Bench of the former State Industrial Commission (Fisher J - President, Cahill and Watson JJ) in Pacific Publications Pty Limited v. Cantlon (1983) 4 IR 415 considered the proposed set off of a sum of money granted as a special gratuity on the retrenchment of an employee as against an amount to which that employee was also entitled. The Full Bench commented as follows (at p.421):

"...We do not think the payment designated a 'special gratuity' was intended to be a payment in lieu of award notice on termination. The company clearly appropriated the payment, at the time of making it, as a 'special gratuity' in the special circumstances of the retrenchments then occurring and not in payment in respect of any obligation which had arisen or might arise under the award. (For instance) a gratuity labelled as a 'Christmas bonus'...would clearly be incapable of subsequent deduction by the payer as part payment of wages or some other unsatisfied award entitlement. We are satisfied that this payment falls into the same category..."

24 In those circumstances, I believe that that approach advanced by the TWU adequately resolves the issue of E-Tags in this hearing. The contract determination of taxi driver bailees shall be varied in those terms.

Annual Leave

25 Clause 19, Annual Leave, of the contract determination for taxi driver bailees provides annual leave entitlements for permanent drivers. Where the taxi driver bailee has taken taxi cabs on bailment, as a permanent bailee, from the one bailor for a period of twelve months during which time he has driven a minimum of 230 day shifts or 220 night shifts, he is entitled to five weeks' annual leave, exclusive of public holidays occurring during that period. Where the taxi driver bailee has taken taxi cabs on bailment, as a permanent bailee, from one bailor for a period of at least three months but less than twelve months, he is entitled upon termination of his contract of bailment to payment of a proportionate amount for holiday pay. The TIA seeks to limit the amount of unpaid annual leave in excess of two years, viz:

"A bailee shall not be entitled to claim unpaid annual leave pursuant to the determination for a period in excess of two years prior to the date of the claim."

26 I understand the logic behind this claim by the TIA. The purpose of annual leave for any worker is to provide a break in employment. As the Court of Appeal of the State Supreme Court (Samuels, Mahoney and Priestley JJA) indicated in Patmore v. Fletcher's Fotographics Pty Limited (1984) 26 AILR Rep.104, the clear intention of the 1944 Annual Holidays Act is to provide annual entitlements of leave to workers which should not be accumulated. It should not be converted into a financial windfall if the worker choses to not claim annual holidays for six years. That is certainly not its purpose.

27 Ms Clegg recorded in her written submissions:

"...The proposed annual leave cap amendments are not an attempt by the Association to deny drivers their annual leave entitlements. The proposed amendments will provide an incentive to drivers to take regular annual leave and are consistent with the objects of annual leave legislation. The purpose of annual leave legislation is not to provide a payout on the termination of the employment relationship (or in this case a bailment relationship) but to ensure that employees (or bailees) can take regular breaks from their employment. See Patmore v. Fletchers Fotographics Pty Limited and Ss.3(4) and (5) of the Annual Holidays Act, 1944 which provides respectively that annual leave must be taken within six months of accrual and there is no payment in lieu of annual leave..."

S.3(4) of the Annual Holidays Act confirms that position, viz:

"The annual holiday shall be given by the employer and shall be taken by the worker before the expiration of a period of six months after the date upon which the right to such holiday accrues: Provided that the giving and the taking of the whole or any separate period of such annual holiday may, with the consent in writing of the Industrial Registrar or the Deputy Industrial Registrar appointed under the Industrial Relations Act, 1996 be postponed for a period to be specified by such Registrar in any case where he or she is of the opinion that circumstances render such postponement necessary or desirable."

And S.3(5) adds that:

"...payment shall not be made by an employer to a worker in lieu of annual holiday or part thereof to which the worker is entitled under this Act nor shall such payment be accepted by the worker..."

Ss.3(4) and (5) suggests that annual holiday entitlements should not be commuted to remuneration. But, of course, that does not mean that any worker who at the termination of his services has not received any of his annual leave entitlements loses them [Ss. 4, 4A and 4B]. And the failure of a taxi owner bailor to provide annual leave entitlements to his taxi driver bailee contrary to his obligation under Clause 19, would be a clear breach of the contract determination for the taxi industry.

28 Ms Clegg has indicated in her written submissions that the TIA does not approve of its members entering into arrangements which depart from the entitlements that are contained in the contract determination for the taxi industry:

"...and frequently provides advice to its members that they are obliged to provide driver entitlements in accordance with the contract determination regardless of the terms of any arrangement entered into with a driver..."

I would certainly take the view that a taxi owner bailor, like any employer, would be entitled to insist that a taxi driver bailee take a paid break annually and not accumulate annual leave entitlements - certainly for a period of six years. In my opinion, a provision to that effect may appropriately be inserted in Clause 19. But is a claim that limits recovery of untaken annual leave to a period of two years something which I may jurisdictionally entertain? Mr Hatcher does not believe so. Nor do I.

29 At present S.369(3) provides the standard time limit of six years for the recovery of outstanding entitlements, viz:

"An application for an order may only be made if the money became due within the period of six years immediately before the application was made."

S.369(3) applies to contract determinations by virtue of S.343(j). Moreover, since amendment in 1980, notwithstanding the provisions of Ss.3(4) and (5), S.13(1) of the Annual Holidays Act has extended the entitlement to recover payment for untaken annual leave from eighteen months to a six year period. S.13(1) reads as follows:

"Any worker may apply to a local court or the Industrial Relations Commission in Court Session for an order directing the employer to pay to the worker the full amount of remuneration or payment which has become due to the worker under this Act at any time during the period of six years immediately preceding the date of assent of the Annual Holidays (Amendment) Act, 1980."

Therefore, the six year period for the recovery of untaken annual leave for taxi driver bailees is consistent with S.13(1). I do not believe that I may limit in a contract determination for taxi driver bailees an entitlement so clearly enshrined in relevant State legislation. I reject the TIA application in that respect.

The Determination of the Appropriate Level of Income

30 At present the entitlement of taxi driver bailees in the contract determination for annual leave [Clause 19, Annual Leave], sick leave [Clause 20, Sick Leave] and long service leave [Clause 22, Long Service Leave] is paid by reference to fixed amounts which the TIA argue are based on assumptions about the average number of shifts worked and the average amounts earned on each shift by permanent taxi driver bailees. The TIA proposal would mean amendment to the current definition for the bailee's income [Clause 2, Definitions] and Clause 19, Clause 20 and Clause 22.

31 The TIA argues in its written submissions it provided earlier for these proceedings that:

"...it is no longer necessary to make such assumptions. It is also submitted that it is more appropriate, having regard to the nature of driver entitlements, and the underlying rationale or premise upon which they accrue, that the amounts paid to drivers when they take annual leave, sick leave or long service leave, reflect the amounts actually earned by the drivers...."

The TIA also pointed out in those earlier written submissions that:

"...as a result of the GST legislation, it is now necessary for every taxi driver to submit to the Australian Taxation Office a Business Activity Statement for each quarter. The BAS, amongst other things sets out the amounts earned by the driver. The fact that this is required by law to be done means that there is now regular and timely reporting by every driver as to the income earned by him. The TIA acknowledges that in some cases a BAS may record income which is derived from a source other than the relevant operator (ie from driving a taxi for another operator or income derived from other sources). That is why the variation proposed by the TIA provides for a taxi driver to make a declaration as to the amount of income on the BAS which is referable to the income earned from any given operator. However, it is noted that only permanent bailees are entitled to receive the benefits - so as a practical matter, it is unlikely that a great number of permanent drivers would be earning income from alternative sources.

Such an approach would ensure that taxi drivers are paid their entitlements by reference to the amounts they actually earn - as is the case with all employees in Australia. It is submitted that, as a matter of public policy, it is appropriate and proper that entitlements be paid on amounts actually earned in circumstances where it is now very easy for drivers to report to an operator the exact amount of income the driver has derived from the operator in any given quarter..."

32 Ms Clegg has confirmed the TIA claim in her subsequent written submissions. She has indicated that:

"...as a matter of public policy, it is appropriate and desirable that entitlements be paid on amounts actually earned in circumstances where it is now very easy for a driver to report to an operator the exact amount of income the driver has derived from the operator in any given quarter. All the TWU's driver witnesses confirmed they completed their BAS's and report their earnings to the ATO on a systematic and regular basis. Many of the witnesses admitted it would be easy to report/declare their earnings to their operators on a quarterly basis..."

Ms Clegg has rejected that the existing methodology be retained simply because it has been the method used in the past - "...if it ain't broke, don't fix it..." - when there is now a better and more accurate method available through the BAS. In her written submission in reply Ms Clegg added:

"...The proposition is simple. Entitlements should be paid on declared earnings. If a driver is worse off because of the proposal, there can be no legitimate complaint because it simply means that his or her declared earnings are less than the amount currently assumed for the purposes of entitlements as payment under the determination. Surely the TWU does not suggest that drivers should be entitled to better or more advantageous entitlements than their employed comrades in the wider community?..."

I believe that in this area an improvement to the existing contract determination for the taxi industry can be achieved.

33 There is, of course, an obligation imposed on taxi driver bailees to report their income truthfully in their regular BAS's and it seems to me that it would now form a more accurate basis for their annual leave, sick leave and long service leave entitlements which was not available to the parties when the contract determination came into existence over 20 years ago. Something better has now emerged through the new taxation regime and the obligation on the taxi driver bailees to provide a BAS. If any taxi driver bailee has been less than honest in completing his BAS, he should not receive the benefit of annual leave, sick leave or long service leave on a higher remuneration which he is not prepared to declare for taxation purposes.

34 Mr Hatcher has rejected the TIA approach to this issue, describing it as "...simply wrong..." in his written submissions and also describing it as a "...leap in the dark...", viz:

"....The Commission has never treated the amounts fixed for entitlements for Method II drivers as being an approximation of actual earnings. It has never been called on to consider that question at all. These amounts have been fixed by the Commission on the basis of an agreed approach by the parties. From 1984 to 2002 that agreed approach was that entitlement amounts simply arose in line with any adjustment to pay-ins. From 2003...the entitlements have been adjusted in line with the rise in the driver cost component of the IPART cost formula. Therefore the Commission ought not proceed on the basis, as it is effectively invited by the Association, that it is axiomatic that the amounts fixed for entitlements ought in some way precisely reflect the amounts actually earned..."

Mr Hatcher indicated in his written submissions that he did not know whether the effect of the TIA proposal would reduce the remuneration paid to taxi driver bailees on annual leave or create an additional cost impost for the operators. But he expressed the view that the TIA proposal in that respect replaced the existing system with an "...intrusive and onerous regime..." and, on the evidence before me in the hearing, there was no real justification for it.

35 The TWU criticism of the TIA proposal in this hearing is therefore based in part on its claim that the TIA has brought no real evidence to support this proposal to change the method of calculating remuneration for taxi driver bailees for annual leave, sick leave and long service leave. Ms Clegg has argued in her written submissions in reply that there was no need to bring such evidence forward as the TIA proposal is "...based entirely upon principle...". In any event, in her written submissions Ms Clegg has referred in particular to the evidence of Mr Michael Jools, a bailee taxi driver whom Mr Hatcher called to give evidence in the hearing, asserting that the TWU's own evidence supports the proposition advanced by the TIA, viz:

"...Mr Jools was just one of the drivers who conceded it would be '...a fairly simple process (to) determine the amount of money (he) earned from taxi driving in a particular quarter as to the amount...earned from other sources...'. This dispenses with the TWU's objection...in its submissions..."

36 In her written submissions Ms Clegg had also anticipated the TWU's argument over the intrusive nature of the TIA claim, ie privacy concerns for the taxi driver bailees in providing information from their BAS's to the taxi owner bailors and countered it, commenting that:

"...it is a nonsense and disingenuous to resist the application on that basis. All employers in Australia are aware of the amounts earned by each of their employees and their entitlements are paid on that basis. There is no sound reason why there should be an exception for taxi drivers..."

The TWU is seeking with its claim for occupational superannuation for taxi driver bailees to equate them with employees. In my view it must expect that the level of confidentiality and privacy on the income records of taxi drivers would be lost in a closer relationship with taxi owners akin to employment.

37 And Ms Clegg further commented in her written submissions in response to those of Mr Hatcher:

"...The TWU's concern with the administrative burden imposed upon the operator because of the proposal is somewhat out of character. It is for the Association to make out its members' case. In any event, there is no substantial additional administrative burden other than keeping on file copies of the BAS statements/declarations and calculating the amount by reference to those documents. Such a burden pales beside the burden in relation to E-Tags - which is both a significant administrative burden and a further burden associated with risk... There is no absurdity whatsoever in the Association's position..."

38 In the circumstances, I propose that the relevant clauses in the contract determination for taxi driver bailees be varied to reflect the TIA proposal. That variation shall take effect on and from the same date as the TWU application for occupational superannuation is implemented following my separate decision on that matter (and, since the proposed formula for the calculation of occupational superannuation entitlements relies upon the remuneration calculated as the annual leave entitlements, it should also be altered to reflect the changed methodology sought by the TIA with its application).

Conclusion

39 The contract determination shall be varied in accordance with this decision effective on and from Tuesday, 31 May, 2005. I direct the parties into discussions to prepare the necessary documentation to give effect to this decision.

P J CONNOR

Commissioner

LIST OF WITNESSES

Bowe, John former TIA executive director

Chaudry, Rajendra TWU organiser

Coates, Geoffrey bailee taxi driver (Method II)

Cole, Graeme* bailee taxi driver (Method II)

Dell, Kieren financial services consultant

Freeman, Mark bailee taxi driver (Method II)

Harrison, Howard chief executive officer of TIA

Hatrick, Michael bailee taxi driver (Method I)

Jools, Michael bailee taxi driver (Method II)

McMillan, William chief executive officer of the

TWU Superannuation Fund

Shaw, Gordon director and taxi owner

(Smugs Pty Limited)

Siegl, Peter bailee taxi driver (Method II)

Wakeford, Roger* bailee taxi driver (Method I)

* Evidence admitted without the need for cross-examination

LAST UPDATED: 04/05/2005