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10 Jan 2006
Appeal Status
Not appealed

Casual relief driver is employee

2006 case note – Authority found that the relief courier driver was a casual employee of the disputant and the disputant was therefore responsible for the PAYE.

TRA 003/05 Decision No 001/2006

Income Tax Act 1994 and the Employment Relations Act 2000.


The TRA found that the relief courier drirver was a casual employee of the disputant. The disputant was therefore responsible for the PAYE.


The disputant, a self-employed courier driver for a courier company, contested his PAYE assessments for the years ended 31 March 1999 to 2002 inclusive, at $259.87, $432.82, $1,465.73 and $940.81 respectively, as employing a relief driver but failing to deduct and pay PAYE to the defendant.

The disputant worked for the courier company pursant to terms of a contract ("the agreement"). The disputant engaged the services of a relief driver to cover any period when he was sick or on holiday. There was no written contract between the disputant and the relief driver and the terms of the agreement and practice between them were:

I). The relief driver:

  1. Would fill in for the disputant by completing his "run" making deliveries and pick-ups, complying with the guidelines and instructions of the courier company.
  2. Was paid a fixed rate of $125 for each day he worked for the disputant irrespective of the number of pick-ups or deliveries made.
  3. Worked the number of hours that were required to complete the deliveries and pick-ups for the day.
  4. Was responsible for finding a replacement driver if he was unavailable. The agreement between the disputant and the courier company provided that if a relief driver fails to carry out his duties, then the courier company may appoint its own relief driver (at the disputant"s cost).
  5. Was able to refuse a request to relief drive.
  6. Used the disputant"s courier vehicle.
  7. Did not supply any invoice for completed work.
  8. Used the disputant"s fuel card for fuel for the disputant"s courier vehicle.
  9. Was not liable for fines in respect of the vehicle, communications equipment or trailer.
  10. Did not incur ordinary business expenses, for example; telephone, electricity, repairs, maintenance and courier tickets.
  11. Only undertook the deliveries and pick-ups for the disputant in the latter"s absence and was not required to undertake further activities and obligations (specified in the agreement between the courier company and the disputant).

II). The relief driver was not required to:

  1. Hold a goods and services licence.
  2. Meet the outgoings in respect of the courier vehicle or provide another courier vehicle approved by the courier company or the disputant if required.
  3. Paint, at the relief driver"s own expense, the courier vehicle with the courier company"s colours and display advertising as may be required by the courier company.
  4. Install and maintain communication, data processing or other equipment at the relief driver"s own expense, if required by the courier company.
  5. Ensure the courier vehicle had a current warrant of fitness and complied with all statutory regulatory requirements.
  6. Take out and maintain insurance cover in respect of the courier activities.

III). Other important facts are:

  1. The disputant"s insurance policy covered the relief driver"s use of the courier vehicle.
  2. If the relief driver had failed to perform his courier duties, the procedure would be that the courier company would query this with the disputant who would then take appropriate action against the relief driver.
  3. The method of calculating remuneration for the disputant and the relief driver was different. The disputant was paid by the courier company for the services rendered in terms of the number of pick-ups and deliveries made; the relief driver was paid a fixed amount of $125 for each day of relief driving regardless of how many pick-ups and deliveries he did.
  4. The agreement between the disputant and the courier company expressly provided that the disputant was an "independent self-employed contractor" to the courier company and was not an employee.


The Authority considered a number of tests which assist the courts in deciding whether a person is engaged as an employee or as an independent contractor. Judge Barber stated that in deciding whether a worker is an employee or an independent contractor a consideration of the relevant facts in "a balancing exercise overall" needs to be considered: Case T13 (1997) 18 NZTC 8,080 at p.8,058.

Historically the "control test" has been applied to determine whether a person is an employee. This has, with other tests, been subsumed by the "fundamental test". For example, in Case U9 (1999) 19 NZTC 9,077, at paragraph 44:

"TNT Worldwide express (NZ) Ltd v Cunningham makes it clear, in terms of the established tests for deciding status, that the ‘fundamental test’ largely subsumes the others, called the control test, the organisation test, the multiple or mixed test, and the label or intention test."

The Privy Council in Lee Ting Sang v Chung Chi-Keung [1990] 2 AC 374 at p.382 quoted with approval Cooke J in Market Investigations Ltd v Minister of Social Security [1969] 2 Q.B 173, 184-185 that:

"the fundamental test ‘Is the person who has engaged himself to perform these services performing them as a person in business on his own account?’... although it can no longer be regarded as the sole determining factor...".

The Authority considered how the disputant paid the relief driver for work performed. Method of payment is a factor that has been taken into account by the courts to determine employment status. Fixed payments, irrespective of the actual work done or revenue created, are usually an indication of an employment contract. In James Bryson v Three Foot Six Ltd [2005] NZSC 34 the Supreme Court reinstated a decision of the Employment Court which found that Mr Bryson was an employee in part because "his income was not linked in any way to the profits or losses of Three Foot Six".

In this instance, unlike the taxi drivers in Case U9 (1999) 19 NZTC 9,077 the relief driver was unable to make a profit from the sound management of his relief driving. If he drove more efficiently he would still be paid $125. In Case U9 relief drivers for taxis were held to be independent contractors. Barber DJ stated, at p 9,084: "The arrangement whereby a percentage of gross takings is paid to the objector, indicates to me an independent contractor set-up or structure". And; "I conclude that the reality of this situation is that each driver has the opportunity to profit from sound management of a taxi operating activity and from his or her own efforts". The relief driver also took no business risk.

The Authority considered the fact that the disputant provided all equipment used by the relief driver and the disputant paid all: maintenance and other expenses incurred in respect of the vehicle; the vehicles insurance; all fuel costs; including all other business expenses. That the disputant paid those expenses supports the proposition that the disputant was an independent contractor who employed the relief driver to relieve him.

The Authority looked at the fact the relief driver did not provide the disputant with an invoice for the work completed. Judge Barber said this indicated the relief driver did not see himself functioning in a capacity separate from the business of the disputant. In Enterprise Cars Ltd v The Commissioner of Inland Revenue (1998) 10 NZTC 5;126 (HC), Sinclair J noted that, in support of the mechanics being independent contractors, they submitted accounts for the work they performed.

Judge Barber stated that the disputant had "substantial control" over the relief driver. Such control included: the relief driver having to comply with all the guidelines and instructions of the courier company, for example diligence and care with which the service is provided, dress code; the depot instructed at which address pick-ups and deliveries were to be made, and the disputant controlled the appearance of the vehicles in that the disputant provided the vehicle to the relief driver.

The Authority considered whether the relief driver was a casual employee. Casual employees do not work fixed hours of work but work only when required. As noted by the Court of Appeal in Drake Personnel (New Zealand) Ltd v Taylor [1996] 1 ERNZ 324 at p.325 to 326, casual employees:

"...have no guarantee of continuous work, or indeed any work. They only have the opportunity of casual assignments. When one assignment ends, there is no certainty another will follow. No wages are paid for the period between assignments…each assignment is a separate engagement..."

It is not inconsistent with being a casual employee that the relief driver drove for other courier firms. In Drake personnel (New Zealand) Ltd v Taylor, McKay J delivering the judgment of the Court, noted at p.326 that Drake "accepts that they (the casual employees) may also be enrolled with other agencies and work for those agencies' clients".

An indicator of the status of a work relationship is the intention of the parties. The authority found that in the present case neither party gave any real consideration to the nature of their relationship nor did they evidence their intention in writing in anyway. Therefore the intentions of the disputant and the relief driver are not clear. Unlike in Case U9 the intention of the parties was to create the status of independent contractors for the relief drivers. Intention was evidenced by the wording of the contracts between the relief taxi driver and the taxpayer (owner of the taxi).

In view of the relevant tests, case law and consideration of the facts, Judge Barber concluded that the relief driver was not carrying on business for his own account but, simply, earning daily pay as a casual employee of the disputant. The relief driver was a casual employee of the disputant at all material times.