Tax & Accounting Blog

Fishing crew members not employees; as engaged in joint venture

Superannuation April 11, 2014

The Administrative Appeals Tribunal has held that fishing crew members on a commercial fishing vessel were not “employees” at common law or under the extended meaning of that term in s 12(3) of the Superannuation Guarantee (Administration) Act 1992 (SGAA). As such, the taxpayer company was not required to make superannuation contributions in respect of the crew members who were found to be independent contractors operating under a joint venture agreement.

The fishing vessel was captained by the director of the taxpayer and out to sea for 10 days at a time. For each voyage, the taxpayer would engage up to 4 fishermen as crew members under “Joint Fishing Adventure” agreements. While it was at sea, the vessel would anchor at a central spot and each fisherman would use a small motorised boat (called a “dory”) to fish in remote locations. Each crew member operated independently and did not take instructions from the skipper.

The AAT ruled that the crew members were not “employees” at common law or under s 12(3) of the SGAA as the contract was not “wholly or principally for the labour” of the crew members. While the joint venture agreement contemplated that the crew members would contribute labour, the AAT noted that they were remunerated on the basis of an outcome (ie the number of fish caught).

However, the AAT was quick to point out that this decision turned on its own peculiar facts and subtle differences between cases might compel different outcomes, the AAT said.  Indeed, a differently constituted AAT has previously held that certain other crew members on commercial fishing vessels were employees in other specific circumstances.

As noted in Thomson Reuters Australian Superannuation Handbook 2013-14, the modern approach to determining whether an employment relationship exists is multi-factorial and considers the “totality of the relationship” referred to by the High Court in Hollis v Vabu Pty Ltd (2001) 207 CLR 21.