Amalgamated Pest Control Pty Ltd v Chaaya - [2015] NSWWCCPD 53

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:	Amalgamated Pest Control Pty Ltd v Chaaya [2015] NSWWCCPD 53
APPELLANT:	Amalgamated Pest Control Pty Ltd
RESPONDENT:	Nadim Chaaya
INSURER:	Allianz Australia Workers Compensation (NSW) Ltd
FILE NUMBER:	A1-6183/14
ARBITRATOR:	Mr J Wynyard
DATE OF ARBITRATOR’S DECISION:	24 April 2015
DATE OF APPEAL HEARING:	26 August 2015
DATE OF APPEAL DECISION:	3 September 2015
SUBJECT MATTER OF DECISION:	Whether claimant a worker or, in the alternative, a deemed worker under the Workplace Injury Management and Workers Compensation Act 1998; consideration of the relevant indicia; consideration of the “ultimate question”, namely, whether the claimant worked in and for his own business or in the business of another; application of principles in Hollis v Vabu Pty Ltd [2001] HCA 44; 207 CLR 21 and On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366; 279 ALR 341; whether claimant carried on a trade or business; application of principles in Humberstone v Northern Timber Mills [1949] HCA 49; 79 CLR 389
PRESIDENTIAL MEMBER:	Deputy President Bill Roche
HEARING:	Oral
REPRESENTATION:	Appellant:	Mr J Jobson, instructed by Stiles Lawyers
Respondent:	Mr W Nicholson, instructed by Brydens Compensation Lawyers
ORDERS MADE ON APPEAL:	1. For the reasons given by the Arbitrator, and the additional reasons in this decision, the Arbitrator’s determination of 20 April 2015 is confirmed. 2. The matter is remitted to the Registrar for the making of such further orders as are necessary to give effect to the Arbitrator’s determination.

INTRODUCTION

This is an appeal against an Arbitrator’s finding that the claimant was a worker within the meaning of that term in s 4 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act). For the reasons given by the Arbitrator, and the additional reasons in this decision, the Arbitrator’s determination is confirmed. In the alternative, if the claimant was not a worker, he was a deemed worker under cl 2(1) of Sch 1 to the 1998 Act.

BACKGROUND

The appellant, Amalgamated Pest Control Pty Ltd, is in the pest control business. It asserts that it has developed certain business procedures and systems, together with a distinctive and valuable name, image and reputation associated with pest control. It conducts its business by issuing licences to licensees wishing to carry on a pest control business in accordance with what it describes as “the System and the Image”.
The respondent claimant, Nadim Chaaya, entered a “Technician Licence Agreement” (the Agreement) with the appellant on or about 19 April 2010. The Agreement described Mr Chaaya as the “Licensee” and the appellant as the “Licensor”. The Agreement required Mr Chaaya to pay to the appellant a $1,000 establishment fee and $5,000 for the cost of training. He commenced work as an “Amalgamated Pest Control Technician”, under the terms of the Agreement, at about the same time as he signed it. While performing work as a pest controller under the Agreement, Mr Chaaya injured his back.
Mr Chaaya has claimed compensation from the appellant on the ground that he was either a “worker” employed by the appellant under a contract of service under s 4 of the 1998 Act or, if he was not a worker, that he was a deemed worker under cl 2(1) of Sch 1 to the 1998 Act. The appellant disputed that Mr Chaaya was a worker or a deemed worker and argued that he was an independent contractor with his own business, which he operated under the Agreement with the appellant.
Mr Chaaya had worked in his father’s pest control business from the time he left school, aged 18, until he started work for the appellant aged 22. His evidence was that he called the appellant in 2010. Mark Bourke, a man identified by Mr Chaaya as his supervisor, interviewed him. It was agreed that Mr Chaaya would provide his own utility vehicle and that he would wear a uniform with Amalgamated Pest Control written on it. The appellant put stickers and signage on Mr Chaaya’s vehicle, which had Amalgamated Pest Control on them.
Mr Chaaya said that he provided chemicals used and the appellant supplied the pump, hoses and reel, toolboxes, nozzle pieces, hand sprayer, compressor and other basic tools. The equipment had the appellant’s logo on it. The appellant’s general manager, Mr Michael Farr, said that the appellant leased equipment to Mr Chaaya for one per cent of turnover, but did not identify the equipment.
Mr Chaaya said that when he started working for the appellant, the appellant’s managers trained him and told him what to do and how to do it “in terms of the pest control”. He went out on jobs with other technicians (engaged by the appellant) for a couple of weeks when he first started.
Mr Chaaya said that he worked (for the appellant) five days per week. In summer, when there was more work available, his typical hours were from about 6 am or 7 am until 5 pm or 6 pm. In winter, his typical hours were from about 7 am to 4 pm. He worked exclusively for the appellant, noting that the appellant’s management had told him that he was not permitted to “do private work”. It is agreed that he did not employ any worker or workers to assist him.
It is also agreed that the appellant allocated the work to Mr Chaaya (and other technicians). In Mr Chaaya’s case, the appellant would send him emails (after hours) with the next day’s jobs. The emails would have the time of the appointment, a statement of what the job was and how much time Mr Chaaya should spend at that job. He was told that he had to be at a specific address at a specific time.
If it was a commercial job, there would be a brief description about what pest control was required. If it was a domestic job and something out of the ordinary was required, that would be in the email. Mr Farr said that a timeframe was allocated to each job, but the technician could vary those times based on the nature of the job and any site complexities. He said that the technician determined when the job was done, what was required to do the job, and how much it might cost. He did not say how the cost was determined.
Mr Chaaya would do the job and send details to the appellant’s office at the end of the day using a “PDA”, a handheld electronic device provided by the appellant, on which Mr Chaaya would fill in the chemicals used, where the jobs were done, where the chemicals were used and recommendations for further pest treatments.
With a commercial customer, the appellant would invoice the customer directly. With a domestic customer, Mr Chaaya would take the payment and issue a receipt in the appellant’s name. He would then pass on the full amount to the appellant. It is agreed that all invoices, whether for domestic or commercial work, were on the appellant’s letterhead, which included Mr Chaaya’s name as Licensee. It also included his ABN, which the appellant had required him to obtain. All contact details on the invoices, such as phone numbers and email addresses, were the appellant’s.
Mr Chaaya was initially paid on the basis of the amount of work he did. He said he “was getting paid [weekly] about 48% of the total payment for the job”. After about a year, the method changed. Though the exact nature of the change was not properly explained in the evidence, Mr Chaaya said that the customer paid the appellant and then the appellant paid Mr Chaaya. If the customer did not pay, the appellant would pursue recovery, not Mr Chaaya. If a domestic customer made a payment to Mr Chaaya, he would pass that payment to the appellant (without deductions) and then receive (after deductions) a payment from the appellant of about 48 per cent of the total paid by the customer. Commercial customers paid the appellant directly.
Mr Chaaya said that he had to work each day and could not refuse any jobs. He could only take time off if he was sick, or if he gave the appellant a few weeks prior notice that he needed time off for a personal matter. In contrast, Mr Farr said that Mr Chaaya had the right to decline work and was not obliged to take any allocated jobs.
Mr Chaaya said that he had to do the work himself and that management told him he could not delegate it to a friend or colleague. The only exception was if it was a very big job. In that situation, the appellant would put two of its technicians on the job. Though he never asked for more work, because his days were “pretty full”, if he wanted to make more money, Mr Chaaya could ask the appellant for more work or for some Saturday overtime. He said that he did not have a restricted area within which he worked, but he worked all over the Sydney metropolitan area and to the Blue Mountains and Wollongong. Mr Farr said that the Agreement gave Mr Chaaya the right to service customers in a defined area (identified in annexure “A” to the Agreement).
Though the Agreement provided for the payment of a $1,000 fee to become a licensee, Mr Chaaya said that he paid no money when he started work for the appellant. However, the appellant deducted a licence fee from his weekly takings before it remitted the balance to him. He had no input into advertising, which was left to the appellant’s management.
Mr Chaaya and other technicians attended monthly meetings at the appellant’s headquarters at Wetherill Park, at which safety issues, paperwork issues and other general issues related to work were discussed.
Mr Chaaya asserted that he was a worker or deemed worker and Mr Farr asserted that, as per the Agreement, Mr Chaaya was an independent contractor running his own business.
In a written decision delivered on 20 April 2015, the Arbitrator determined that Mr Chaaya was a worker employed by the appellant and therefore entitled to benefits under the legislation. Essentially, the Arbitrator determined that, looking at the control exercised by the appellant, “with an eye to the entrepreneur test” ([104]), it did not seem to him that any element in the indicia (identified in the authorities) established that Mr Chaaya was an entrepreneur running his own business. Even if he were, the Arbitrator was not satisfied that the performance of the work (by Mr Chaaya) was “in his own business rather than the [appellant’s] business that was receiving the benefit of his work” ([104]).
Consistent with the Arbitrator’s determination, the Commission issued a Certificate of Determination directing the parties to file an agreed schedule of the appropriate compensation payable and remitted the claim for lump sum compensation to the Registrar for referral to an Approved Medical Specialist (AMS). The Arbitrator did not determine whether, if he was wrong on the worker issue, Mr Chaaya was a deemed worker.
The appellant has appealed the Arbitrator’s finding that Mr Chaaya was a worker.

ISSUES IN DISPUTE

The appellant has alleged that the Arbitrator failed to “properly consider” the evidence relating to:
(a)     control;
(b)     hours of work;
(c)     income tax and other taxation arrangements;
(d)     the delegation of work;
(e)     the right to dismiss;
(f)      the mode of remuneration;
and that he failed to give “any consideration” to evidence relating to the:
(g)     maintenance of equipment;
(h)     obligation to work;
(i)      provision of holidays;
(j)      obligation to secure insurance;
(k)     creation of a saleable asset;
(l)      control Mr Chaaya had over how the work was to be done and the pricing of particular jobs;
(m)   fact that there was no payment of superannuation entitlements made on behalf of Mr Chaaya, and
(n)     fact that there was no industrial award covering Mr Chaaya.
In addition to the above matters, buried in the appellant’s submissions in support, prepared by Mr Jobson of counsel, are numerous additional alleged errors. Those allegations should properly have been identified in the grounds of appeal, as required by Practice Direction No 6. Presenting the appeal in this way has resulted in Mr Chaaya’s counsel, Mr Nicholson, addressing only the alleged “grounds” of appeal and not the additional matters identified in the submissions.
To address that problem, the Commission issued a direction on 3 July 2015 requiring further submissions from Mr Nicholson. That should not have been necessary. The profession is reminded, yet again, that appeals must properly comply with Practice Direction No 6 and must clearly and concisely identify the respects in which the Arbitrator has allegedly erred.

APPLICABLE LAW

After referring to various authorities, the Arbitrator said that it was necessary to have regard to not only the indicia “but to the totality of the relationship, looking beyond and beneath the documents” ([30]). The Arbitrator quoted (at [28]) the following passages from Bromberg J in On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366; 279 ALR 341 (On Call Interpreters):
“204.Despite the earlier preoccupation of the law with the degree of control exercised by the putative employer as defining an employment relationship, the modern approach is multi-factorial. As the majority said in Hollis at [24] it is ‘the totality of the relationship’ which is to be considered. A range of indicia may be examined. Some will be more useful than others in some work arrangements but less useful in other work arrangements. Because of the multiplicity and diversity of work arrangements and the ingenuity of those fostering disguised relationships, there is value in a multi-factorial test which recognises that one spotlight will not necessarily adequately illuminate the totality of the relationship. Such an approach also involves what may be described as a ‘smell test’, or a level of intuition. The majority in Hollis (at [48]) described the notion that bicycle couriers were each running their own business as ‘intuitively unsound’.” (The reference to Hollis was a reference to Hollis v Vabu Pty Ltd [2001] HCA 44; 207 CLR 21 (Hollis))
As the Arbitrator noted (at [99]), Bromberg J explained that while Hollis applied a multi-factorial approach, that case provided a “focal point around which relevant indicia can be examined”. The Arbitrator then quoted the following passages from On Call Interpreters:
“207. … That focal point has been elsewhere expressed as the ‘ultimate question’ posed by the totality approach: Abdalla v Viewdaze Pty Ltd (2003) 122 IR 215 at [34] (referred to with approval by Crispin P and Gray J in Yaraka Holdings Pty Ltd v Gilgevic (2006) 149 IR 339 at [303]); and see Sappideen C, O’Grady P and Warburton G, Macken’s Law of Employment, (6th ed, Lawbook Co., 2009), at [2.80]. As Wilson and Dawson [JJ] in Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; (1986) 160 CLR 16 observed at 35 ‘the ultimate question’ was posed by Windeyer J in Marshall v Whittaker’s Building Supply Co Ltd [1963] HCA 26; (1963) 109 CLR 210 at 217, in a passage which the majority in Hollis strongly endorsed at [40]. The majority in Hollis (citing Windeyer J) said, the distinction between an employee and an independent contractor is ‘rooted fundamentally’ in the fact that when personal services are provided to another business, an independent contractor provides those services whilst working in and for his or her own business, whereas an employee provides personal services whilst working in the employer’s business: at [40]. Unless the work is being provided by an independent contractor as a representative of that entrepreneur’s own business and not as a manifestation of the business receiving the work, the person providing the work is an employee: Hollis [39], [40], [47], and [57] and see Sweeney v Boylan Nominees Pty Ltd [2006] HCA 19; (2006) 226 CLR 161 at [30]–[32]. The English courts have taken a similar approach. There the ‘entrepreneur test’ seems to be the dominating feature: Selwyn NM, Laws of Employment (2006) Oxford University Press at [2.34].
208.Simply expressed, the question of whether a person is an independent contractor in relation to the performance of particular work, may be posed and answered as follows:
Viewed as a ‘practical matter’:
(i) is the person performing the work an entrepreneur who owns and operates a business; and,
(ii) in performing the work, is that person working in and for that person’s business as a representative of that business and not of the business receiving the work?
If the answer to that question is yes, in the performance of that particular work, the person is likely to be an independent contractor. If no, then the person is likely to be an employee.”
The Arbitrator concluded, at [100]:
“Adopting the dicta from Bromberg J in On Call Interpreters, the authorities now provide that the ultimate question, or the focal point, is rooted fundamentally in the question as to whether a person is providing services to another business as part of his own business or whether he was working in that other business. It is the ‘entrepreneur test’ as Bromberg [J] said that poses and answers the question whether a person is an employee or an independent contractor.”
With that “test” in mind, the Arbitrator then considered the various indicia and concluded that Mr Chaaya was a worker employed by the appellant.
Mr Jobson relied, in particular, on Vabu Pty Ltd v Commissioner of Taxation (1996) 33 ATR 537, where a finding of independent contractor was made despite evidence of control exercised over the contractors, including requirements to wear a particular uniform, start work at a particular time, work for a certain number of hours, and undertake their duties in accordance with various directions.
He also quoted the following statement by McColl JA (Ipp and Tobias JJA agreeing) in Australian Air Express Pty Ltd v Langford [2005] NSWCA 96 (Langford), at [16]:
“The second observation concerns the distinction between an employee and independent contractor. That distinction has been said to be ‘rooted fundamentally in the difference between a person who serves his employer in his, the employer’s business, and a person who carries on a trade or business of his own’.”
It will be seen that the test stated in On Call Interpreters, which the Arbitrator applied, is substantially the same as that stated by McColl JA in Langford, relied on by Mr Jobson. Mr Jobson did not submit that the Arbitrator applied the wrong test or that the statements by Bromberg J in On Call Interpreters were not a correct statement of the principles to be applied.
Mr Jobson contended that the question of “control” is an important factor in determining whether there is a relationship of employment, but that “control” is now only one of a variety of indicia to be considered. He argued that the Arbitrator erred in his application of the test in the circumstances of this case, and erred in his “analysis of the evidence” and the “indicia”. He contended that the Arbitrator “cherry-picked” certain indicia and failed to consider the totality of the Agreement (which involves applying the “smell test”) and the intention evidenced by the Agreement, which was a commercial arrangement, not an employment arrangement.
It is convenient to deal with Mr Jobson’s submissions under the headings set out below, which essentially follow the headings in his written submissions. Before doing so, it is appropriate to note the definition of “worker” in s 4 of the 1998 Act:
“‘worker’ means a person who has entered into or works under a contract of service or a training contract with an employer (whether by way of manual labour, clerical work or otherwise, and whether the contract is expressed or implied, and whether the contract is oral or in writing). However, it does not include:
(a) …”

CONTROL

The Arbitrator’s reasons

The Arbitrator dealt with this issue at [102]–[104]. He said:
“102. [Mr Chaaya] was clearly under a great deal of control within the Agreement. He was not permitted to work for customers who were not obtained by the respondent. [Mr Chaaya] was not permitted to use his vehicle other than in performance of his duties for the respondent. To that end he was obliged to display the respondent’s logo. At Clause 18 he was to provide at his own cost all the tools and equipment necessary to carry on the business, to maintain a supply of chemicals and other preparations similarly necessary, to comply with the image branding requirements, to sell the approved products, not to prejudice the goodwill of the [appellant’s] business, to co-operate with other members of the network, to keep a list of customers and to only use stationery of a style approved by the respondent – to name but a few of the requirements.
103.The [appellant] had power to terminate the relationship which was analogous to that of an employer (Clauses 3.4, 3.5). [Mr Chaaya] was required to take out an ABN and to be responsible for his own taxation affairs and other business requirements. The [appellant] had the right to vary the terms of the engagement unilaterally and [Mr Chaaya] was compelled to approve new contracts obtained by the [appellant].
104.As Mr Jobson submitted, an effective franchise business requires a great deal of control over the franchisees, so it cannot be said that of itself this indicia is determinative either way. I agree, but when looking at the control exercised by the [appellant] with an eye to the entrepreneur test, it does not seem to me that any element within those indicia establishes that [Mr Chaaya] is an entrepreneur running his own business, nor that even if he were, the performance of the work was in his own business rather than the [appellant’s] business that was receiving the benefit of his work.”

It is appropriate to break the issue of control into the following sub issues: customers, vehicle, tools and equipment/maintenance of equipment, power to terminate/right to dismiss, ABN and tax arrangements, and conclusion on control.

Customers

Mr Jobson submitted that the Arbitrator erred in saying that Mr Chaaya was not permitted to work for customers who were not obtained by the appellant. He contended that Mr Chaaya was permitted to work for customers “so long as he performed that work in accordance with the Agreement” and that cl 18.2(24) of the Agreement encouraged Mr Chaaya to “actively solicit new business”.
Mr Nicholson submitted that Mr Jobson’s submissions missed the Arbitrator’s finding on this matter. He said that the Arbitrator’s reasoning was that notwithstanding any clause in the Agreement that might otherwise suggest freedom to work for other clients, the facts of the relationship, as they played out in practice, operated to militate against any ability Mr Chaaya may otherwise have had to work for anyone other than the appellant.
The Arbitrator’s statement that Mr Chaaya was “not permitted to work for customers who were not obtained by the [appellant]” (emphasis added) ([102]) was not strictly accurate. Clause 21 of the Agreement states:
“The Parties acknowledge and agree that [Mr Chaaya] may not, during the Term, perform any work or services for persons who are not Customers unless otherwise approved by the [appellant].” (emphasis added)
However, “Customer” is defined to mean “any customer of the [appellant] serviced by [Mr Chaaya] under the terms of this Agreement” (emphasis added) (cl 1.1(11)). Further, the appellant decided which customers “who require the Approved Products or the Service are referred to [Mr Chaaya]” (cl 13.2).
Clause 18.2(24) provides that Mr Chaaya had to, at his cost:
“actively solicit new business for the Network within the Territory and maximise the revenue potential and customer service and operational efficiencies of the Licensed Business in the Territory.” (emphasis added)
“Territory” was defined to mean “the territory in the Schedule, or any other territory as is agreed between the [appellant] and [Mr Chaaya] in writing”. Mr Chaaya’s “Territory” covered several named suburbs of Sydney listed in annexure A to the Agreement, though Mr Chaaya’s evidence was that he was not restricted to any one area. (The annexure lists 52 suburbs alphabetically, starting with Abbotsbury and ending with Beaumont Hills. Thus, his territory was not restricted to a specific geographical area.) “The Network” was defined to mean “the [appellant], [Mr Chaaya] and all other persons involved from time to time in the provision of pest control services using the System and the Image whether as Licensees, employees, sub-contractors or otherwise”.
Given the definition of “Customer” in the Agreement, and given that Mr Chaaya was not to perform any work or services for persons who were not customers (as defined), unless otherwise approved by the appellant (cl 21), and given that the appellant decided which customers were referred to Mr Chaaya, Mr Chaaya was clearly not free to work for anyone he chose, as an independent contractor or entrepreneur could do. In other words, unlike an independent contractor, he had no customers of his own.
While Mr Chaaya was permitted to “solicit new business”, the new customers he secured would, under the Agreement, become customers of the appellant, not customers of Mr Chaaya. Moreover, he was not permitted to sell any “Approved Products” or perform any of the “Services” outside the “Territory”, nor solicit new business outside the “Territory”, except with the appellant’s prior written approval, which could be granted or withheld at its sole discretion (cl 7.3).
The Arbitrator did not overlook cl 21, or the definition of “customer”, but expressly referred to both at [52]–[54]. It would have been more accurate to say that Mr Chaaya was not permitted to work for persons who were not customers of the appellant without the appellant’s approval. However, the Arbitrator’s challenged statement is consistent with Mr Chaaya’s evidence that management specifically told him he was not permitted to do “private work”.
It follows that, when viewed in its proper context, the Arbitrator’s minor misstatement makes no difference to his statement in the opening sentence of [102] that Mr Chaaya was “clearly under a great deal of control within the Agreement”. In other words, the misstatement makes no difference to the result. The critical point is that all “customers” were the appellant’s customers.

Vehicle

With respect to the use of Mr Chaaya’s vehicle, Mr Jobson submitted that the Arbitrator erred in saying that Mr Chaaya was not permitted to use his vehicle other than in the performance of his duties. That was because, he contended, the Agreement simply required that Mr Chaaya provide and maintain his own vehicle in accordance with the appellant’s operating system, as required by cl 18.2(1).
Mr Nicholson submitted that it did not matter what the Agreement might say, if what occurred made it clear that Mr Chaaya had no opportunity to use his vehicle in the work he performed other than for the appellant’s business. If Mr Chaaya had had the opportunity to use his vehicle other than in the appellant’s business, he would have been doing so with a vehicle displaying the appellant’s name and logo. He would have been promoting the appellant’s business, not his own.
The Arbitrator’s statement that Mr Chaaya was not permitted to use his vehicle, other than in the performance of his duties for the appellant, was inaccurate. The Agreement defines “vehicle” to mean “the vehicles approved by the Licensor and used by the Licensee in the Licensed Business bearing the signwriting approved by the Licensor” (cl 1.1(42)). Where the Licensee owns the vehicle, the Licensee must “ensure that the Vehicle to be used in the Licensed Business is constructed, painted, signed, equipped and outfitted in accordance with the Image and the System” (cl 6.2(4)(b)).
“Image” is defined to mean “the distinctive image, visual appearance, reputation and presentation of the Licensee [sic, Licensor] in the market” (cl 1.1(19)). The appellant’s name, the Trade Marks, and the brand names, logos and slogans associated with the Approved Products, the Services and “the System” are “features of the Image” (cl 1.1(19)).
“The System” is defined in cl 1.1(36) to mean:
“the business procedures and systems including the Amalgamated Operating System develop by the [appellant] for the operation of a pest control business and concerning a consistent high quality approach to customer service, uniform operating techniques, centralised group marketing activities. Coordinated marketing programs, and business management generally.”
While it was correct that there was no express prohibition on Mr Chaaya using his vehicle other than in the performance of his duties for the appellant, given the tight controls on how the vehicle was to be “constructed, painted, signed, equipped and outfitted”, it is difficult to see how, in a practical sense, he could have used his vehicle other than in the performance of the appellant’s business. It follows that the Arbitrator’s misstatement has not affected the outcome.
In any event, the fact that Mr Chaaya provided his own vehicle was not a factor that pointed decisively to him being an independent contractor. Though the interpreters in On Call Interpreters provided their own equipment, albeit that their equipment was modest, that was not determinative.

Tools and equipment/maintenance of equipment

Mr Jobson contended that the Arbitrator’s comment (at [102]), that Mr Chaaya was to provide, at his own cost, all the tools and equipment necessary to carry on the business, was supportive of the appellant’s position that Mr Chaaya had control of what tools, equipment and chemicals he used to carry out his business. He said that Mr Chaaya was free to source his tools and chemicals from anywhere, so long as they met the appellant’s operating requirements. Mr Jobson submitted that this suggested that Mr Chaaya was an independent contractor.
Mr Jobson submitted that the Arbitrator failed to give any consideration to the fact that Mr Chaaya was required to maintain equipment at his own cost. Though the Arbitrator referred to cl 18, it is clear from cl 18.2(2) that Mr Chaaya was responsible for supplying and maintaining all the tools and equipment he required to undertake his duties. Mr Jobson submitted that it is typical of a contract of employment that the employer supplies the materials and equipment used in the performance of the work. As the obligation was on Mr Chaaya to source and obtain his own tools and equipment, and chemicals, this was a further indicium that suggests Mr Chaaya was an independent contractor and the Arbitrator did not give proper consideration or weight to this.
Mr Nicholson observed that the Arbitrator stated that the source of these items was merely one of the indicators of the nature of the relationship. The Arbitrator did not mistake the legal principle involved. Mr Nicholson added that Mr Jobson did not indicate in what way the Arbitrator erred in handling the evidence on this point.
The Arbitrator referred to this issue in several paragraphs, in particular, at [47], [48], [82], [87] and [93]. He said:
“47. One of the terms of Clause 13.1 was that the licensee [sic, licensor] would provide ‘the Equipment’ to [Mr Chaaya]. The definition of ‘equipment’ at Clause 1.1(13) was that it meant the equipment owned by the [appellant] and provided to [Mr Chaaya] to use including but not limited to a handheld unit used to record and invoice jobs done by [Mr Chaaya].
48.Under Clause 23 [Mr Chaaya] was liable to meet the cost of a damaged, lost or misplaced piece of equipment, or to repair it and, amongst other things, advise the [appellant] where the equipment was stored.” (Footnote omitted)
When summarising Mr Nicholson’s submissions, the Arbitrator said:
“82.Mr Nicholson also said that in favour of his interpretation of the contract were the terms as to equipment. A ‘vehicle’ was defined at Clause 1.1(42) as meaning the vehicles approved by the [appellant] and used by [Mr Chaaya] in the licensed business bearing the sign writing approved by the [appellant]. Although [Mr Chaaya] owned his vehicle, Clause 6.2(b) provided that he had to ensure that it was painted, signed, equipped and outfitted in accordance with the ‘Image and System’ and as a matter of practicality could only be used in doing the [appellant’s] work. Clause 23, which related to equipment supplied, required [Mr Chaaya] to use equipment in compliance with the [appellant’s] requirements. The [appellant] had an entry and inspection right pursuant to Clause 24 whereby [Mr Chaaya] was required to permit the [appellant] to enter upon any premises during normal business hours for the purpose of ascertaining whether the equipment was being maintained in accordance with the requirements of the Agreement.
…
87. Further, the fact that that cost of training was to be paid at the termination of the Agreement was also a factor, as I understood Mr Nicholson, that indicated a control that was beyond the range of a normal commercial contract. The requirements set out as the Licensees’ obligations at Clause 18 also Mr Nicholson submitted demonstrated an intention that [Mr Chaaya] was under such an element of control that he could only be regarded as an employee. He was required to provide his vehicle, to provide tools, to provide chemicals, to ensure the status of the tools as acceptable, to purchase and wear uniforms of the style and design set out in the [appellant’s] style to comply with the branding requirements and indeed to comply with the other requirements relating to the OAS.
…
93.Mr Nicholson also referred to [Mr Chaaya’s] explanation as to what he was required to supply in Exhibit D. At [13]–[14] [Mr Chaaya] said:-
‘13. I supplied my utility and the chemicals. I supplied biflex chemical and dust chemical, cockroach gels and other typical best controlled [sic, pest control] chemicals.

14. [The appellant] supplied the equipment. They gave me the pump, the hoses and real [sic, reel], toolboxes, nozzle pieces, handsprayer, compressor and other basic tools.’” (Footnotes omitted)

Dealing with tools, equipment and chemicals, it is correct that, as Mr Jobson submitted, the provision of such things by a claimant points to the claimant conducting his own business rather than being an employee. The Arbitrator recorded (at [102]) that the Agreement required Mr Chaaya to provide, at his own cost, all the tools and equipment necessary to carry on the business. That statement was consistent with cl 18.2(2), which stated that the Licensee must, at its cost, “supply and maintain all the tools and equipment as may be necessary to carry on the Licensed Business in the Territory”.
However, the difficulty is that cl 18.2(2) is inconsistent with cl 13.1(5), which states, as the Arbitrator noted at [47], that the appellant must “provide the Equipment to the Licensee during the Term”. “Equipment” is defined to mean the equipment owned by the appellant and provided by it for use during the term of the Agreement, including, but not limited to, a hand-held unit used to record and invoice jobs done by Mr Chaaya (the PDA). Thus, the Arbitrator’s statement (at [102]) was not an entirely accurate summary of the Agreement.
Mr Chaaya’s evidence was that the appellant provided certain identified equipment: the pump, hoses and reel, toolboxes, nozzle pieces, hand sprayer, compressor, other basic tools and the PDA. At least some of that equipment had the appellant’s logo on it. Mr Farr did not dispute that evidence, but said that the appellant “hires/leases equipment to a licensee under the terms of the Agreement” at a cost of one per cent of turnover. That statement was consistent with cl 1.1(13) of the Agreement, which provides that equipment means “Equipment owned by the Licensor and provided to the Licensee for use during the Term”. It was also consistent with cl 13.1(5).
Thus, while it is correct that cl 18.2(2) required Mr Chaaya to supply and maintain all the tools and equipment necessary to carry on the Licensed Business, in fact the appellant provided (for a fee) most of the equipment Mr Chaaya used, except for his vehicle. Though the Arbitrator noted Mr Chaaya’s evidence (at [93]), as Mr Jobson has complained, he did not say what weight he gave to it.
However, it is clear that, reading the Arbitrator’s decision as a whole, he did not regard the provision of equipment as determinative. That involved no error. Normally, the provision by the claimant of his or her own tools and equipment indicates that the person is an independent contractor (Hollis at [56]). However, that is not always so. In Hollis itself, the fact that the couriers provided their own bicycles did not prevent a finding that they were employees. The same result followed in On Call Interpreters. Moreover, control over the maintenance and use of equipment suggests an employment relationship.
In the present case, apart from the vehicle, which had the appellant’s name and signage on it, and had been “equipped and outfitted in accordance with the Image and the System” (cl 6.2(4)(b)), the appellant provided necessary equipment and charged Mr Chaaya a fee for it. While cl 18.2(2) provided that Mr Chaaya was to maintain the equipment, cl 23.1 provided that Mr Chaaya “must use the Equipment in compliance with the requirements of the [appellant]”. Thus, the equipment was not his to do with as he pleased. In particular, he was clearly not free to use the equipment to do pest control work for persons not approved by the appellant.
Mr Chaaya had to keep the equipment in good repair and condition (cl 23.2). He had to tell the appellant where the equipment was stored (cl 23.3) and had to permit the appellant to enter any premises to ascertain whether the equipment was being maintained “in accordance with the requirements of [the] Agreement” (cl 24.1). The appellant was entitled, by notice in writing, to require Mr Chaaya to carry out repairs necessary to comply with his obligations under the Licence (cl 24.2). If Mr Chaaya failed to make those repairs, the appellant could enter any premises to do so itself (cl 24.3).
It follows that the appellant exercised significant control over the use and maintenance of the equipment. This does not support a conclusion that Mr Chaaya was an independent contractor running his own business. It follows that if the Arbitrator failed to consider maintenance of equipment, it does not matter because this point does not advance the appellant’s position on appeal.

Power to terminate/right to dismiss

The Arbitrator said that the appellant “had power to terminate the relationship which was analogous to that of an employer” ([103]).
At [111], the Arbitrator said:
“111. This indicia I have considered under the control indicia. As noted the process at Clause 3.4 and 3.5 is similar to those possessed by an employer, who usually has to give notice in disciplinary performance appraisal matters.”
Mr Jobson pointed out that the clauses referred to by the Arbitrator (cls 3.4 and 3.5) are “Minimum Performance Criteria”, which Mr Chaaya agreed to adhere to as part of the Agreement. This was a quality control mechanism employed by the appellant to ensure that its operating system is maintained. He contended that what was more relevant was the fact that, at cl 39, Mr Chaaya had the right to terminate the Agreement on one month’s written notice. This indicates, so it was argued, a contract of services, rather than an employee/employer relationship. Mr Jobson submitted that the Arbitrator failed to have proper regard to those aspects of the Agreement when considering these indicia.
Mr Jobson contended that the Arbitrator’s comments (at [103]), that the appellant had the power to terminate the relationship, which was analogous to that of an employer, were made on the basis of a fundamental misunderstanding of the Agreement. He added that, while the appellant had the power to terminate the Agreement, cl 39 gave Mr Chaaya power to terminate the licence by giving one month’s written notice. He emphasised that the agreement was a commercial contract, not a contract of employment.
Mr Nicholson submitted that the Arbitrator understood that the Agreement did not match the factual basis of the relationship. Mr Nicholson contended that taking into account the whole of the arrangement, the terms of the Agreement and the relationship in practice, the appellant exercised employer-like control over Mr Chaaya. When that was “balanced” by the Agreement, the facts favoured Mr Chaaya.
Mr Nicholson said that cl 39.1, which sets out the circumstances in which Mr Chaaya may terminate the agreement, namely, by giving one month’s notice, placed the appellant in the dominant position in the arrangement. He added that the giving of one month’s notice had the ring of employment termination as opposed to the termination of a business relationship.
It is correct that the Arbitrator failed to acknowledge that Mr Chaaya had power to terminate the Agreement by giving one month’s written notice. Thus, he failed to acknowledge that the Agreement provided that either side could terminate the arrangement in certain specified circumstances. The question is whether that omission makes any difference to the outcome. Mr Jobson submitted that the fact that, with appropriate notice, each side could terminate the Agreement was evidence of a normal commercial arrangement, not an employment arrangement. Though there is some merit in that submission, when the contract is viewed as a whole, the power to terminate takes on a different complexion.
The Agreement provided that Mr Chaaya had to “at all times meet the Minimum Performance Criteria” (cl 3.1). The Minimum Performance Criteria was defined in Annexure B to the Agreement to include the development and maintenance, in conjunction with the appellant, of a business plan for each year of the term, ensuring that Mr Chaaya and all his employees (it is agreed that Mr Chaaya had no employees) conform to the “Amalgamated Operating System”, and ensure that the licensed business conform to all legal requirements and has serviced all business liabilities, including income tax, BAS, trade debtors, etc.

The Amalgamated Operating System is defined to mean the operating system developed and implemented by the appellant for use by the Amalgamated Group, the operating procedures outlined on the appellant’s intranet site, and any other information or materials deemed part of the Amalgamated Operating System by the appellant. Under “Licence Grant”, the appellant granted to Mr Chaaya, and Mr Chaaya accepted, a non-exclusive licence to, among other things, “operate the Licensed Business within the Territory using the Image, the Manual, the Amalgamated Operating System and the System” (cl 2.1(1)).
As previously noted, “the System” was defined to mean the business procedures and systems including the Amalgamated Operating System developed by the appellant for the operation of a pest control business “and concerning a consistent high quality approach to customer service, uniform operating techniques, centralised group marketing activities, coordinated marketing programs, and business management generally” (cl 1.1(36)). Consistent with this, Mr Chaaya had to promptly attend to customers within his territory, identify their needs and provide a “consistent and reliable service” (cl 7.2).
If Mr Chaaya failed to meet the Minimum Performance Criteria, the appellant could require him to attend a meeting and provide a written explanation for his failure and, if requested, set out specific strategies, which were acceptable to the appellant, to be taken to assist him to meet the Minimum Performance Criteria (cl 3.2). The appellant could require Mr Chaaya, or his employees, to undertake additional training, at Mr Chaaya’s cost (cl 3.3).
If Mr Chaaya failed to attend a meeting in accordance with cl 3.2, or complete additional training in accordance with cl 3.3, or meet the Minimum Performance Criteria within six months of a meeting under cl 3.2 or completing the training required in cl 3.3, the appellant could terminate the Agreement with 30 days’ notice in writing without compensation (cl 3.5(1)). In the alternative, the appellant could immediately reduce the size of Mr Chaaya’s territory, reduce the length of the term (from the original five years), or reduce the scope of services and/or approved products he was permitted to provide in accordance with the Agreement (cl 3.5(2)).
Thus, the Minimum Performance Criteria, the Amalgamated Operating System, and the System are all interrelated to ensure, among other things, a “consistent high quality approach to customer service”. It follows that, given the consequences if Mr Chaaya did not meet the Minimum Performance Criteria, or comply with any directions issued under cl 3, the appellant’s right to terminate the contract under cl 3.5(1) was, as the Arbitrator found, analogous to an employer’s power to terminate an employee. Similarly, the appellant’s powers under cl 3.2 and 3.3 were similar to an employer’s power to performance manage a poor performing employee. An independent contractor would not be subject to such controls.
This conclusion is not eroded by describing the contract as a commercial arrangement. Nor is it eroded by the fact that Mr Chaaya had the power, like an employee, to terminate the arrangement. It follows that the Arbitrator’s conclusion involved no error. In any event, even if it were accepted that the appellant’s power to terminate was not analogous to that of an employer’s power to dismiss an employee, it is not a matter that is determinative of the status of the relationship.

ABN and tax arrangements

The Arbitrator said (at [103]) that Mr Chaaya was required (by the appellant) to take out an Australian Business Number (ABN) and “to be responsible for his own taxation affairs and other business requirements”.
At [107], the Arbitrator said:
“107. I have referred to the requirement for [Mr Chaaya] to obtain an ABN and to look after his own taxation affairs as an element of the control he was under pursuant to the Agreement. Such arrangements can sometimes indicate an intention that the contract was not an employment contract. However, [Mr Chaaya] had his own ABN but he had no business name and clearly was required to get an Australian Business Number at the direction of the [appellant]. Similarly, it was at the direction of the [appellant] that [Mr Chaaya] looked after his own tax affairs.”
Mr Jobson submitted that the Arbitrator acknowledged that the authorities confirm that a requirement to administer and take care of one’s own taxation affairs, and the operation of an ABN, suggest that the claimant is an independent contractor. Mr Jobson submitted that, despite this, the Arbitrator concluded that “this was a requirement imposed upon [Mr Chaaya] by the [appellant]”.
Mr Jobson said that the Arbitrator erred in concluding that “this indicia” (presumably Mr Chaaya being required by the appellant to use an ABN and take care of his own taxation affairs) suggested an employment relationship. That the Agreement required Mr Chaaya to make those arrangements (and look after his own tax affairs) merely reflected the fact that any independent contractor is required by law to have an ABN and as such is not evidence of any form of control or direction by the appellant.
Mr Jobson’s submission is based on the false premise that the Arbitrator concluded that the use of an ABN and Mr Chaaya taking care of his own taxation affairs suggested an employment relationship. The Arbitrator said the opposite. He expressly acknowledged that such “arrangements” could sometimes indicate an intention that the contract is not one of employment.
The Arbitrator’s significant finding was that, though Mr Chaaya had an ABN, he had no business name and he had been required to get an ABN at the direction of the appellant. Both of those observations were correct, but neither was determinative of whether Mr Chaaya was an employee and the Arbitrator did not suggest that they were. As Bromberg J observed (at [244]) in On Call Interpreters, obtaining an ABN is a simple process in which the existence of a business is not required to be demonstrated. Having an ABN did not prevent a finding that most of the interpreters in that case were employees.
In ACE Insurance Ltd v Trifunovski [2013] FCAFC 3 Buchanan J (Lander and Robertson JJ agreeing) observed (at [37]) that it is difficult to give much weight to arrangements about taxation, or even matters such as insurance or superannuation. They may be taken into account, but are not conclusive. Therefore, the Arbitrator’s comments on these matters were of little significance.
On the question of “other business requirements”, the Agreement provided (in cl 31.4) that Mr Chaaya had to maintain a record of the gross sales for each week, month, quarter and year, the customers of the business, the products and services provided, the dates on which they were provided and other information about the outgoings of the business. Mr Jobson submitted that that was a normal requirement for any business.
That may well be so, but the Agreement goes further and states that, in the conduct of the business, Mr Chaaya must only use the business reporting forms prescribed by the appellant and that he acknowledged the importance of uniform stationery “to maintain discipline on call patterns, to verify calls, to assist in resolving Customer queries and disputes and for ease of operations and uniform appearance throughout the Network” (cl 31.3). Mr Chaaya had to comply with all reasonable requirements of the appellant in relation to the type, format and content of business forms and documentation.
Further, cl 31.4 required Mr Chaaya to promptly provide any reports concerning the operations of the business to the appellant in the format required by the appellant and containing other information as the appellant reasonably required. These requirements suggested a high degree of control over Mr Chaaya and, though not determinative, were not consistent with Mr Chaaya operating an independent business.

Conclusion – control

The above analysis demonstrates that the appellant exercised considerable direct control over Mr Chaaya in several important areas. This is a strong indicator that Mr Chaaya was an employee. However, that does not determine the matter because, as the authorities make clear, “the modern approach is multi-factorial” (On Call Interpreters at [204], quoted at [25] above) and requires further examination of the parties’ arrangements.

HOURS OF WORK/OBLIGATION TO WORK

The Arbitrator’s reasons

At [57]–[59], the Arbitrator said:
“57.Mr Jobson then addressed [Mr Chaaya’s] statement where [Mr Chaaya] said at [33] that he had to work each day. He said:-
‘I had to work each day. When [their] emails with the list of jobs came through I had to perform those jobs. I could not refuse them. The only way I could take time off, was if I was sick. Alternatively if I gave notice to Amalgamated a few weeks prior that I needed a day off to attend to a personal matter, then I would have to give them two or three week’s [sic] notice that I would require a day off.’
58. Mr Jobson then referred to the statement of Mr Farr who responded that:-
‘[Mr Chaaya] determined the hours he would work and his availability, including how many days he would work and what hours he would work from and to. There was a general expectation that Licensees would be available for six days a week in summer and five days in other seasons. However, each Licensee had the right to decline any work and was not obliged to take any allocated jobs.’
59.Mr Jobson submitted that I would not accept [Mr Chaaya’s] contention that he was unable to refuse work allocated to him by the [appellant]. This was because he had been so busy during the term of the engagement that he never sought any time off. [Mr Chaaya] said in his statement at [38]:-
‘If I wanted to make more money in a week, then I would say to Amalgamated, ‘Give me more work each day or give me some Saturday over time.’ I never actually asked for more work because my days were pretty full as it was.’” (Footnotes omitted)
The Arbitrator analysed this issue at [105]–[106]:
“105.The terms of the contract required [Mr Chaaya] to work as a pest control officer at the behest of the [appellant]. He was told by email every evening where the employment was and although no strict hours of work were stipulated what is clear from the evidence is that there was an abundance of work, which [Mr Chaaya] was keen to do, so that the question of the actual hours worked was not a significant indicator in these circumstances.
106.There was no provision for holiday, sick leave nor annual leave in the way in which [Mr Chaaya’s] remuneration was structured. However, it is clear that [Mr Chaaya] worked set hours in accordance with the stream of work that came his way. The arrangement was so harmonious that [Mr Chaaya] never sought to work on weekends nor to vary his hours. Whilst [Mr Chaaya] said that he was not allowed to refuse jobs, Mr Farr maintained that [Mr Chaaya] determined the hours and days that he would work. In these circumstances, leaving aside the resolution of that disagreement, the fact is that [Mr Chaaya] worked regular hours and accepted all the work he was given. Applying the test, the work did have the appearance that [Mr Chaaya] was working as a representative of the business receiving the work, that is to say, the [appellant].” (Footnote omitted)

Submissions

Mr Jobson submitted that the Arbitrator erred in “ignoring” the conflicting evidence from Mr Chaaya and Mr Farr concerning the hours worked by Mr Chaaya, as it was “the critical factor in determining whether this indicia suggests” that Mr Chaaya was an employee or an independent contractor. Mr Jobson contended that, consistent with Mr Farr’s evidence, there is nothing in the Agreement that specifies or requires Mr Chaaya to work a particular number of hours or jobs. Mr Chaaya acknowledged in his statement that if he wanted to make more money in a week, he would ask the appellant for more work or for some “Saturday overtime”, though he never actually asked for more work.
Mr Jobson argued that there is no reason to doubt Mr Farr’s evidence, which Mr Jobson contended is supported by the evidence from Mr Chaaya noted in the last sentence of the preceding paragraph. There is no evidence that the appellant dictated the hours Mr Chaaya was required to work or the amount of work he was to undertake. He was referred jobs he could accept or reject. There was no provision for holiday, sick or annual leave, which is indicative of Mr Chaaya being an independent contractor. Any arrangements Mr Chaaya wanted to make regarding time off were under his control and were not dictated to him by the appellant. Mr Chaaya has admitted that he could have worked weekends, but he chose not to.
Thus, Mr Jobson submitted the evidence is that Mr Chaaya had control of the hours of work he undertook in each week and this supports a finding that he was an independent contractor.
Under the heading “Obligation to Work”, Mr Jobson submitted that the Arbitrator failed to give any consideration to the fact that there was no obligation imposed on Mr Chaaya to work a particular number of days or hours, or undertake a particular number of jobs. Mr Chaaya could control how much he earned, by taking as much or as little work as he was prepared to undertake. This suggests that Mr Chaaya was an independent contractor and that he had control of his own business.
Mr Nicholson submitted that the Arbitrator weighed what Mr Chaaya said in fact happened against mere reliance on the Agreement. What happened was that the alleged freedom to choose was never capable of being exercised. Mr Nicholson contended that Mr Chaaya was so loaded up with work by the appellant that he had no opportunity to do anything other than do the work allocated as it arose.

Discussion and findings

The Arbitrator did not ignore the conflicting evidence from Mr Chaaya and Mr Farr concerning the hours of work and the obligation to work.
The Arbitrator noted that Mr Chaaya was “told by email every evening where the employment was” ([105]) and that, though no strict hours of work were stipulated, there was an abundance of work, so the question of hours worked was “not a significant indicator in these circumstances” ([105]). Those statements were correct.
The Arbitrator added that Mr Chaaya worked “set hours in accordance with the stream of work that came his way” ([106]). Though the reference to “set hours” was not strictly accurate, because there were no formal “set hours”, which the Arbitrator had acknowledged at [105], the general thrust of the Arbitrator’s statement was consistent with Mr Chaaya’s evidence that his typical hours in summer were from about 6 am or 7 am until 5 pm or 6 pm for five days per week. In winter, his typical hours were about 7 am to 4 pm.
The Arbitrator’s misstatement about Mr Chaaya working “set hours” makes no difference to the outcome. That is because it does not matter that Mr Chaaya did not work “set hours”. The lack of set hours is not demonstrative of a lack of control (Wesfarmers Federation Insurance Ltd v Stephen Wells t/as Wells Plumbing [2008] NSWCA 186 at [69]–[72]). Of more significance is the fact that Mr Chaaya worked regular and consistent hours for the appellant and that he worked for no one else.
Mr Farr did not dispute Mr Chaaya’s evidence about the hours he worked. He said that Mr Chaaya determined the number of hours and days he worked and his availability, but there was a “general expectation that licensees would be available for 6 days a week in summer and 5 days in other seasons”. He said that licensees had the right to “decline doing any work and [were] not obliged to take any allocated jobs”. Mr Chaaya’s evidence was that he “had to work each day” and that when the emails came through with the list of jobs, he had to perform those jobs and could not refuse them.
While it is correct that there is no evidence that the appellant dictated the hours Mr Chaaya was required to work or the amount of work he was to undertake, Mr Farr’s evidence that “[t]here was a general expectation that licensees would be available for 6 days a week in summer and 5 days in other seasons” was inconsistent with his further statement that each licensee had the right to refuse jobs, something that Mr Chaaya disputed.
Further, Mr Farr’s evidence does not sit comfortably with cl 18.2(22) of the Agreement, which required that the licensed business operate “so as to promptly service all Customers in a prompt, efficient, professional and courteous manner”, nor with cl 7.2, which required that Mr Chaaya promptly attend customers within the territory, identify their needs and provide a consistent and reliable service.
The Arbitrator’s observation that the “arrangement was so harmonious that [Mr Chaaya] never sought to work on weekends nor to vary his hours” ([106]) was consistent with the evidence and disclosed no error. It follows that it was not essential to resolve the conflict between Mr Chaaya and Mr Farr about the obligation to work. If I am wrong and the Arbitrator erred in not resolving that conflict, the parties consented to me determining it on appeal. As the Arbitrator heard no oral evidence, and as there are no credit issues involved, that is appropriate.
Given the terms of cl 18.2(22) and cl 7.2, and given the inconsistency in Mr Farr’s evidence noted above, it is difficult to see that Mr Chaaya was free to refuse jobs at will. He clearly could not do so if he wished to remain part of the “Network”. It follows that, on the issue of obligation to work, the better view is that Mr Chaaya’s evidence is correct and is to be preferred to that of Mr Farr. That conclusion is further reinforced when one considers the provisions in cl 3.2 and 3.3 discussed at [76]–[77] above. This supports the Arbitrator’s conclusion that Mr Chaaya was an employee.
In any event, as observed (at [267]) in On Call Interpreters, while a lack of obligation to work is a feature of an independent contractor it is also a feature of casual employment (Sgobino v State of South Australia (1987) 46 SASR 292). Therefore, even if one were to accept Mr Farr’s evidence it would not, looking at the totality of the arrangement, as urged by Mr Jobson, lead to a different outcome. It was not uncommon for the interpreters in On Call Interpreters to decline work, but that did not prevent a finding that all but two of them were workers and not independent contractors. (The contrast between Mr Chaaya’s circumstances and the interpreters Bromberg J found were not workers is instructive and is discussed at [174] below).
It was also open to the Arbitrator to conclude that, “[a]pplying the test, the work did have the appearance that [Mr Chaaya] was working as a representative of the business receiving the work, that is to say, the [appellant]” ([106]). (The Arbitrator’s reference to “the test” was a reference to the test applied by Bromberg J in On Call Interpreters discussed at [25]–[27] above.)

HOLIDAYS/SICK LEAVE

Submissions

Mr Jobson submitted that Mr Chaaya was not provided with any sick leave or annual leave and this indicated that he was an independent contractor. He said that the Arbitrator failed to properly consider this matter.

Discussion and findings

The Arbitrator acknowledged that there was no provision for holidays, sick leave or annual leave in the way in which Mr Chaaya’s remuneration was structured. It is not disputed that the absence of such provisions is a relevant indicator of the type of relationship entered. However, it is not determinative.
Reliance on these factors may involve circularity of reasoning, “particularly where these factors are based upon the self-assessed and objectively incorrect label that the parties have attached to their relations” (On Call Interpreters at [219], citing Hollis at [37]). Further, as Bromberg J noted (also at [219]), casual employees are not ordinarily entitled to leave or sick pay. Therefore, the Arbitrator’s failure to refer to this factor is of no consequence because it has not affected the outcome.

What was more important was that, as the Arbitrator correctly found, Mr Chaaya worked as a representative of the appellant’s business. That finding was open on the evidence and was, in the circumstances, critical to the outcome.

DELEGATION OF WORK

The Arbitrator’s reasons

The Arbitrator said, at [108]–[110]:
“108.The Agreement clearly envisaged that [Mr Chaaya] would hire employees. Indeed, the reference to the Licensee in many parts of the Agreement as ‘it’ is an indication that the [appellant] had in [sic] anticipation that businesses would join the Agreement.
109.That indicia is clearly one that supports a construction that the Agreement was designed for corporate independent contractors and businesses. Clause 18.3, which is addressed to the behaviour of employees of the Licensee is an example.
110. As indicated earlier in these reasons however, the actual implementation of the Agreement with [Mr Chaaya] did not give rise to the exercise of these Clauses. [Mr Chaaya] maintained that he was not allowed to delegate and again the factual situation is such that the situation never arose during the relationship between parties.”

Submissions

Mr Jobson contended that the Arbitrator determined that no weight should be given to this factor, as there was no evidence that Mr Chaaya had ever employed anyone. He argued that whether Mr Chaaya ever in fact employed anyone was irrelevant. The Agreement made provision for contractors to employ others to undertake work so long as that work was undertaken in accordance with the Agreement and, if Mr Chaaya had chosen to do so, he could have done so at his discretion. This, so it was submitted, supports the conclusion that Mr Chaaya was an independent contractor.
Mr Nicholson submitted that the Arbitrator gave weight to this factor, but considered it to be outweighed by Mr Chaaya’s evidence that he did not engage persons and, in any event, given the work, as allocated and remunerated, could not have done so.

Discussion and findings

The power to delegate is an important factor in deciding whether a claimant is a servant or an independent contractor (Stevens v Brodribb Sawmilling Company Pty Ltd [1986] HCA 1; 160 CLR 16 (Stevens v Brodribb)), though limited or occasional delegation may not be (Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497 at 515). However, the mere right to delegate in the absence of the likelihood or actuality of delegation occurring may be of little consequence (On Call Interpreters at [283], citing Neale v Atlas Products (Vic) Pty Ltd [1955] HCA 18; 94 CLR 419).
Mr Chaaya’s assertion that he did not have the right to delegate was based on his evidence that he was not allowed to give the work to “any friend or colleague” who had knowledge of pest control. If he had a “very big job”, he said the appellant would put two (of its) technicians on that job. This evidence suggested that there was no power of delegation and that the appellant retained complete control over who worked with Mr Chaaya.
I accept, as did the Arbitrator, that the Agreement expressly envisaged, in several clauses, that a Licensee could employ workers. However, those workers had to be aware of “the contents of the Manual and all obligations imposed upon it [the Licensed Business] by the Amalgamated Operating System, and are appropriately trained in the System and supervised at all times” (cl 18.2(13)). Moreover, they had to wear uniforms in a style and design set out in the Amalgamated Operating System (cl 18.2(6)). It is agreed that that uniform, which the appellant required Mr Chaaya to wear, and which he did wear, had the appellant’s name and logo on it.
Thus, the Agreement significantly restricted and controlled the power of delegation. Mr Chaaya could only delegate work to people trained in the appellant’s system. Such people had to wear the appellant’s uniform. Moreover, they had to be “supervised at all times”. Such restrictions on the power of delegation were not consistent with the normal operation of an independent contractor, who is free to employ whomever he or she wishes and on such terms and conditions as he or she wishes.
It follows that Mr Chaaya’s evidence that he was not allowed to give work to a friend or colleague was correct. This conclusion is further supported by the fact that Mr Farr did not dispute Mr Chaaya’s evidence that if he had a “very big job” the appellant would put two of its technicians on it. The fact that the Arbitrator did not expressly say what weight he gave to this point is of no consequence. It is not a point that, when properly analysed, advances the appellant’s position on appeal. It points strongly to Mr Chaaya not being an independent contractor. Consistent with On Call Interpreters (at [284]), the absence of delegation tends strongly against the conclusion that the work provided was performed in and for Mr Chaaya’s own business.

MODE OF REMUNERATION

The Arbitrator’s reasons

The Arbitrator analysed the evidence on this point at [60]–[70], where he said:
“60. Mr Jobson referred to Exhibit 3 which contained the documents surrounding payment. [Mr Chaaya] addressed the mode of remuneration in his statement under that title. He said at [26]:
‘When I started working for Amalgamated Pest Control, I was initially getting paid on the basis of the amount of work that I did. I would get paid an amount of money per job. I recall back at this time I was getting paid about 48% of the total payment for the job. This payment was made weekly. This payment was direct deposit to my bank account.
27. Then, and after about a year, the method of getting paid was changed. The method of payment was changed to become one which was when the customer paid Amalgamated Pest Control, then I got paid. So that worked out being that if the customer did not pay, then I in turn did not get paid for the job. If a customer did not pay, I did not chase them up, but Amalgamated did. It was never discussed with me and I was never given the option of chasing up on that payment or non paying customers. All the chasing up of payments was left to Amalgamated.
28. The payment would go from the customer to Amalgamated and then Amalgamated would pay me.
29. If it was a domestic job, the customer would pay me. The customer would pay me via cash or credit card or cheque. If it was a credit card payment I would write down their credit card details on a piece of paper.
30. I would then give Amalgamated the cash or cheque or credit card details.
31. Amalgamated would thereafter give me my portion being still 48% or thereabouts.
32. It was with the commercial work, that I was doing a lot of, where I had to wait for the commercial client to pay Amalgamated and thereafter Amalgamated would then pay me.’
61.In a second statement dated 25 January 2015 [Mr Chaaya] expanded on this evidence. He said:
‘24. I would do the job. I would then send the details to the office at the end of the day. For example, if I did a job in North Sydney, I would get the PDA which is a handheld electronic device, I would fill in all the job details such as the chemicals used, where the job was done, where the chemicals were used in the job, the recommendations I would make for further pest treatment at this particular place. If it was a commercial job, Amalgamated would invoice the commercial customer directly.
25. If it was a domestic job, I would take the payment off the domestic customer, whether it be by cash or credit card or cheque. I would give the domestic customer a receipt in the company’s name.
26. If I received cash from a domestic customer I would either give the cash directly to the people in the office at Amalgated [sic] Pest or alternatively I would keep the cash, and give Amalgamated [a] slip with my credit card details and an authority to debit my credit card an amount of $300.
27. Amalgamated would give us a book of authorisation slips. On those authorisation slips I would write the customer’s name, the customer’s address and my credit card number if I wanted to keep the cash. I would also write on the slip the amount of money received from the domestic client.
28. At the end of the week therefore I might give Amalgamated cash in the range of $500 to $1000, perhaps even more. I would give this to the office ladies at the premises at Wetherill Park. I never once provided an invoice with my ABN to the client.’
62.In response Mr Farr at [10] of his statement acknowledged that he had read the applicant’s statement of 24 November 2014 and confirmed that the disbursement of funds was made in accordance with Clauses 11 and 12 of the Agreement, to which I have earlier referred. The system was that the [appellant] would submit a tax invoice for the ‘Amalgamated Charge’ and for other ‘Levies’ to [Mr Chaaya] as Licensee. This, said Mr Farr, would then result in the distribution of funds from the Open Account to the [appellant], and then to [Mr Chaaya] as Licenses [sic, Licensee].
63.Exhibit 3 also contains documents to illustrate that system. From pages 28 to 43 were copies of tax invoices on the [appellant’s] letterhead for the different jobs performed between 28 April 2010 and 4 June 2010. As indicated earlier they contained the [appellant’s] business name and logo and in smaller print on the left hand side of the page displayed [Mr Chaaya’s] ABN and his name as Licensee. Tax invoices were addressed to what would appear to be in the main households in various parts of the metropolitan area. The invoices contained alternative means of payment, either by Bpay, eftpos, mail or by phone.
64.Also in evidence were bundles of documents relating to different periods. The first related to the period 5 May 2010 to 11 May 2010, the second from 19 May 2010 to 25 May 2010 and the third from 2 June 2010 to 8 June 2010.
65.The system shown thereby is complex and difficult to follow. Monies sent in by [Mr Chaaya] by cash or credit card during the period is credited to [Mr Chaaya’s] account via the ‘pay-in worksheet.’ This contains credits for work paid and accounts paid. Those amounts are added together and placed in a ‘pay-in calculation (ex GST) sheet.’ The total credited for work paid and accounts paid in the case of the period 5 May 2010 to 11 May 2010 was $1,343.64. From that amount pursuant to the agreement 1.30% was deducted as an advertising fee, 1.70% deducted as an IT levy, and 1% deducted as a credit card charge. That left a subtotal of $1,291.19. From that amount [Mr Chaaya] was credited [sic, debited] with $645.59 as a ‘branch license [sic] fee.’
66.A further document entitled ‘tax invoice’ with the [appellant’s] name immediately below it but also containing in the right hand column a heading ‘customer service enquiries’ with some phone numbers and identifying internet addresses. This was expressed as being an invoice to [Mr Chaaya] and was dated 11 May 2010. It showed the license [sic] fee of $645.59 and the GST component thereof. This was added together to give a total of $710.15. To those amounts $12.91 was added by way of equipment hire (plus GST) and the amounts deducted in the ‘pay-in worksheet’ were then re-credited with a GST component added. This gave a total including GST of $782.05 which appeared in the tax invoice next to the words ‘amount due.’
67.That document appears at Exhibit 3, page 3. At page 4 appears an untitled document with the applicant’s name and address on it, with the date 11 May 2010 and a figure simply described as ‘amount’ of $695.95. In a box entitled ‘details’ a note is entered ‘for period 11/05/2010 dispersement [sic] from Open Account’ and the figure of $695.95 is repeated.
68.For the period 19 May 2010 to 25 May 2010 documents were similarly lodged. The amount calculated in the pay-in worksheet for that period in the pay-in breakdown was in the sum of $2,170, of which the figure $1,397 was listed under the heading ‘unknown.’
69.The pay-in worksheet indicated that after the deduction of equipment, hire fee, the advertising fee, the IT levy and the credit card charge, the disbursement from the Open Account was $1,031.40. That amount was again the subject of a document indicating I assume that it had been paid into [Mr Chaaya’s] account on 25 May 2010, although the tax invoice dated 25 May 2010 showed an amount due of $1,138.60.
70.I would observe that, even with the assistance of counsel, this system of accounting is very difficult to follow, without the assistance of expert evidence. However, I assume that the figures demonstrate that an amount of about 48% from the work paid and accounts paid income credited to [Mr Chaaya], was eventually paid to him.” (Footnotes omitted)
The Arbitrator commented on this issue at [112]:
“112. The mode of remuneration, confusing as I found it to be, is not consistent with a person running his independent business. The system whereby all monies received had to be credited to the [appellant], including cash payments in the manner set out by [Mr Chaaya], is instructive. The [appellant] received the monies obtained by [Mr Chaaya] but then after making deductions returned apparently 48% of the earnings to him. This method of remuneration is not consistent with firstly a person performing the work being an entrepreneur who owns and operates their own business but secondly, is more consistent with a person working as a pest control officer as a representative of the [appellant]. I have already indicated that the system is obtuse and complex but one feature that is clear is that the [appellant] is the recipient of the income – either directly from the customer, or by virtue of the system whereby [Mr Chaaya], as he receives money directly, has to then forward all of it to the [appellant].”

Submissions

Mr Jobson submitted that the Arbitrator has confused the method of payment and remuneration provided for in the Agreement. Relying on Mr Farr’s evidence, he said that money paid by customers to a licensee was deposited into an “open account”. The appellant then submitted a tax invoice to Mr Chaaya for the “Amalgamated Charge” (as defined in the Agreement) and for other levies (as provided for in the Agreement) for things provided to Mr Chaaya by the appellant.
This resulted in a distribution of funds from the open account to the appellant and to Mr Chaaya. Mr Jobson contended that the open account was simply a convenient means of collecting and distributing money, but Mr Chaaya was entitled to the fees collected, after payment of his expenses. Clearly, the appellant did not pay Mr Chaaya any salary or wage. In fact, Mr Chaaya paid the appellant a fee, as provided for in the Agreement. These matters support the conclusion that Mr Chaaya was an independent contractor and the Arbitrator erred in finding the contrary.
Mr Nicholson submitted that the Arbitrator found the appellant’s chosen mode of remunerating Mr Chaaya was complex and confusing. The Arbitrator considered the evidence in detail and preferred Mr Chaaya’s evidence. Mr Nicholson said that the accounting system was the appellant’s, as was the equipment used for invoicing. Mr Chaaya had no choice in the process of invoicing, banking or receipting.

Discussion and findings

I do not accept that the Arbitrator has “confused the method of payment and remuneration”.
Mr Jobson has not dealt with any part of the Arbitrator’s analysis, but has merely referred to Mr Farr’s evidence. The Arbitrator considered that evidence at [62]. Weighing all the evidence, the Arbitrator concluded (at [112]) that the mode of remuneration, though confusing, was not consistent with a person running an independent business. Nothing in Mr Jobson’s submissions has demonstrated error in that conclusion, which was clearly correct.
The critical facts were that, consistent with Mr Farr’s evidence, all money received for work done by Mr Chaaya was credited to an account run by the appellant called the “Open Account”, which is defined in the Agreement to mean “the [appellant’s] bank account nominated by the [appellant] as the ‘Open Account’ for the purposes of this Agreement”. After making numerous deductions (as per the Agreement), the appellant returned to Mr Chaaya about 48 per cent of the gross takings from his work.
After noting this arrangement, the Arbitrator drew the following conclusion (at [112]): that the method of remuneration was “not consistent with” the person performing the work (in this case, Mr Chaaya) being an “entrepreneur who owns and operates” his own business and was more consistent with a person working as a pest control officer as a representative of the appellant. This conclusion, based primarily on the fact that the appellant received the income generated by Mr Chaaya’s labour, either directly from the customer, or via Mr Chaaya, which it then disbursed to Mr Chaaya, after deductions, was open on the evidence and disclosed no error.
While it is accepted that the appellant did not pay Mr Chaaya a wage, the method of remuneration adopted strongly supports the Arbitrator’s conclusion that Mr Chaaya was an employee. That is because, normally, an independent contractor would bill his clients directly and be in control of recovering outstanding fees.
In the present case, invoices were issued on the appellant’s letterhead. Though Mr Chaaya’s name appeared on the invoices, as Licensee, all contact details on the invoices were the appellant’s. Those details included the phone number, facsimile number, web and email address. The appellant kept control of all revenue and was responsible for collecting any outstanding debts. None of these matters is compatible with Mr Chaaya being an independent contractor running his own business.

INSURANCE

Submissions

Mr Jobson argued that the Agreement requires (at cl 32.1) Mr Chaaya to obtain and maintain the following insurance: public liability, professional indemnity, workers compensation and employer’s liability, accident and sickness, compulsory third party motor vehicle insurance, and to cover damage to equipment.
He noted that Mr Chaaya had an accident and sickness insurance policy, and that he claimed on that policy while he was off work because of the injury the subject of this claim. Mr Jobson contended that the Arbitrator does not appear to have given any proper consideration to this matter, “in either a factual sense or on the basis that it is an indicia that suggests Mr Chaaya was an independent contractor”.
Mr Nicholson submitted that the requirements as to insurance arrangements were “in character and principle” no different to the requirements for, as an example, an ABN to be in place.

Discussion and findings

It is correct that the Arbitrator did not expressly deal with the fact that the Agreement required Mr Chaaya to have his own insurance. It is accepted that this requirement often indicates that the relationship is one involving an independent contractor. However, on its own, that fact is not determinative and the Arbitrator’s failure to refer to it is of no consequence. That is because, as noted earlier when dealing with arrangements about taxation (see [86] above), it is difficult to give much weight to matters such as insurance or superannuation. They may be taken into account, but are not conclusive.

ASSET/SALE OF LICENCE/GOODWILL

The Arbitrator’s reasons

The Arbitrator considered this issue at [37], where he said:
“37. [Mr Chaaya] as licensee was forbidden by Clause 15.3(3) from selling the business to any person at a price or on terms that were more favourable than those which were offered to the [appellant], without giving the [appellant] a further option in accordance with Clause 15.3(2), just referred to. As I understand the interplay of those two Clauses, the licensee was prevented from selling his business above the sum of $1000.”

Submissions

Mr Jobson contended that the Arbitrator misunderstood the mechanism by which the licence could be transferred, assigned or sold. He said that cl 15.3 of the Agreement provides the mechanism for a Licensee to sell, transfer or assign the licensed business. It provides for the appellant to purchase the licence back for $1,000. Alternatively, “if a price or terms more favourable than that referred to in clause 15.3(2) is offered, the Respondent [sic, appellant] has a further option to purchase the licence”.

Mr Jobson argued that this is consistent with the comments made by Wilson and Dawson JJ in Stevensv Brodribb (at 37) that the creation of goodwill or saleable assets in the course of a person’s work is an indication of a contract for services and not employment. Mr Jobson submitted that the Arbitrator failed to have any proper regard to this factor and clearly misunderstood the operation of the Agreement in terms of the sale of the licence.
Mr Nicholson submitted that the Arbitrator considered the modest price of $1,000 as a contra-indication of a commercial business relationship. He added that there was no goodwill in Mr Chaaya’s business, if that was what it was. The goodwill was all for the appellant.

Discussion and findings

I do not accept Mr Jobson’s submissions.
Clause 15.3 provided:
“If the Licensee wishes to sell, transfer or assign the Licensed Business;
(1)the Licensee must notify the Licensor and the Licensee in writing of the proposed sale price and terms of sale;
(2)the Licensor has the option to buy the Licensed Business at a fixed price of $1,000 exclusive of GST (less any amount owed by the Licensee to the Licensor) within 14 days of the notice of sale; and
(3)the Licensee must not sell the Licensed Business to any person at a price or on terms more favourable than those which have been offered to the Licensor without giving the Licensor a further option in accordance with sub-paragraphs 15.3(2).”
The Arbitrator’s interpretation of cl 15 was correct. Mr Jobson’s submissions have ignored the words “in accordance with sub-paragraphs 15.3(2)” in cl 15.3(3), which make it clear that, if the Licensee receives an offer more favourable than $1,000, the appellant reserves the option to buy the Licensed Business “at a fixed price of $1,000”. It follows that there was no realistic opportunity for Mr Chaaya to acquire and sell any goodwill in the “business”.
In any event, if this interpretation of cl 15.3 is wrong, and the Agreement allows the Licensee to sell the Licensed Business for more than $1,000, given the structure of the arrangement, the close control of it by the appellant, the fact that the Licensee wears the appellant’s uniform and uses the appellant’s letterhead, that work is allocated by the appellant to the Licensee, that the “Customers” are the appellant’s customers, and that all proceeds from the Licensee’s labour go to the appellant for fees to be deducted before the balance (about 48 per cent) is released to the Licensee, it is difficult to see how any Licensee could realistically build goodwill in the “business” that would have any saleable value.
The “goodwill”, if any, clearly accrues for the benefit of the appellant. That fact is effectively acknowledged by cl 34, which provides, among other things, that the appellant has “considerable and recognised goodwill in the conduct of its business of developing and promoting the System and the Network” (cl 34.1(1)) and that it is “entitled to protect that goodwill for its own benefit and all the Network by restricting the Licensee’s ability to damage that goodwill by competing with the Licensor or any member of the Network” (cl 34.1(2)). Further, cl 18.2(9) provides that a Licensee must “not act in a manner which prejudices the goodwill or reputation of the Licensor, any member of the Network, the Image or the System”.
Other than his utility vehicle (which has the appellant’s sign writing and logo on it), which depreciates, there were no “business” assets that Mr Chaaya could expect to sell at a profit. It follows that, as in On Call Interpreters (at [274]), the benefits flowing from good work by Mr Chaaya and customer satisfaction were benefits that flowed to the appellant. That had to be so because, as previously explained, the customers were exclusively the appellant’s customers.
With respect to any intellectual property or innovations that a Licensee may develop, which could potentially add value to a business, cl 26.4 provided that if the Licensee developed any “Improvements” during the term of the Agreement, in respect of which the Licensee obtained any intellectual property rights, the Agreement required the Licensee to assign all of the Licensee’s rights to, and intellectual property in, the Improvements to the appellant as and when Improvements are created.
“Improvements” were defined to mean “any works, marks, designs, ideas, knowhow or trade secrets developed by the Licensee which are derived from or incorporate the Intellectual Property or which are otherwise developed by the Licensee during the operation of the Licensed Business in respect of which the Licensee obtains any intellectual property rights”. Thus, the Licensee acquired no advantage from any improvements he or she may develop while working for the appellant. That is not consistent with a person operating an independent business.
It follows that this issue points strongly in favour of Mr Chaaya being an employee and the Arbitrator’s failure to refer to it in his analysis does not advance the appellant’s position.

CONTROL OF WORK PRACTICES AND PRICE

The Arbitrator’s reasons

At [71], the Arbitrator said:
“Mr Jobson referred again to the statement of Mr Farr stating that his comment that the technician determined when the job was to be done, how much it might cost and what was required to do it was an indication that the relationship was not an employment relationship. …”

Submissions

Mr Jobson submitted that Mr Chaaya had ultimate control over how any particular job was undertaken and the final price to be paid by the customer and this was against a conclusion that Mr Chaaya was a “worker”. He relied on Mr Farr’s evidence that while a general timeframe was allocated to each particular job, a technician would vary those times based on the nature of the job and any site complexities or difficulties. The technician then determines when the job is to be done, how much it might cost and what is required to do the job. Mr Jobson contended that the Arbitrator failed to have proper regard to this matter.
Mr Nicholson submitted that the Arbitrator did not accept the appellant’s contention that its evidence pointed to Mr Chaaya having “ultimate control” over work accepted or the price paid.

Discussion and findings

While the Arbitrator referred (at [71]) to Mr Farr’s evidence on this point, he made no specific finding about its significance or the weight he attached to it. His general finding was that when looking at the control exercised by the appellant “with an eye to the entrepreneur test” ([104]), it did not seem to him that any element within those indicia established that Mr Chaaya was an entrepreneur running his own business, nor that, even if he were, the performance of the work was in his own business rather than the appellant’s business, which was receiving the benefit of his work. Reinforcing this conclusion, the Arbitrator said (at [114]) that it could not be said that Mr Chaaya was operating his own business as an independent contractor when he was unable to have any control over the funds he received for his work.
Nothing in Mr Farr’s statement undermines these conclusions. The reality is that the appellant allocated the work to Mr Chaaya. Mr Farr said that “[i]n general, a timeframe is allocated to each job however the technician can vary those times based on the nature of the job and any site complexities/difficulties”. This statement does not sit comfortably with cl 7.2, which states that the Licensee must “promptly” attend customers within the territory, identify their needs and provide a consistent and reliable service. Thus, the suggested freedom given to a Licensee to vary the times when a job was to be done was restrained by the obligations in cl 7. An independent contractor would not be subject to such restraints.
Mr Farr said that the technician determined how much the job might cost and what was required to do the job. The Agreement provided that the appellant could inform Mr Chaaya of a recommended scale of fees to be charged, but he was not bound to observe those fees (cl 22.4). Mr Chaaya gave no evidence about how fees were set. As the appellant billed commercial customers directly, it is assumed that he did not set the fees for them. It is not known how he determined the fees for domestic customers.
Assuming, in favour of the appellant, that Mr Chaaya had some latitude in setting fees for the domestic customers, I do not believe that that overcomes the matters identified above that strongly point to Mr Chaaya being an employee. Though, on this point, the evidence is unsatisfactory, given the close degree of control exercised by the appellant, it is inconceivable that Mr Chaaya was free to set any fee he chose for domestic customers.
Mr Chaaya’s evidence was that he was “told in the jobs that [he] had to be at a specific address at a specific time” and was told how long he should spend at a particular job. This evidence was consistent with cl 7.2 and the appellant exercising extensive control over Mr Chaaya, which is consistent with a contract of service.
With respect to “work practices”, the Agreement required that Mr Chaaya was to operate the “System developed and implemented” by the appellant. That “system” included the Amalgamated Operating System developed by the appellant for the operation of a pest control business and concerning “a consistent high quality approach to customer service, uniform operating techniques” and other matters relating to marketing and business management.
This is consistent with Mr Chaaya’s evidence that, when he started working for the appellant, he was trained (by the appellant’s “managers”) for a “week or two”. They told him what to do and how to do it “in terms of pest control”. At the start, he went out on jobs with the appellant’s other technicians for a couple of weeks. Any suggestion that there was even scope for Mr Chaaya to adopt his own “work practices” is untenable. The evidence of work practices points strongly to Mr Chaaya being an employee.
It follows that if the Arbitrator failed to have proper regard to Mr Farr’s evidence on this issue, it makes no difference to the outcome. That is because, on proper analysis, regardless of whether Mr Chaaya had some latitude in setting fees for domestic customers, the appellant strictly controlled work practices in a manner consistent with an employment relationship. Moreover, the Arbitrator’s conclusions (summarised at [152] above) were clearly open on the evidence and disclosed no error.

OTHER MATTERS

Submissions

Mr Jobson argued that the whole thrust of the appellant’s case was that Mr Chaaya purchased the right to conduct a licence/franchise and, in doing so, agreed to adhere to the appellant’s operating system. That was what Mr Chaaya purchased for the $1,000 licence fee. He said the Agreement was designed to ensure that all Licensees adhere to a uniform operating system, which ultimately benefits both those Licensees and the appellant. It did not provide evidence of “control” of the nature found in an employer/employee relationship, but sought to protect and maintain the appellant’s business model and system while allowing Mr Chaaya the freedom to determine how he conducted his business within that system.
In his written submissions, under the heading “conclusion”, Mr Jobson conceded that while there may be some indicia that suggest there may be an employment relationship, that is not unusual and the case law confirms that each matter needs to be determined on its own factual basis, having regard to the variety of indicia referred to above. He argued that the indicia considered by the Arbitrator, when considered correctly, could only suggest that Mr Chaaya was an independent contractor. In addition, he said that there were numerous other indicia that suggested Mr Chaaya was an independent contractor, to which the Arbitrator failed to have any, or any appropriate, regard.
Mr Jobson submitted that when the totality of the arrangements under the Agreement are considered, it is overwhelmingly clear that Mr Chaaya was an independent contractor, acting as an entrepreneur running his own business. He had control over the hours he worked, the equipment he purchased, and, ultimately, the amount of money he would earn. He was also able to employ others to assist in his business. There should be an award for the appellant.
Mr Nicholson submitted that, on proper analysis, the appellant’s complaint is about findings of fact the Arbitrator was entitled to make. He said that the submission about the thrust of the appellant’s case did no more than re-state the appellant’s defence at the arbitration, which defence the Arbitrator rejected. Mr Nicholson referred to Mr Jobson’s submissions at the arbitration and to his submissions in response to those submissions. To the extent necessary, those submissions are dealt with in the issues discussed below.
Mr Nicholson argued that the Arbitrator’s approach, which was to look at the totality of the matter, including the indicia and the Agreement in proper context, was correct and the appeal should be dismissed.

Discussion and findings

I do not accept Mr Jobson’s submissions.
The Arbitrator did not misunderstand the thrust of the appellant’s case. Mr Jobson’s submissions have ignored the Arbitrator’s reasons and the reliance he placed on “the ultimate question” identified in the passage quoted by the Arbitrator at [99] (reproduced at [26] above). Applying that test, it was open to the Arbitrator to conclude that, as a practical matter, Mr Chaaya was not performing work as an entrepreneur in his own business. Rather, he was performing work in and for the appellant’s business as a representative of that business. This conclusion is strongly reinforced by the analysis of the issues discussed earlier in this decision.
It is appropriate to note the context of this claim. As noted earlier, Mr Chaaya left school when he was 18. He worked for his father, as a pest controller, until he started with the appellant in 2010, when he was about 22. He had no business experience. He did not advertise his “business”. He did not hold himself out as conducting a pest control business. He had no office or other trappings of a business, such as a business name or phone number. When he worked, he worked as the face of the appellant’s business. That was clear from the signage on his vehicle, the logos on the equipment, the invoices and from the uniform he wore.
While Mr Chaaya did not work for a wage, and could earn more by making himself available for more work, the essence of a business is the conduct of a commercial enterprise as a going concern (On Call Interpreters at [210], citing Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd [2005] HCA 9; 222 CLR 194 at [83]). It will usually involve the acquisition and use of tangible and intangible assets in the pursuit of profit (On Call Interpreters at [210], citing Hope v Bathurst City Council [1980] HCA 16; 144 CLR 1 at 8–9). A business usually has an intangible asset, its name, brand, reputation or goodwill (On Call Interpreters at [210]). In his activities with the appellant, the evidence clearly established that Mr Chaaya did not conduct a commercial enterprise as a going concern, had no assets (apart from his car, which carried the appellant’s name and signage) of any great value, and, because of the terms of the Agreement, had no “brand”, reputation or goodwill.
It follows from this that the answer to the first question posed in On Call Interpreters, namely, viewed as a practical matter, was Mr Chaaya performing the work of an entrepreneur who owns and operates a business, must be “no”. As the Arbitrator concluded, Mr Chaaya was not conducting a business. Given the answer to that question, the second question, namely, whether, in performing the work, Mr Chaaya was working in and for his business as a representative of that business and not the business receiving the work, did not arise. Nevertheless, the Arbitrator also answered the second question in the negative. He was right to do so. Contrary to Mr Jobson’s submissions, the indicia and the totality of the arrangement point overwhelmingly to Mr Chaaya being an employee.
Mr Jobson made much of the fact that the Agreement described Mr Chaaya as an independent contractor and added that he “alone controls and is responsible for the manner and means of the operation of the Licensed Business” (cl 20). Further, the Agreement expressly stated (also at cl 20) that no relationship of employment was intended or implied into the Agreement.
The labels used to describe the parties are of little assistance if they “are inconsistent with the real substance or reality of the relationship” (On Call Interpreters at [246]). “[A] clause designed to prevent the relation receiving the legal complexion which it truly wears would be ineffectual” (R v Foster; Ex parte Commonwealth Life (Amalgamated) Assurances Limited [1952] HCA 10; 85 CLR 138 per Dixon, Fullagar and Kitto JJ at 151). Consistent with these authorities, and given the reality of the arrangement in the present case, I find that cl 20 is of no effect.
One further matter reinforces the Arbitrator’s conclusions. In On Call Interpreters the interpreters were required to wear an identification badge headed “On Call Interpreters and Translators Agency Pty Ltd”. The company’s logo appeared on the badge as well as its slogan “Solving your language needs”. It also listed the address, telephone, fax and email details for the company. Bromberg J concluded (at [271]) that the requirement for panel interpreters to wear the company’s identification badges, and the content of those badges, portrayed panel interpreters as representing the company and as being an “emanation” of the company.
Given that Mr Chaaya wore the appellant’s uniform, drove a vehicle with the appellant’s signage, used equipment with the appellant’s logo on it and issued invoices with the appellant’s name and details on it, the same conclusion applies in the present case. Mr Chaaya was an “emanation” of the appellant’s business. As noted earlier, he was the face of the appellant’s business, not his own. Mr Chaaya’s efforts “comprised the very essence of the public manifestation of [the appellant’s] business” (Hollis at [57]). Contrary to Mr Jobson’s submission, the appellant was not merely a call centre through which Mr Chaaya’s clients were directed to him. As explained earlier in this decision, Mr Chaaya had no clients of his own.
It is convenient to consider, by way of contrast to Mr Chaaya’s circumstances, the position of one of the claimants (Mr Giovannoni) in On Call Interpreters who Bromberg J found to have his own business and therefore not be a worker. Mr Giovannoni was held not to be a worker because:
(a)     he gave evidence of a relatively substantial direct client base in relation to his work as a translator, which was constituted by ordinary members of the public and small businesses (Mr Chaaya had no client base);
(b)     he perceived himself to be an owner and operator of his own business and he promoted his business to the public through advertising, the Yellow Pages, the use of business cards and a website (Mr Chaaya did not perceive himself as the owner of a business and did not promote himself or advertise);
(c)     the vast bulk of purchasers of Mr Giovannoni’s services were his direct clients and not agencies (Mr Chaaya’s services were used by the appellant’s customers);
(d)     Mr Giovannoni operated from his home office, utilising that office and its equipment extensively (there was no evidence that Mr Chaaya had a home office);
(e)     he had and operated transactional systems (Mr Chaaya used the appellant’s transactional systems, for example, through the use of the PDA);
(f)      he had an invoicing system and standard methodologies for quoting or for otherwise assessing what to charge for particular services (in Mr Chaaya’s case, all invoices were on the appellant’s letterhead, the appellant billed commercial clients and the evidence as to costing for domestic customers was unclear);
(g)     he operated a business-based accounting system (it is accepted that Mr Chaaya also kept a business-based accounting system, as required by the Agreement);
(h)     his activities involved engaging others to perform work, who he paid. That activity involved Mr Giovannoni in “the taking of risk” (On Call Interpreters at [234]) in the pursuit of profits (Mr Chaaya did not engage others to perform the work for the appellant and did not take a risk in the pursuit of profit);
(i)      his activities generated goodwill, which enured to his business (any goodwill generated by Mr Chaaya’s activities accrued for the benefit of the appellant), and
(j)      the fact that the regulatory requirements of a business (ABN, GST, taxation returns) were being met had a rational connection to the activities in which he was engaged (Mr Chaaya had an ABN, but that had no rational connection with the activities in which he was engaged, it was a requirement of the Agreement).

CONCLUSION ON WORKER

Notwithstanding that the Arbitrator misstated the evidence on some points, and did not expressly deal with some of the indicia, the compelling conclusion, having regard to the totality of the relationship, and applying the relevant authorities, is that, as the Arbitrator found, Mr Chaaya did not conduct a business and that he was a worker employed by the appellant under a contract of service.
It follows from this conclusion that it is not necessary to consider cl 2 of Sch 1 of the 1998 Act. However, if the Arbitrator erred in his conclusion on worker it is appropriate, having regard to the parties’ submissions on appeal, to consider whether, in the alternative, Mr Chaaya was a deemed worker.

DEEMED WORKER

The legislation

Clause 2(1) of Sch 1 provides:
“(1) Where a contract:
(a) to perform any work exceeding $10 in value (not being work incidental to a trade or business regularly carried on by the contractor in the contractor’s own name, or under a business or firm name), or
…
is made with the contractor, who neither sublets the contract nor employs any worker, the contractor is, for the purposes of this Act, taken to be a worker employed by the person who made the contract with the contractor.”

Submissions

Mr Jobson conceded that Mr Chaaya was a party to a contract with the appellant to perform work that exceeds $10 in value. He contended that Mr Chaaya could not rely on cl 2 of Sch 1 because the work he performed was incidental to a trade or business regularly carried on by him in his own name and that, though he did not actually employ anyone, he had the right to do so.

Discussion and findings

In Scerri v Cahill (1995) 14 NSWCCR 389, Bainton AJA (Kirby ACJ and Rolfe AJA agreeing) held (at 399D) that, to rely on cl 2 of Sch 1, an applicant must establish that:
(a)    he (or she) was a party to a contract with the respondent to perform work;
(b)     the work exceeded $10 in value;
(c)     the work is not work incidental to a trade or business regularly carried on by the applicant in his (or her) own name or under a business or firm name, and
(d)     the applicant has neither sublet the contract nor employed workers in the performance of it.
Given Mr Jobson’s concession that Mr Chaaya was a party to a contract to perform work that exceeded $10 in value, which was appropriate, the first issue is whether the work was incidental to a trade or business regularly carried on by Mr Chaaya. Before addressing that issue it must be determined if Mr Chaaya was regularly conducting a trade or business.
In Humberstone v Northern Timber Mills [1949] HCA 49; 79 CLR 389 (Humberstone), Dixon J (as his Honour then was) said, dealing with a similar provision in the Workers’ Compensation Act 1928–1946 (Vict.), at 401–402:
“I think that the purpose of the exception or exclusion expressed by the words in question was to confine the benefit of the conclusive presumption which it establishes to persons who do not conduct an independent trade or business, who are not holding themselves out to the public under their own or a firm or business name as carrying on such a trade or business and who do not in the course of that trade or business, as an incident of its exercise, undertake the work by entering into the contract. The provision will thus cover men who work for the principal but have no independent business or trade and men who though carrying on an independent trade or business undertake a contract outside the scope or course of that trade or business. The word ‘trade’ is capable of including any handicraft and in that sense it may seem to lack the element of systematic practice or holding out which the idea of openly conducting a distinct or independent trade or business and seeking custom implies. But a consideration of the policy of the provision as well as of its text appears to me to show that the distinction it seeks to draw is between on the one hand an independent contractor whose relation with the principal is special or particular either because it is outside the course of the general business of the contractor or the general practice of his trade or because he has no such general business or is not a general practitioner of his trade, and on the other hand an independent contractor who performs work successively or perhaps concurrently for his customers or others in the course of a definite trade or business carried on systematically or who holds himself out as ready to do so.” (emphasis added)
His Honour added, at 402:
“The suggestion which this language conveys of the existence of a business or the practice of a trade is much strengthened in sub-s. (6) by the words ‘carried on,’ ‘regularly’ and ‘in his own name or under a firm or business name.’ These all indicate a business or trade conceived as independently existing or exercised by a person holding himself out to the public under a name or style. No doubt the policy is a matter of inference but it seems reasonable to suppose that it was considered proper that a person conducting a business in the course of which he contracted to perform work should himself carry the risk of personal injury as one of the hazards of his business, while the man who worked under contract but only for the employer or without any general trade or business or outside his trade or business should, like an ordinary employee, be insured by the Act against the risk of injury in his work.”
In Turner v Stewardson [1962] NSWR 137 (at 139) the New South Wales Court of Appeal, dealing with s 6(3A) in the Workers’ Compensation Act 1926 (the 1926 Act), which was in substantially the same terms as cl 2 of Sch 1, considered the situation where a carpenter, who contracted his work when employment was difficult to obtain, was regularly carrying on a trade or business:
“Looked at broadly, the Legislature meant to provide that persons who are in business for themselves, and who systematically and regularly accept work to be done under contract, and who hold themselves out as open to be employed under contract, are expected to undertake the risk of injury and not to rely for compensation upon the principal whose contract work they are performing at the moment of injury. The original notion that the contractor is deprived of the benefits of the Act because he is not a worker has disappeared, and today many small contractors who undertake contract work, not as a regular or systematic practice, are covered by the Act. This is in keeping with modern practice as to payment for labour at piece work or contract rates.” (emphasis added)
The question of whether there must be a “holding out” before an applicant is prevented from relying on s 6(3A) of the 1926 Act was considered by the High Court in Higgins v Jackson [1976] HCA 37; 135 CLR 174 (Higgins) at 176 where Barwick CJ (Stephen, Mason and Murphy JJ concurring) said:
“The subsection requires the business to be carried on with regularity. Thus a contractor who regularly contracts can scarcely be said not to hold himself out as carrying on the business in the course of which he makes the contracts. But in my opinion, there is no separate element required by the subsection of holding out. It is sufficient, as I have said, that the contractor regularly carries on business in his own or a firm name.”
In Cam v Cousins Interstate Transport Pty Ltd [1964] NSWR 1288 the applicant was the owner and driver of a large truck registered in his name. He was injured in the course of a journey from Melbourne to Sydney when he was carrying steel for the respondent at a fixed rate per ton. For six months prior to the accident he had ceased to regularly carry on the business of a carrier, but operated his truck solely for the business of the respondent. He had no business address or telephone book entry relating to an occupation or business as a general carrier, nor did he advertise or hold himself out to the public as being in the trade or business of a carrier.
On appeal it was held that the trial judge was not in error in holding that the applicant was a deemed worker under the provisions of s 6(3A). This decision must now be read in the light of the High Court decision in Higgins, which establishes that there is no separate element required by the provision of holding out. However, the decision remains relevant as it illustrates some of the matters to be considered in determining whether the applicant is conducting a business.
In Wathen v AUT Holdings Pty Ltd [1977] 51 WCR 1 (Wathen) the applicant had been conducting a general carrying business prior to contracting with AUT to carry pipes exclusively for that company. AUT argued that the work performed under the contract was work “incidental to a ... business regularly carried on by [the worker] in his own name or under a business or firm name”.
After referring to Humberstone, Mahoney JA noted, at 5, in Wathen:
“In the present case, the worker had no trade or business other than what he was doing for the defendant. The case was therefore not ‘work incidental’ in the subsection. In my opinion, the learned Judge properly held that s 6(3A) applied to deem the worker to be a worker within the Act.”
The High Court considered the phrase “trade or business”, in the context of local government legislation, in Cooney v Ku-ring-gai Municipal Council [1963] HCA 47; 114 CLR 582 (Cooney). Menzies J said at 602:
“...the line between ‘trade’ and ‘business’ is not hard and fast and it is to be observed that in the Oxford English Dictionary one meaning of the word ‘trade’ is: ‘The practice of some occupation, business, or profession habitually carried on, especially when practised as a means of livelihood or gain’. In the same way, a meaning of the word ‘business’ that is given is: ‘Stated occupation, profession, or trade’. It is not, I think, a departure from ordinary usage when in the Income Tax Assessment Acts the word ‘business’ is defined to include ‘trade’.”
In the text Workers Compensation (New South Wales), second edition, C P Mills cites Cooney as authority that the phrase “trade or business” involves the “practice of systematic activity or work for reward or with a view to gain” (page 157). I accept that this is the appropriate interpretation of the phrase in cl 2 of Sch 1. This interpretation is also consistent with the decision of Coleman v Grafton Greyhound Racing Club (1955) 55 SR (NSW) 214 where it was held that the words are not apt to cover hobbies or pastimes engaged in by one or more people.
Considering the totality of the arrangement, and applying the above authorities, I am comfortably satisfied that, for the reasons explained earlier in this decision, Mr Chaaya was not regularly conducting a trade or business. It follows that the work he performed when he was injured was not work incidental to a trade or business regularly carried on by him in his name or a business or firm name. He was doing work for the appellant as part of the appellant’s business.
I would add that Mr Chaaya’s relationship with the appellant was clearly “special or particular” (Humberstone at 401) and that he did not perform work successively or concurrently for his customers in the course of a trade or business. Mr Chaaya had no customers and no independent business outside of the work he did for the appellant. That finding, together with Mr Jobson’s concession, brings Mr Chaaya within the ambit of cl 2 of Sch 1.
The last question is whether Mr Chaaya is prevented from relying on cl 2 of Sch 1 because he either sublet the contract or employed any worker. The evidence clearly established that he did neither. He did all the work under the Agreement. Mr Jobson’s submission that the Agreement permitted Mr Chaaya to employ workers has ignored the words of the provision and cannot be accepted. The disentitling provision only applies if, in the performance of the contract, the claimant actually “sublet the contract” or “employ[ed] any worker”. He did neither. It is therefore not relevant that the Agreement permitted him to do so.

CONCLUSION ON DEEMED WORKER

It follows from the above analysis that, if the Arbitrator erred in finding Mr Chaaya to be a worker, he was a deemed worker under cl 2 of Sch 1 and entitled to the benefits under the legislation.

DECISION

For the reasons given by the Arbitrator, and the additional reasons in this decision, the Arbitrator’s determination of 20 April 2015 is confirmed.
The matter is remitted to the Registrar for the making of such further orders as are necessary to give effect to the Arbitrator’s determination.

Bill Roche

Deputy President

3 September 2015

I, STEVEN HAMPSON, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF BILL ROCHE, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

ASSOCIATE