Anika Tanjin Aziz v Aargus Pty Ltd

[2024] FWC 1365

[2024] FWC 1365

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.394—Unfair dismissal

Anika Tanjin Aziz
v

Aargus Pty Ltd

(U2024/1096)

COMMISSIONER MCKINNON SYDNEY, 24 MAY 2024

Application for an unfair dismissal remedy – whether dismissed – whether employee

1. Ms Anika Tanjin Aziz worked for Aargus Pty Ltd (Aargus) from 23 November 2015 until 16 January 2024. She was in charge of all accounting tasks, acted as its authorised representative for the purposes of liaising with the Australian Taxation Office and other regulatory bodies in relation to taxation, superannuation and workers compensation.

1. On 1 February 2024, Ms Aziz applied in time for an unfair dismissal remedy under section 394 of the Fair Work Act 2009 (Cth) (the Act). Aargus objects to the application on the basis that Ms Aziz was an independent contractor and not an employee, and accordingly she could not have been “dismissed” for the purposes of the Act.[1]

1. The question is whether Ms Aziz was an employee of Aargus.

1. For the reasons below, I find that Ms Aziz was not an employee of Aargus. The application will be dismissed.

Legal framework

1. Section 386 of the Act sets out the circumstances in which a person is taken to have been “dismissed” for the purposes of section 394. Relevantly, it provides as follows:

“386 Meaning of dismissed

(1)   A person has been dismissed if:

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

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

1. The text of section 386 makes plain that a person is only “dismissed” if their employment comes to an end in one of the circumstances described in (a) or (b) above. In each case, the circumstances depend on the existence of an employment relationship at law.

1. The relevant legal principles for present purposes are those set out by the High Court of Australia in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd[2] (Personnel Contracting) and ZG Operations Australia Pty Ltd & Anor v Jamsek & Ors (Jamsek).[3] These principles were helpfully summarised by the Federal Court of Australia in JMC Pty Limited v Commissioner of Taxation[4]. Shortly stated:

1. First, where the rights and duties of the parties are comprehensively committed to a written contract, the legal rights and obligations established by the contract are decisive of the character of the relationship provided that the validity of the contract has not been challenged as a sham, or that the terms of the contract have not been varied, waived or are subject to an estoppel. The task is to construe and characterise the contract made between the parties at the time it was entered into.

2. Second, in order to ascertain the relevant legal rights and obligations, the contract of employment must be construed in accordance with the established principles of contractual interpretation. In that respect, regard may be had to the circumstances surrounding the making of the contract, as well as to events and circumstances external to the contract which are objective, known to the parties at the time of contracting and which assist in identifying the purpose or object of the contract. The nature of the specific job that the putative employee applied for and the nature and extent of any tools or equipment they have to supply for that job may also be relevant. It is, however, generally not legitimate to use in aid of the construction of a contract anything which the parties said or did after it was made.

3. Third, and flowing from the first two principles, the characterisation of the relationship between the parties is not affected by circumstances, facts or occurrences arising between the parties that have no bearing on their legal rights. A “wide-ranging review of the entire history of the parties’ dealings” is neither necessary nor appropriate. For a “matter to bear upon the ultimate characterisation of a relationship, it must be concerned with the rights and duties established by the parties’ contract, and not simply an aspect of how the parties’ relationship has come to play out in practice but bearing no necessary connection to the contractual obligations of the parties”. The fact that the parties’ subsequent conduct may not have precisely aligned with their contractual rights and obligations, or the fact that a particular contractual right may have never been exercised or utilised, will generally be irrelevant when it comes to characterising the relationship. That is unless the manner in which the parties conducted themselves after entering into the contract was such as to establish that the contract was a sham, or that the contract had been varied, or that certain rights under the contract were subject to an estoppel.

4. Fourth, the contractual provisions that may be relevant in determining the nature of the relationship include, but are not limited to, those that deal with the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work, the provision for holidays, the deduction of income tax, the delegation of work and the right to exercise direction and control.

5. Fifth, the characterisation of the relationship as one of service or employment involving an employer and employee, as opposed to a relationship involving an independent contractor providing services to a principal, often hinges on two considerations, although neither are determinative and both involve questions of degree. The considerations are:

1. the extent to which the putative employer has the right to control how, where and when the putative employee performs the work, and
2. the extent to which the putative employee can be seen to work in his or her own business, as distinct from the business of the putative employer – the so-called “own business/employer’s business” dichotomy.

6. Sixth, a “label” which the parties may have chosen to describe their relationship is not determinative of the nature of the relationship and will rarely assist the court in characterising the relationship by reference to the contractual rights and duties of the parties. The parties’ “legitimate freedom to agree upon the rights and duties which constitute their relationship” does not “extend to attaching a ‘label’ to describe their relationship which is inconsistent with the rights and duties otherwise set forth” – to permit otherwise would elevate the freedom to “a power to alter the operation of statute law to suit … the interests of the party with the greater bargaining power”. The characterisation of a relationship as being either one of employer and employee, or one involving the engagement of an independent contractor, is ultimately an evaluative judgment that takes into account the totality of the parties’ contractual rights and obligations. The exercise may not necessarily be straightforward because, in some cases at least, the parties’ contractual rights and obligations may point in different directions. The evaluative exercise also should not be approached on the basis that there is some checklist against which ticks and crosses may be placed so as to produce the right answer. Some degree of uncertainty is unavoidable, particularly in the case of many modern-day work or service contracts.

1. In Secretary, Attorney General’s Department v O’Dwyer[5], the Federal Court considered the principles established in Personnel Contracting to apply equally to circumstances where there is no wholly written contract between the parties but where there is instead an oral contract or one that is partly written and partly oral.

Consideration

1. In Ms Aziz’s case, there is no written contract between the parties in relation to the period after 2018. The evidence as to the arrangements of a contractual nature governing Ms Aziz’s work for Aargus is this:

1.   Ms Aziz is a qualified Certified Practising Accountant. She was employed by a related entity of Aargus (Aargus Holdings Pty Ltd) on 23 November 2015 in the position of Financial Accountant. The employment was regulated by a written contract of employment dated 30 December 2015. In this role, Ms Aziz looked after the company accounts including payroll, insurance and financials. She was subject to the direction and control of Aargus and its Managing Director, Mr Nickolaos Kariotoglou, Managing Director. She worked full-time in the office and reported to Mr Kariotoglou and Ms Cynthia David, Administration Manager.

2.   In or about 2017, Ms Aziz worked 3 days in the office and 2 days from home.

3.   On 16 May 2018, Ms Aziz registered for an Australian Business Number in her name.

4.   On 25 May 2018, and at Ms Aziz’s request, she began providing services to Aargus on the basis that she was a sole trader. The purpose of the change was to allow Ms Aziz greater control over her hours and working arrangements now that she had a baby. It also meant she could earn more by changing the basis upon which she was paid and taxed. Her hourly rate increased by approximately 10% from $35.12 to $38.46 to compensate for the loss of superannuation and other entitlements and she became entitled to claim a wider range of tax deductions. The actual work to be performed by Ms Aziz for Aargus remained the same, but ‘when, where and how’ that work was performed became matters largely within Ms Aziz’s control.

5.   Consistent with the change to sole trader, when Ms Aziz completed annual payroll tax declarations and worker’s compensation paperwork for Aargus after 2018, she recorded her status in the business as contractor rather than employee. The description given to her role as a contractor was “Bookkeeping, Accounting Services”.

6.   Ms Aziz invoiced Aargus for “Book Keeping and Admin Services” each week or fortnight by way of a Recipient Created Tax Invoice. Aargus was her sole client. Her invoices claimed payment for a weekly or fortnightly sum for services rendered and did not otherwise specify the hours or times during which those services were performed. The invoices were paid by Aargus as received, although not always in a timely way.

7.   The rates at which Ms Aziz charged for her services were arrived at by agreement between the parties. Neither had the right, independent of that agreement, to set their own rates except for the purpose of complying with statutory obligations. For example, from July 2023, Ms Aziz became registered for GST and began charging Aargus for GST accordingly. At the time her services were terminated, Ms Aziz charged Aargus an amount equivalent to an hourly rate of $64.03 plus GST.

8.   Ms Aziz received a “bonus” of $5000 in November 2021.

9.   Ms Aziz had the use of an office computer although after 2018, it appears to have been rarely used except when Ms Aziz accessed it remotely. Ms Aziz largely worked from home and used her own phone and laptop for work purposes. She did not accrue leave on the Aargus accounts that she maintained, although she was paid for two weeks each year when Aargus was closed for the annual Christmas break. The evidence as to payment for absence due to illness is uncertain. Ms Aziz did not take maternity leave on the two occasions that she would have been entitled to it.

10.  Ms Aziz sometimes used her credit card to cover company expenses and charged these to Aargus on her regular invoice for reimbursement.  Aargus paid her toll account, provided her with a fuel card and paid for her Microsoft 365 account subscription. She could use the company Officeworks account to purchase stationery supplies.

1. On the facts, there were two separate and distinct contractual relationships between Ms Aziz and Aargus. The first was a comprehensive written contract of employment, which commenced on 23 November 2015 and was discharged by agreement on 24 May 2018. From 25 May 2018 until 16 January 2024, the contract between Ms Aziz and Aargus was an oral contract for services. This second contract was entered into in response to a proposal by Ms Aziz that she establish her own business and work for Aargus as a contractor. The terms of the contract provided for Ms Aziz to invoice Aargus on a weekly or fortnightly basis for professional services rendered in the billing period, together with any claim for reimbursement of expenses incurred. In addition to the agreed rate of remuneration, Aargus paid for her Microsoft 365 subscription and where necessary, stationery supplies. Ms Aziz was responsible for payment of her own taxation and for deciding where, when and how she performed her role within the broad ambit of providing the services for which she was contracted to perform.

1. It is important to recall the professional qualifications held by Ms Aziz, and the context in which her proposal to vary the nature of her relationship with Aargus was made. As a certified practising accountant, Ms Aziz was in a position to make an informed choice about the state of affairs that best suited her at the time. The proposal she put to Aargus, and to which it acceded, relied on these professional qualifications and expertise. By the agreement reached, Ms Aziz obtained a degree of independence in the performance of her role that was inconsistent with her continuing to be subject to the control of Aargus in relation to how her work should be done. Although it retained the ability to instruct Ms Aziz about the work it required to be done, it would be a strange contract for services that did not permit directions to be given about the nature of services to be provided by the contractor, or for inquiries to be made by the principal about how work was progressing.

1. Ms Aziz provided the few tools of her trade that were necessary for the performance of her work – a place from which to work, a phone, laptop and internet connection, and her specialist knowledge and skills. These, and the matters above, point in favour of the conclusion that on and after 25 May 2018, Ms Aziz was acting on her own behalf, and working in her own business, rather than in the service of the business of Aargus.

1. It is not inconsistent with this finding that Aargus was her only client. There is no evidence to imply any contractual term into the arrangement to the effect that Aargus had exclusive rights to the services provided by Ms Aziz, or that she was prevented from engaging others to work in her business, even if that is how things unfolded in practice. There is no evidence that the arrangements put in place on and from 25 May 2018 were a sham.

1. In summary, at the time of termination of her contract with Aargus, Ms Aziz was not its employee. She could not have been dismissed for the purposes of section 386 of the Act.

Disposition

1. The application is dismissed.

COMMISSIONER

Appearances:

A Aziz on her own behalf.
N Kariotoglou for the Respondent.

Hearing details:

2024.
Sydney (by video):
April 15.

[1] Fair Work Act 2009 (Cth), s.394 and s.386 (meaning of “dismissed”).

[2] [2022] HCA 1.

[3] [2022] HCA 2.

[4] [2022] FCA 750 per Wigney J.

[5] [2022] FCA 1183; see also Meltser v Toppa Sports Pty Ltd [2023] FWC 3224.

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