Baghdadi v Infinity Cabling Group Pty Ltd

CERTIFICATE OF DETERMINATION OF MEMBER
CITATION:	Baghdadi v Infinity Cabling Group Pty Ltd [2024] NSWPIC 519
APPLICANT:	Karim Baghdadi
RESPONDENT:	Infinity Cabling Group Pty Ltd
MEMBER:	Sophie Jones
DATE OF DECISION:	18 September 2024
CATCHWORDS:	WORKERS COMPENSATION - Workers Compensation Act 1987 (1987 Act); Workplace Injury Management and Workers Compensation Act 1998 (1998 Act); claim for weekly payments of compensation pursuant to sections 36 and 37 of the 1987 Act; whether the applicant was a worker pursuant to section 4 of the 1998 Act or a deemed worker pursuant to clause 2 of Schedule 1 to the 1998 Act; Held – the applicant was not a worker or deemed worker; award for the respondent.
DETERMINATIONS MADE:	The Commission determines: 1. The applicant was not a worker pursuant to s 4 of the Workplace Injury Management and Workers Compensation Act 1998. 2. The applicant was not a deemed worker pursuant to cl 2 of Schedule 1 of the Workplace Injury Management and Workers Compensation Act 1998. 3. Award in favour of the respondent.

STATEMENT OF REASONS

BACKGROUND

On 14 March 2024, Mr Karim Baghdadi (the applicant) was working at a building site in Granville when he fell backwards down a flight of steps, a distance of about 4m. The applicant sustained multiple injuries and was treated at Westmead Hospital.
The applicant alleges he was employed at the relevant time by Infinity Cabling Group Pty Ltd (the respondent) and sustained head injuries, facial fractures, neck injury and post-traumatic stress disorder in the course of that employment.
The applicant made a claim on the insurer for weekly payments of compensation. The respondent issued a notice pursuant to s 78 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act) on 31 May 2024, denying liability for the applicant's claim on the basis that he was neither a worker (as defined in s 4 of the 1998 Act) nor a deemed worker (as defined in cl 2 of Schedule 1 of the 1998 Act).
The present proceedings were commenced by lodgement of an Application to Resolve a Dispute (Application) in the Personal Injury Commission (Commission) on 6 June 2024.
The applicant seeks compensation pursuant to ss 36 and 37 of the Workers Compensation Act 1987 (the 1987 Act) for weekly payments of compensation for the period from 14 March 2024 to date and continuing.

ISSUES FOR DETERMINATION

The parties agree that the following issues remain in dispute:
(a) whether the applicant was a “worker” pursuant to s 4 of the 1998 Act;
(b) whether the applicant was a “deemed worker” pursuant to cl 2 of Schedule 1 of the 1998 Act, and if so,
(c) the extent and quantification of the applicant’s entitlement to weekly payments of compensation for the period from 14 March 2024 to date and continuing, pursuant to ss 36 and 37 of the 1987 Act, including the calculation of the applicant’s pre-injury average weekly earnings (PIAWE).
The following matter was not in dispute between the parties:
(a) that the applicant sustained injuries on 14 March 2024.

PROCEDURE BEFORE THE COMMISSION

The parties appeared for conciliation conference and arbitration hearing on 29 August 2024, conducted by way of videoconference. The applicant was represented by Mr Carney of counsel, instructed by Ms McKay, McKay Compensation Lawyers. The respondent was represented by Ms Goodman of counsel, instructed by Ms Petrolo, Gair Legal. Mr Smail from Gallagher Bassett Services Pty Ltd (the insurer) also attended.
Oral submissions were made during the arbitration hearing on all issues other than PIAWE and I directed the applicant and the respondent to lodge and serve wages schedules and PIAWE calculations following the arbitration hearing.
I am satisfied that the parties to the dispute understand the nature of the application and the legal implications of any assertion made in the information supplied. I have used my best endeavours in attempting to bring the parties to the dispute to a settlement acceptable to all of them. I am satisfied that the parties have had sufficient opportunity to explore settlement and that they have been unable to reach an agreed resolution of the dispute.

EVIDENCE

Oral evidence

No party applied to adduce oral evidence or cross-examine any witness.

Documentary evidence

The following documents were in evidence before the Commission and considered in making this determination:
(a)    Application and attached documents;
(b)    Reply and attached documents;
(c)    additional documents filed by the respondent on 1 July 2024 and
23 August 2024;
(d)    additional documents filed by the applicant on 27 August 2024;
(e)    wages schedule and PIAWE calculation filed by the applicant on
6 September 2024, and
(f)    wages schedule and PIAWE calculation filed by the respondent on
12 September 2024.
All additional documents were admitted by consent.

Applicant’s statements

The applicant’s evidence is set out in statements dated 1 May 2024,[1] 6 June 2024[2] and 26 August 2024.[3]
[1] Application, page 1.
[2] Application, page 8.
[3] Applicant’s late documents, page 7.
In the applicant’s statement dated 1 May 2024, he states that in 2021 he completed an apprenticeship as an electrician with Reed Group Electrical and Data Services Pty Ltd. The applicant states that he completed his certificate as an electrician but is not yet licensed.
The applicant advises that since 2021 he has been engaged by the respondent as a “sub-contract electrician” and he does not have any other employment.
The applicant states that he does not have a written contract with Mustaffa El Omar,[4] the principal for respondent, and their agreement is verbal. Mr El Omar allocates work to the applicant by sending him an SMS advising him of the work location and the work he is required to do. The applicant does not have the option of refusing work and is required to seek permission if he undertakes work for other people.
[4] Mr El Omar is also referred to as Mr Elmar in the documentary evidence. For consistency, I have referred to him as Mr El Omar.
The applicant states that during 2023, he undertook work for three businesses run by friends: Auswide Plumbing, Flow Rite Plumbing and Plumbing and Gas Today. In each case, he was required to seek permission from Mr El Omar to undertake this work.
The applicant advises that Mr El Omar directs him where he will be working and the manner in which his work is to be performed and any work site the applicant attends is under the responsibility of the foreman employed by the respondent. The applicant is not authorised to sub-contract any work to a third party.
The applicant is responsible for paying his personal income tax and making superannuation contributions. The applicant is paid on a weekly basis by direct transfer to his bank account and he issues an invoice weekly which includes a GST component on the invoice. The applicant does not accrue any sick leave, annual leave or long service leave entitlements.
The applicant is required to wear a uniform at work which is supplied by the respondent.
The applicant states he does not advertise on either social media or the internet and while the name “Phase Up Electrical” appears on his invoices, this does not currently exist as a business. The applicant intends to register this business name when he obtains his licence. The applicant advises he does have an ABN, last lodged a tax return in 2023 and does not lodge Business Activity Statements.
In the applicant’s second statement dated 6 June 2024, he provides further information about his apprenticeship at Reed Group Electrical and Data Services Pty Ltd. The applicant advises that when he started working for the respondent, he still needed to complete Certificate III “Electrotechnology Electrician”, which he completed while working for the respondent.[5] Before he could apply for an electrician’s licence, the applicant needed to have the requisite work experience working under the supervision of a licensed electrician and he completed this under the supervision of Mr El Omar.
[5] Certificate III in Electrotechnology Electrician dated 30 January 2023, Application, page 11.
The applicant states that when he first commenced working for the respondent, he was being paid $30 an hour and after he obtained his Certificate III, his hourly rate increased to $40 an hour.
The applicant explains that although he was being paid an hourly rate for construction jobs, the respondent was sometimes contracted to do “government rebate jobs”, for which the respondent was paid a set amount for the work and the applicant would be paid a daily rate.
The applicant states that he used tools supplied by the respondent for the work he was required to do. Mr El Omar would usually ensure the tools and materials required for a job were at the site, or the applicant would collect them from Mr El Omar. The tools included power tools and would be locked up on site. Sometimes the applicant was required to pick up materials such as cable from a hardware store, which Mr El Omar had already paid for.
About a week before the accident on 14 March 2024, Mr El Omar agreed to increase the applicant’s hourly rate to $55 per hour from 1 April 2024 as the applicant was in the process of obtaining his electrician’s licence and was expecting to be licensed by that date.
In the applicant’s statement dated 26 August 2024, the applicant provides information regarding bank statements produced to the Commission. The applicant confirms that he has not earned any income since the accident on 14 March 2024.

Mr El Omar’s statements

Statements of Mr El Omar were in evidence, dated 14 May 2024[6] and 3 July 2024.[7]
[6] Application, page 13.
[7] Respondent’s second bundle of late documents, page 5.
In his first statement, Mr El Omar states he is the sole director of the respondent business. Mr El Omar states the applicant “commenced employment with my organisation in 2021 as a sub-contract electrician. In his role, the Worker is employed under the supervision of me”.
Mr El Omar states the applicant is engaged to undertake work for the respondent by way of verbal agreement and there is no written contract in place. Mr El Omar states the applicant does have the authority to reject and accept work and only Mr El Omar is authorised to terminate the work relationship.
Mr El Omar states he is responsible for setting out and directing how work is performed by the applicant at any job site he has been allocated to, he authorises how, when and where the applicant performs the work. The applicant is not authorised to sub-contract tasks or employ other workers.
The applicant is responsible for meeting his tax obligations and is paid by direct bank deposit weekly. The applicant is required to provide an invoice and is paid on a per installation basis for government rebate jobs or on an hourly basis for construction work. The applicant is not entitled to annual leave, sick leave or personal leave and is responsible for making his own superannuation contributions.
The applicant is required to wear a uniform when carrying out tasks for the respondent. The respondent contracts to an organisation called Approved Fire Services and they provide the uniform.
The applicant does not advertise his services to other organisations or advertise on a commercial basis.
In his statement dated 3 July 2024, Mr El Omar states he first met the applicant about 10 years ago when they both worked together for another company. Mr El Omar states his current working relationship with the applicant is as the direct manager. Mr El Omar states:
“The Worker [the applicant] commenced employment with the Employer [the respondent] on 4th April 2022, as an Electrician, in a Full time capacity, as a sub-contractor, working from various job sites as required. He worked on average five (5) days per week between the hours of 7:00 AM and 3:00 PM, on average, with overtime available on Saturdays. These hours were consistent from the beginning.
I believe that the nature of the Worker was a combination of both to some extent. I mean this in the sense that he was receiving full-time hours, to the extent that he couldn’t work for other businesses, as I kept him busy, and provided the opportunity for overtime. I was paying him weekly through his invoices for the hours he worked and provided him uniform. However, he was not on the books, or on payroll, was paid through an ABN, where he would do his own taxes and his own superannuation. I am not sure if he was contributing to his superannuation fund, as this was not my role.
When I contacted him, we hadn’t spoken for around 7-8 years, however, I reached out to him and asked him to work for me, and if he wanted any more work, and if he needed hours and more money. He accepted and started working with me. I reached out to him as I needed more workers.
I asked him if he was working full-time and if he was looking for full-time work. At the time, I believe he was not working full-time, but I am not 100% sure.
The only clear thing was that he would work with me, with the intention to progress into full-time eventually and be on the books. However, in the interim, he would be working full-time hours, as a subcontractor, and through his own ABN.
From the beginning, he worked with me on a sub-contractor basis, intending to move into full-time employment. He was working with me from there on with full-time hours, however, he was paid as a subcontractor - he would invoice me, and he had his own ABN. …
Less than a month before his incident, he was going to go full-time with me and be on the payroll. He wanted this because of the benefits. This was a conversation, and a verbal agreement, with an intended start date to be on Monday 11th March 2024. A draft contract had been drawn up to support this move. However, this did not go ahead due to his injury. He has since been off work.
When it comes to pay, the Worker would invoice me, and I would process this myself. I would pay him through his ABN.”
Mr El Omar states the applicant was employed under his supervision, however he did not need to be closely supervised as he knew the job well.

Medical evidence

Clinical notes

Clinical notes were in evidence from Workers Doctors.[8]
[8] Application, page 85.
A report from Dr Morgan Mo, dated 23 May 2024, states that the applicant attended on 23 May 2024 following the accident on 14 March 2024. Dr Mo states the diagnosis as, “Head trauma, L) facial fractures: Complex comminuted and depressed fracture of the L) maxillary sinus walls, L) orbital fractures and displaced fracture of the L) zygomatic arch (CT: 14/03/2024); L) facial fracture surgical fixation; L) supraorbital full thickness laceration; Cervical spine strain; PTSD”. Dr Mo states the applicant is unfit for work and in relation to capacity for work, he states, “Due to his ongoing cervical spine dysfunction, and traumatic symptoms with concentration difficulties, he has not and cannot return to work as an electrician at this stage. He is recovering from surgery and requires further imaging to clarify the nature of his injuries.”

Medical certificate and Certificate of capacity

A medical certificate from Westmead Hospital was in evidence.[9] The image is difficult to read, however it appears to certify the applicant is unfit for work from 14 March 2024 to 29 May 2024.
[9] Application, page 107.
A certificate of capacity signed by Dr Mo dated 23 May 2024[10] certifies the applicant to have no capacity for any work from 23 May 2024 to 20 June 2024.

[10] Application, page 86.

Tax records

In the applicant’s tax return for the financial year ending 30 June 2023,[11] the applicant’s income is declared as business income, with a business name of “Karim” and the description of the main business or professional activity is stated as “Electrical Services”. Business expenses were claimed for motor vehicle expenses, protective clothing, tools and telephone, and were deducted from the total business income. The applicant also claimed a small business income tax offset.
[11] Application, page 72.
In the applicant’s tax return for the previous financial year ended 30 June 2022,[12] the applicant’s income is declared as business income with the business name “Phase Up Electrical”. Business expenses were claimed for motor vehicle and other expenses and were deducted from the total business income.
[12] Applicant’s late documents, page 24.
The applicant’s tax return for the financial year ended 30 June 2021[13] records the applicant’s main salary and wage occupation as “Apprentice – Electrician”.
[13] Applicant’s late documents, page 27.
The applicant’s tax return for the financial year ended 30 June 2020[14] similarly records the applicant’s main salary and wage occupation as “Apprentice – Electrician”.
[14] Applicant’s late documents, page 30.
Business Activity Statements (BAS) for the periods October 2021-December 2021 and January 2022-March 2022 were also in evidence.[15]
[15] Respondent’s second bundle of late documents, page 27.

Business Name and ABN details

An extract from the Australian Securities & Investments Commission database was in evidence.[16] The extract is dated 23 April 2024 and states the business name “Phase Up Electrical” was registered as a business name on 10 November 2021 and its current states is cancelled.
[16] Application, page 83.
An extract from the Australian Government, Australian Business Register was in evidence.[17] That extract is dated 23 April 2024 and shows an ABN with an entity name of Karim Jamal Baghdadi, active from 24 October 2021. The entity type is listed as “Individual/Sole Trader” and the extract records, “Not currently registered for GST”.
[17] Application, page 84.

Tax invoices

A total of 33 invoices from Phase Up Electrical addressed to the respondent covering the period 14 March 2023 to 14 March 2024 were included with the Application.[18] The invoices include the applicant’s ABN and residential address. The majority of invoices are for payment on an hourly basis, however some indicate payment on a per job basis.
[18] Application, page 26.
Further invoices from Phase Up Electrical addressed to the respondent were provided with the applicant’s late documents.[19] It is unclear which year these invoices relate to as the dates provided give the day and month but do not include a year. The respondent’s first bundle of late documents also contains invoices from Phase Up Electrical addressed to the respondent which appear to be for work undertaken in 2022.[20]
[19] Applicant’s late documents, page 37.
[20] Respondent’s first bundle of late documents, page 2.
A total of 12 invoices from Phase Up Electrical addressed to entities other than the respondent during the period 14 March 2023 to 14 March 2024 were included with the Application.[21] It appears these invoices are addressed to Muhammad Khaled, Flowrite Plumbing Group and George Sooalo, Plumbing and Gas Today, however some of the images are not possible to read. The invoices are for payment on a job basis, for example, “04/07/23 install x2 hot water system $600.00”.[22]
[21] Application, page 60.
[22] Application, page 60.

Bank records

The applicant’s bank records for the period 29 June 2021 to 19 July 2024 were in evidence.[23]
[23] Respondent’s second bundle of late documents, page 29.

Factual investigation report

A factual investigation report prepared by Robert Whelan, Investigative Services Group, dated 24 May 2024 was in evidence.[24] Among other things, the report contains the results of social media searches related to the applicant, which found personal Facebook and Instagram accounts of the applicant, ABN and business ownership details, a copy of the applicant’s statement dated 1 May 2024 and Mr El Omar’s statement dated 14 May 2024, photographs of a work shirt bearing the logo “Approved Fire Services”, a number of invoices from Phase Up Electrical addressed to the respondent and a copy of the applicant’s 2023 tax return.
[24] Reply, page 116.

Wages schedule and PIAWE calculations

In accordance with directions made at the arbitration hearing, the applicant submitted a wages schedule and PIAWE calculation on 6 September 2024. The applicant submits the applicant’s PIAWE is $1,815.89.
The applicant’s wages schedule includes a list of payments made to the applicant from Mr El Omar, Flow Rite Plumbing, Plumbing and Gas Today and Auswide Plumbing, covering the period from 22 January 2022 to 12 May 2024, as well as the applicant’s relevant bank records.
The respondent submitted a wages schedule and PIAWE calculation on 12 September 2024 and submits the applicant’s PIAWE is $1,660.

SUBMISSIONS

Oral submissions were made during the arbitration hearing and were recorded. The key points of those submissions are summarised below.

Applicant’s submissions

In summary, the applicant’s submissions were:
(a)    the applicant was an employee or a deemed employee;
(b)    the applicant did not have any other employment besides that which he had with the respondent. The applicant did do some other work but that was of a very minor nature and not on a regular basis;
(c)    the applicant had a verbal agreement with the respondent;
(d)    following ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2 and Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 (Personnel Contracting), the contract is the major determinant of whether a person is a worker or not, however in this case the contract was an oral contract, so the intention of the parties needs to be considered;
(e)    the applicant was required to obtain approval from Mr El Omar to do other jobs. Mr El Omar clearly exercised a great deal of control over the work that the applicant did;
(f)    the applicant was under the close supervision of the foreman, he was told where to go and what to do, he was not authorised to subcontract any work to a third party;
(g)    in relation to financial arrangements, the applicant paid his own tax and was responsible for submitting an invoice every week and he did not have leave entitlements;
(h)    the applicant was required to wear a uniform that was supplied. To the outside world it would have appeared that he was an employee;
(i)    the applicant did not advertise on social media or the internet;
(j)    the three other entities that the applicant performed work for were all friends of his which is consistent with his evidence that he did not hold himself out as being open for business;
(k)    the applicant was not a fully qualified electrician so he could not hold himself out as an electrician to the general public;
(l)    the applicant did lodge a BAS in 2021 however it is not compliant with the requirements of a BAS and is indicative that he was not running a regular business;
(m)     the respondent provided tools and materials for the applicant’s use;
(n)    the invoices rendered by the applicant are only for his labour and do not include the cost of materials;
(o)    the applicant was contracting on a regular basis to the respondent and other than the work that he did for three friends, he did not do work for anyone else;
(p)    Mr El Omar confirms the applicant was required to wear a uniform of Approved Fire Services. Mr El Omar stated that he has eight subcontractors but only the applicant receives full-time hours. The certificate of insurance discloses two workers which is consistent with that statement. Mr El Omar intended that the applicant would work full-time for the respondent;
(q)    the applicant never registered the business name that was on the invoices, and the only BAS statements submitted were in 2021 and 2022, which suggests that some years before the injury occurred he had stopped considering that he was running a business;
(r)    there is no evidence that the applicant was holding himself out as an electrician and that option was not open to him as he was not qualified;
(s)    there is no evidence that the applicant was holding himself out in an entrepreneurial way as a subcontractor: On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366;
(t)    the oral contract with the respondent does seem to have exclusivity in it and it imposed obligations on the applicant that he would do the respondent’s work first;
(u)    an employer/employee relationship is suggested, or in the alternative, the applicant was a deemed worker, and
(v)    the applicant was not carrying out a regular business, as a regular business would not be curtailed by the requirement for the applicant to seek permission from the respondent to do other work.

Respondent’s submissions

In summary, the respondent’s submissions were that:
(a)    the applicant’s statement that he did not have any other employment is not entirely true with reference to the invoices and bank records;
(b)    the applicant stated that he was engaged by the respondent as a subcontract electrician, not as an employee;
(c)    the applicant describes his work as electrical services in his tax return;
(d)    the agreement with the respondent was verbal and there is no SMS evidence of how jobs were sent to him or if he has refused jobs;
(e)    there is dispute between the applicant and the respondent as to whether he has the right to refuse work: the applicant says that he did not have the right, whereas the respondent says that he did have the right to refuse work;
(f)    the invoices do not support the submission that the applicant was working full-time;
(g)    the applicant was responsible for the payment of income tax on his earnings, he was paid into a nominated bank account, superannuation was his responsibility and he did not accrue any sick leave, annual leave or long service leave;
(h)    the applicant does not advertise but he has a number of friends who provide him with work;
(i)    the name Phase Up Electrical appears on every one of his invoices. Even if it is not a registered business name, this is the name he uses for the business he is in fact running;
(j)    the applicant has an ABN, which is inconsistent with him being a worker;
(k)    the applicant did lodge business activity statements, even if they were not completed correctly;
(l)    the invoices are inconsistent with the applicant being a full-time employee as he was not working five days a week;
(m)     there are 13 invoices issued to entities other than the respondent. As recently as six weeks before the incident, he was working for other people;
(n)    the applicant’s tax returns show his income is derived not as an employee but derived from a business;
(o)    the applicant claimed motor vehicle and other expenses in his tax return, including for tools and uniform expenses;
(p)    the applicant is clearly running his own business and he claims the offset for a small business. The applicant is not a worker or a deemed worker;
(q)    Mr El Omar’s statement says the applicant commenced as a subcontract electrician. The intention was the applicant was not a worker but a subcontractor;
(r)    the fact that the applicant was not licensed does not make a difference to the fact the applicant was in fact performing a business providing electrical services;
(s)    the applicant is not a worker, on the basis that he provides invoices for work that he does, those invoices have an ABN on them and are not on an hourly rate but a daily amount or by the job. The applicant is then paid upon the invoice and the applicant manages his own entitlements;
(t)    the applicant claimed a deduction in relation to protective clothing and tools. The tax return itself shows the applicant is running a business and claiming a small business tax offset;
(u)    the applicant was also not a deemed worker as he is clearly running his own business. In the last financial year there are at least 13 invoices to other entities. The applicant is clearly working for other people, and
(v)    in relation to the applicant’s work capacity, it is noted that there are payments made from the respondent to the applicant after the date of injury.

Applicant’s submissions in reply

In summary, the applicant’s submissions in reply were that:
(a)    the 13 invoices issued to entities other than the respondent need to be considered in the context that the applicant had a working relationship with the respondent that had existed for three years. There is no question that he did some work for other people, but they were the same people;
(b)    the overwhelming employment that the applicant had was with the respondent. The fact the applicant did some work for three distinct persons is not indicative of running a business as they were people known to the applicant, and
(c)    the applicant has explained all the payments in his statement.

FINDINGS AND REASONS

Was the applicant a worker?

Section 4 of the 1998 Act sets out the definition of “worker” as follows (exceptions omitted):
“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).”
It is therefore necessary to examine whether the applicant entered into or worked under a contract of service or a training contract with the respondent.
In Stevens v Brodribb Sawmilling Company Pty Limited [1986] HCA 1; (1986) 160 CLR 16 (Stevens), the High Court considered factors to determine whether a relationship is one of employer and employee (rather than principal and independent contractor). Those factors include the right of the employer to exercise control, direction and supervision over the worker, the mode of remuneration, provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax, the ability of the worker to delegate work, the right of the employer to have a particular person do the work, the right to suspend or dismiss the worker, the right to the worker’s exclusive services, and the right to dictate the place of work and hours.
In Personnel Contracting, Keifel CJ, Keane and Edelman JJ stated at [34], with reference to Stevens that “the characterisation of a relationship as being either one of employment or one of principal and independent contractor is to be determined by reference to ‘the totality of the relationship between the parties’” rather than running down items on a checklist.
In Malivanek, Roche DP referred to the indicia set out in Stevens as well as the observation of McColl JA in Australian Air Express Pty Ltd v Langford [2005] NSWCA 96 at [16]:
“The second observation concerns the distinction between an employee and an 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’: Marshall v Whittaker’s Building Supply Co [1963] HCA 49; (1963) 109 CLR 210 at 217 per Windeyer J. Although this statement was criticised by Wilson and Dawson JJ in Stevens (at 34) as ‘posing the ultimate question in a different way rather than offering a definition which could be applied for the purpose of providing an answer’, it was referred to with approval by the majority in Hollis (at 38 – 39 [39] – [40] [Hollis v Vabu Pty Ltd [2001] HCA 44; 207 CLR 21 (Hollis)]).”
It is the applicant’s onus to establish that he was a worker on the balance of probabilities.
The applicant submits that there existed an employer/employee relationship between himself and the respondent. The applicant states that there was a verbal agreement between himself and Mr El Omar concerning his employment and Mr El Omar sent him SMS messages with the details of where he was required to work and the work required to be undertaken. The applicant states there was an agreement with Mr El Omar regarding his hourly rate, he was paid an hourly rate for construction jobs and a daily rate for government rebate jobs.
Mr El Omar also states that the applicant was engaged to perform work for the respondent by way of verbal agreement and there was no written contract. Mr El Omar stated in his first statement that the applicant commenced employment with the respondent in 2021, however in his second statement he advises the applicant commenced employment with the respondent on 4 April 2022.
There is no dispute that the applicant was paid by the respondent on production of invoices and the applicant’s bank records show transfers from “Mustaffa El Omar” into the applicant’s bank account commencing on 30 October 2021, which would suggest this may mark the commencement of the work relationship between the applicant and the respondent.
I am satisfied that an oral contract was formed between the applicant and the respondent at some point either in the latter part of 2021 and certainly by early 2022.
In considering the nature of the contractual relationship between the parties, I note that neither party submitted that the nature of the contract between the applicant and the respondent was a “training contract” as that term is defined in s 4 of the 1998 Act.
With respect to the control test in Stevens and the relevant indicia, the parties were in agreement that Mr El Omar directed the applicant when and where to work. The applicant states he worked under the supervision of the foreman of the worksite and Mr El Omar states that he worked under his supervision, however he did not need to supervise the applicant closely as he knew the job well.
Both parties agree that the applicant was paid upon production of an invoice and was paid an hourly rate for construction jobs. For government rebate jobs, the applicant states he was paid a daily rate, whereas Mr El Omar states he was paid per job. From a review of the invoices, it would appear that the latter is correct, that the applicant was paid on a per job basis for government rebate work. Both parties agree that payment of income tax and superannuation contributions were the applicant’s responsibility, and the applicant received no sick leave, annual leave or other leave entitlements from the respondent. Both parties agree that the applicant was not permitted to delegate his work to another person.
Both parties agree that the applicant was required to wear a uniform. In addition, the applicant states that all tools and materials were provided by the respondent.
In relation to uniform, tools and equipment, the respondent submitted that the applicant claimed deductions in his tax returns for protective clothing and tools. Whilst Mr El Omar did not address the topic of tools and equipment in his statement evidence, both Mr El Omar and the applicant state that the applicant was required to wear a uniform and a photograph of what is said to be that uniform is included in the Reply documents.[25]
[25] Reply, page 141.
The only issue on which the applicant and Mr El Omar’s statement evidence diverges is whether the applicant had the right to refuse work. The applicant states that he did not have the right to refuse work, whereas the respondent states that the applicant had the right to accept or refuse work but only the respondent had the right to terminate the work relationship.
Considering the evidence in the applicant and Mr El Omar’s statements, I consider that there was a degree of control and direction exerted by the respondent over the applicant, as he was directed when and where to work, and what jobs were to be undertaken. There was also supervision of the applicant by either the foreman on site or by Mr El Omar.
Other indicia of an employer/employee relationship that are present are that the applicant was required to wear a uniform, that, on the applicant’s evidence, tools and materials were supplied by the respondent and that the applicant was not permitted to delegate his work.
In relation to the right to the applicant’s exclusive services, the applicant states that he was required to obtain permission from the respondent in order to undertake work for other people, which indicates the respondent had an exclusive right to the applicant’s services. This element was not addressed in Mr El Omar’s statements. Mr El Omar stated that the applicant was receiving full-time hours from him “to the extent that he couldn’t work for other businesses, as I kept him busy, and provided the opportunity for overtime”, however Mr El Omar does not state whether the applicant had to seek permission to work for others.
In relation to the factors that indicate an employer/employee relationship was not present, I note firstly that the applicant provided invoices which bore the name “Phase Up Electrical” and the applicant’s ABN, although the invoices did not include any charges for materials and were a combination of payment on an hourly basis and per job. In addition, the respondent did not withhold PAYG tax or make superannuation contributions and the applicant did not receive any leave entitlements from the respondent.
In considering the totality of the relationship between the parties, I also note the specific references by both the applicant and Mr El Omar to the fact that the applicant was engaged by the respondent as a subcontractor. Mr El Omar also states that some time before the accident, he had a conversation with the applicant about becoming a full-time employee on the payroll in the future, but this had not occurred as at the date of injury. The evidence supports the view that the intention of the parties in forming the oral contract was that the applicant was to be engaged as a subcontractor by the respondent. I do not find the evidence supports the view that the intention of the parties in forming the oral contract was that the applicant was to be engaged as an employee of the respondent.
Considering not only the factors in Stevens, but also the totality of the relationship between the applicant and the respondent, whilst I am satisfied that there was an oral contract between the parties, I am not satisfied on the balance of probabilities that the applicant was a worker for the purposes of s 4 of the 1998 Act.

Was the applicant a deemed worker?

Section 5 of the 1998 Act provides that Schedule 1 of the Act has effect with respect to deemed workers. The applicant bears the onus of establishing on the balance of probabilities that he was a deemed worker.
Clause 2(1) of Schedule 1 provides:
“Other contractors
(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
(b)(Repealed)
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.”
In order to satisfy cl 2(1)(a), the Court of Appeal set out in Scerri v Cahill (1995) 14 NSWCCR 389 at 399 that an applicant needs to establish the following:
1.     that he or she was a party to a contract with the respondent to perform work;
2.     that work exceeds $10 in value;
3.     that work is not work incidental to a trade or business regularly carried on by the applicant in their own name or under a business or firm name; and
4.     that the applicant has neither sublet the contract nor employed workers in the performance of it.
I have found an oral contract was formed between the applicant and the respondent to perform work. There is no dispute that the applicant was paid more than $10 for his work, nor that he did not sublet the contract or employ any other worker. I therefore find points 1, 2 and 4, above, are satisfied.
The point that is in issue is whether the work was not incidental to a trade or business regularly carried out by the applicant in his own name or under a business or firm name.
In Pasqua v Morelli Constructions Pty Ltd [2009] NSWWCCPD 153 (Pasqua), Roche DP observed at [50]:
“As observed by Dixon J in Humberstone, a distinction must be drawn between an independent contractor whose relationship with the principal is ‘special or particular’, on the one hand, 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.’”

Roche DP further held at [58]:
“[I]t is necessary to consider whether the contractor is in business for himself or herself and whether a trade or business is carried on systematically and regularly.”
The following authorities and principles are noted in Malivanek v Ring Group Pty Ltd [2014] NSWWCCPD 4 at [216] – [221]:
“In Turner v Stewardson [1962] NSWR 137 (at 139) the Court of Appeal 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 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 Sch 1 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) of the Workers Compensation Act 1926, which was in similar terms to Sch 1. 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, but it 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 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 applicant submitted that he worked exclusively for the respondent, apart from a small amount of work that was undertaken for three friends, for which the applicant had to seek the respondent’s permission. It was submitted that if the applicant was running a business, it could not be curtailed in that way. The applicant submitted that whilst he did some work for other people, his overwhelming employment was with the respondent. The applicant further submitted that he was not a licensed electrician so could not hold himself out to the general public as an electrician, he did not advertise and the fact the only other work he performed was for friends is consistent with him not holding himself out as conducting a business. In addition, the applicant submitted he had never registered his business name and the fact that only two BAS statements were lodged is evidence that he had stopped considering that he was running a business.
The respondent submitted that the applicant was clearly running his own business, as evidenced by there being at least 13 invoices to other entities in the last financial year, which demonstrates that he was not only working for the respondent, and he was claiming a small business offset in his tax and other business deductions. The applicant had lodged BAS statements, he has an ABN and used a business name on his invoices. The fact that he was not licensed does not change the fact that he was running a business providing electrical services and although he did not advertise, he was getting work from his friends.
The applicant has an ABN and the business name “Phase Up Electrical” was registered in November 2021 as a business name, although it is cancelled. The invoices in evidence bear the name Phase Up Electrical and the applicant’s ABN.
The applicant’s tax returns declare the applicant’s income as being business income. The applicant’s 2023 tax return states the business name as “Karim” and the description of the main business activity as “Electrical Services”. In addition, in his 2023 tax return the applicant claimed a small business tax offset and business expenses for motor vehicle expenses, protective clothing, tools and telephone.
In relation to a business name appearing on invoices, Roche DP stated in Pasqua at [48], “The fact that Mr Pasqua used a business name in his dealings with Morelli is not determinative. The question is not whether he had a business name, but whether he was regularly carrying on a trade or business during the relevant period.”
The wages schedule and bank records lodged by the applicant demonstrate that from 22 January 2022 to 22 March 2024, Mr El Omar made 80 payments into the applicant’s bank account. From 22 January 2022 to 28 April 2022, these are noted in the bank records as “Credit to Account”; from 5 May 2022 to 29 July 2022, they are recorded in the bank records as “Karim Wages” and from 5 August 2022 to 23 March 2024 almost all are recorded as “Invoice” or an abbreviation thereof.
In addition to the bank records, a number of invoices issued by the applicant to the respondent were in evidence, as were invoices issued to Flow Rite Plumbing, Plumbing and Gas Today and Auswide Plumbing. The invoices issued to those three entities were for payment per job, rather than for payment at an hourly rate.
Further examination of the applicant’s wages schedule and bank records shows that from
27 June 2023 to 16 February 2024, payments were made into the applicant’s bank account from persons the applicant states are associated with Flow Rite Plumbing, Plumbing and Gas Today and Auswide Plumbing.
The applicant’s wages schedule and bank records support the view that from 22 January 2022 to 26 June 2023, the applicant was working as a subcontractor exclusively for the respondent, as the wages schedule does not identify any payments to the applicant from Flow Rite Plumbing, Plumbing and Gas Today or Auswide Plumbing prior to 26 June 2023.
However, from 27 June 2023 to 22 March 2024, the respondent made 24 payments to the applicant’s bank account, compared with 19 from persons identified by the applicant as associated with Flow Rite Plumbing, Plumbing and Gas Today and Auswide Plumbing.
It therefore appears from the evidence that the applicant’s activities changed around June 2023 from exclusively subcontracting for the respondent to undertaking work for others. In this regard, I note that the applicant obtained his final certificate, Certificate III in Electrotechnology Electrician on 30 January 2023 and although he was not a fully licensed electrician, he had obtained all his required certificates by the time he started undertaking work for Flow Rite Plumbing, Plumbing and Gas Today and Auswide Plumbing.
The applicant submits that he was required to obtain permission from the respondent and this should weigh against a conclusion that he was conducting his own business. However, Mr El Omar’s statement evidence is silent as to whether the applicant was required to obtain his permission but states that the applicant could accept or refuse work, which is one of the only differences between the evidence of Mr El Omar and the applicant.
Whether or not the applicant was required to obtain permission from the respondent to undertake work for other companies, the evidence demonstrates that in the nine months before his injury, he did in fact undertake this work on a number of occasions. Having regard to the applicant’s wages schedule and bank records, the evidence suggests that for the nine months preceding the date of injury, the applicant was not working exclusively for the respondent.
The applicant had an ABN and issued invoices for his work which bore a business name, although that business name was unregistered. The applicant’s tax returns declared the nature of his business as “Electrical Services” and in the nine months before the date of injury on 14 March 2024, the evidence is that he received payment on 24 occasions from the respondent and on 19 occasions from persons the applicant states were the owners of or associated with three other businesses. The applicant did not advertise his services and was not a licensed electrician, however, based on the totality of the evidence, I am satisfied that at the time of his injury the applicant was regularly carrying on a trade or business in his name or a business name, the nature of which was the provision of electrical services.
As I am satisfied that the applicant was regularly carrying on a trade or business providing electrical services at the time of the injury, I am therefore not satisfied on the balance of probabilities that the work undertaken by the applicant for the respondent was not incidental to his usual trade or business.
I am not satisfied that the applicant has discharged his onus and established that he was a deemed worker pursuant to cl 2 of Schedule 1 of the 1998 Act.
As I have found the applicant was not a worker or deemed worker, the applicant is not entitled to weekly payments of compensation, pursuant to ss 36 and 37 of the 1987 Act.

SUMMARY

The applicant was not a worker pursuant to s 4 of the 1998 Act or a deemed worker pursuant to cl 2 of Schedule 1 of the 1998 Act.
Award in favour of the respondent.

[2024] NSWPIC 519

18 September 2024