David Prossor v Melbourne Flight Training Pty Ltd

[2018] FWC 6961

[2018] FWC 6961

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

David Prossor
v
Melbourne Flight Training Pty Ltd
(U2018/5754)

COMMISSIONER MCKINNON MELBOURNE, 20 NOVEMBER 2018

Application for an unfair dismissal remedy - whether employee or contractor.

Introduction

[1] David Prossor says he was employed by Melbourne Flight Training Pty Ltd (MFT) as a Flight Instructor from January 2007 until 16 May 2018 when he was directed to cease operations effective immediately.

[2] On 4 June 2018, Prossor applied to the Commission for a remedy for unfair dismissal under section 394 of the Fair Work Act 2009 (the Act).Prossor says the dismissal was unfair because there was no valid reason for dismissal and he was denied procedural fairness.

[3] On 6 August 2018, MFT filed a response to the unfair dismissal application. It objects to the application because it says its arrangement with Prossor facilitated a lifestyle business for him and was not an employment relationship. 1 In the alternative, it says Prossor was a casual flying instructor and if he was dismissed, the dismissal was not unfair.

[4] The matter was conciliated on 5 September 2018 but not settled. After seeking the views of the parties, I held a determinative conference in the matter on 12 September 2018 in Melbourne. Prossor was represented by the Australian Federation of Air Pilots (AFAP). MFT was not represented.

[5] The issues for resolution are these:

1. Was Prossor an employee of MFT?

2. If yes, was Prossor dismissed, and when?

3. If Prossor was dismissed, was the dismissal unfair?

Was Prossor an employee of MFT?

[6] The meaning of the word “dismissed” is set out in section 386 of the Act. It refers broadly to a person having been dismissed from “employment”. The terms “employee” and “employer” are defined in section 12 of the Act, and for the purposes of unfair dismissal, mean respectively, a “national system employee” and a “national system employer” (see sections 380, 30C and 30D of the Act).

[7] Determiningwhether a person is an employee or a contractor requires the application of multifactorial tests established through the Courts and recently confirmed in Kimber v Western Auger Drilling Pty Ltd 2(Kimber).In Kimber, the Full Bench endorsed the approach in French Accent v Do Rozario3 (French Accent), which had regard to the earlier relevant authorities.4

[8] There is no dispute that immediately before 16 March 2018, Prossor was performing work from MFT’s premises as a flight instructor. Ultimately, the question is whether he was doing so as the servant of MFT in its business or while carrying on his own business.

Control over the manner in which work is performed, place of work, hours of work and the like.

[9] At the time their relationship came to an end on 16 May 2018, Prossor was working as a “casual” Grade One flight instructor for MFT. He decided which hours and days to work and worked variable hours and days, averaging approximately 2-4 hours per week depending on student needs, aircraft availability and weather. He worked out of the MFT building in Moorabbin and his hours were largely determined by when students were available.

[10] There is no evidence of any roster or schedule of work. I accept both the evidence of Prossor that he did not often see MFT’s Director, Glen Buckley and the evidence of Buckley that Prossor “could come and go as he pleased”.

[11] Prossor worked for MFT when it suited him and his students. He booked planes for his students’ use as required and let MFT know if he was away as a courtesy. MFT did not require him to attend work at any particular time or day and did not require him to advise if he was unavailable for work.

[12] The evidence establishes that when MFT offered him work, it was because it had too much work on or was unable to offer a particular service to a student. Mr Buckley says Prossor had the right to refuse work and did so.

[13] Prossor had a large degree of autonomy over his work, with almost no supervision and his primary source of guidance coming from Civil Aviation Safety Authority (CASA) regulations. He was responsible for managing student and safety issues involving his flights directly and there were no apparent consequences for him if he failed to do so effectively. In the rare event that he was unable to resolve such matters, he could refer them to the Senior Base Pilot overseeing flight training, who acted as a reference point for other flight instructors.

[14] On one occasion, the father of a student, ‘Collie’, made a complaint about Prossor’s teaching style. Following receipt of the complaint, Prossor provided a report to MFT about what had happened and refused to fly with the student again. MFT did not require Prossor to work with the student again and did not take any disciplinary action. It simply referred Collie on to another flight school.

[15] The evidence establishes that Prossor was involved in two serious safety incidents. Prossor wrote up the incident as he was required to do. There is nothing to suggest any disciplinary action taken in response to either incident.

[16] Prossor agrees that he did not always maintain up to date flight records as required by CASA regulations. In my view this was related to his difficulty both accessing and using the relevant computer programs at times that were convenient to him. Prossor says he sought remote access to MFT systems so he could complete his records and this was not provided. Buckley says no remote access was available to any person, including Prossor. I find that the record keeping deficiency was a matter of concern to MFT and Buckley had asked Prossor to rectify the matter. However, there was no formal process in place, nor any warnings issued, in relation to what Buckley considered ongoing regulatory breaches by Prossor.

[17] The overall picture is that MFT neither had, nor exercised, any control over Prossor’s work for MFT. That fact alone runs contrary to the notion that Prossor was its’ employee.

Work for others

[18] The right to exclusive services from a person can be characteristic of employment, while working for others or the entitlement to do so can indicate an independent contracting relationship. 5 

[19] MFT says Prossor worked for others and advertised his services to the world at large. Prossor confirmed in his evidence that he had the ability to provide services to other businesses and that he did in fact do so.He also says he ran the occasional ad for ferry pilot work during the period in which he worked for MFT.

[20] It is not in dispute that in addition to his work in connection with MFT, Prossor undertook work separate to MFT, including annual interstate flight review work, air show announcing, and writing for industry journals. It is also not in dispute that MFT did not object to these activities, to the extent that it was aware of them.

[21] From November 2013 to August 2014, Prossor worked for Avia Aircraft, another flight instruction business. According to Prossor, he was still flying with MFT at that time although that fact is in dispute.

[22] Prossor characterises his work with Avia Aircraft as “additional work” to that of his work for MFT. He says he had students of MFT during the period of his work for Avia Aircraft and that he continued to work with them in that period. He also says that he “returned to” MFT as flight instructor in August 2014, and “resumed his casual employment from that time.”

[23] Buckley says Prossor left MFT in October 2013 and then “popped back up” at MFT in 2014 when things did not work out at Avia Aircraft. The email referred to above, confirming Prossor’s departure from MFT says “Dave Prossor has elected to take up an exciting new position at Avia, flying the Cirrus. He will remain here for a period of time during his transition period and work towards finishing up a number of his students.” A note given to Prossor by Buckley around the same time says “I am glad to have retained you at least in part.”

[24] Flight records for the period show flights for MFT in October 2013, in what I take to be the ‘transition period’, and flights in November and December 2013, also involving MFT over the period but related to Prossor’s own annual instructor standardisation check. Flights in January, February and March 2014 appear either to relate to flight review work in Queensland (unrelated to MFT) or work for Avia Aircraft in the Cirrus. The evidence does not establish whether work in the period from 20 to 30 December 2014 was for MFT or another entity.

[25] On the material before me, I find that Prossor undertook some work for MFT while also working with Avia Aircraft.

[26] Overall, the range of Prossor’s work for others while also working for MFT factor weighs against a finding of employment.

Whether the worker has a separate place of work and/or advertises his or her services to the world at large.

[27] Prossor worked out of MFT’s premises at Moorabbin and on location when conducting flight reviews and announcing air shows. He relied on MFT for access to its premises and facilities to perform much of his instruction work in Victoria. There is no evidence that he used (or even had) his own plane, aircraft storage facility and related equipment from which to provide his services. He travelled around Australia working at different flight locations, sometimes flying in the planes of his students.

[28] Prossor has had his own business cards “since he started working in the industry”. 6 For easy contact, those cards display his own mobile number rather than any contact details of MFT.7 He uses his business cards for students flying with him, so they can contact him as required.

[29] There is a dispute about whether MFT also had its own business cards. Prossor says it did not, while Buckley says MFT had blank business cards with MFT’s address, email and telephone number on it. I find that MFT did have blank business cards and that Prossor was not provided with MFT business cards for his use.

[30] It is not in dispute that Prossor also had access to an MFT email address but that he did not use it, preferring to ‘stick with’ the contact details on his own business card.

[31] While Prossor used his own contact details for students and potential students, he did not have his own place of work separate to MFT or other flight operations through which he provided instruction. The nature of his work required him to provide his services either in a plane booked through MFT or provided by a student or other entity. I find it weighs in favour of Prossor being a contractor rather than employee.

Tools or equipment

[32] MFT provided planes, aircraft storage facilities, CASA licence and approval for Prosser to fly under license, as well as a pool of potential students. Prossor provided his services as a flight instructor without any apparent significant capital investment on his behalf.

[33] What Prossor brought to the relationship was his flight and training skills as well as his personal flight equipment, including his flight bag, headset, laptop and uniform as well as maps and charts, iPad and torch. However, Prossor says it was common practice in the flight training business for instructors to provide their own equipment of this kind at their cost and to claim it back on tax at the end of year.

[34] According to Buckley, Prossor also covered the cost of his own pilots licence renewals, unlike MFT staff whose renewals were paid for by MFT, although this was not always the case. The evidence establishes that this was not always the case and that on occasion, the cost of Prossor’s licence renewals were met by MFT.

[35] On balance, the disproportionate investment in facilities and equipment by MFT as compared to Prossor resolves in favour of an employment relationship.

Delegation or subcontracting

[36] There was no suggestion that Prossor was able to delegate or subcontract his work to others or that he did so.

[37] Prossor could not recall ever delegating his work. His evidence was that he would cancel a booking and rebook it if either he or his student were unavailable, as he considered the professional instructor/student relationship to be personal and believed that one instructor should fly with a student from initial training through to accreditation.

[38] Buckley’s evidence was that unlike other flight instructors who worked for MFT, Prossor did not share his students.

[39] I am satisfied that while other flight instructors could (and did) share work, Prossor did not do so, for his own reasons. His approach, which was accepted by MFT, renders this criterion a neutral consideration in the matter.

Rights to suspend or dismiss

[40] The right to have a particular person do the work under MFT’s contract with Prossor, or the right to suspend or dismiss Prossor, might indicate a contract of service rather than a contract for services. 8 The analysis furthers a consideration of whether the person is working in the business of another, rather than in the business of their own.9

[41] MFT and Prossor entered into an “Employment Agreement for Flight Instructor” on 29 March 2018 which is expressed to be binding on MFT and Prossor “to the extent that it is a contract of employment”. 10 It provides for termination of the contract:

•  By either party in the three month probationary period with reason and 14 days’ notice;

•  By MFT on the third breach of his contract or MFT Policy Manual, or failure to meet requisite flying standards;

•  By MFT in the case of redundancy; or

•  By Prossor on 30 days’ notice.

[42] While MFT says there was no requirement for Prossor to give notice of termination, the terms of the Employment Agreement say otherwise. 11

[43] There is no provision for suspension of duties under the Employment Agreement.

[44] As noted above, MFT had permitted flight instructors to share their students. In that sense, it did not require a particular person to perform Prossor’s work. As a practical matter, Prossor chose not to delegate his work. This factor resolves in favour of Prossor’s status as an employee.

Whether the worker held out as an emanation of the business

[45] It seems uncontroversial that while undertaking work with students of MFT, Prossor represented to those students, and they understood, that he was working for MFT. 12

[46] However, Prossor did not always hold himself out to the world at large as a representative of MFT. MFT expected its pilots to wear the ‘traditional’ blue pants, white shirt or MFT polo shirt, epaulettes and MFT wings. 13 Prossor wore a similar uniform, consistent with what he understood to be MFT’s expectations, including blue shirt, black or blue pants, tie in winter months, epaulets on shoulders and company wings on the left breast. When he worked for Avia Aircraft, he wore its company epaulets and company wings.

[47] As noted above, Prossor had his own business card and did not use an MFT business card. 14 He had his own contact details which he used for all purposes.

[48] MFT’s website had pictures of its flight instructors but did not feature Prossor. There was a dispute about how that outcome arose. Prossor felt he had been excluded from the website for a number of years until 2017, when he was included in the photographic line up. Buckley disagreed with Prossor’s recollection and said that he asked for his picture not to be published on the website in 2017. The dispute is not necessary to resolve because the point is that there is no evidence that Prossor was identified as a representative of MFT on its website.

[49] Prossor attended CASA safety seminars to maintain his industry knowledge and network with other industry professionals. The evidence persuades me that he did so in his own capacity and not as representative of MFT.

[50] On balance, I find that this criterion resolves in favour of Prossor operating his own business, including as a contractor to MFT.

Remuneration and income tax

[51] The distinction may have reduced relevance in modern times 15 but it has been said that employees tend to be paid a periodic wage or salary, while contractors are often paid by reference to the completion of tasks.

[52] Prossor was remunerated on an hourly basis, based on the number of hours spent in flight time and theory with students of MFT. He invoiced his hours to MFT and was paid on the invoice as wages, together with PAYG taxation deducted and superannuation added where due.

[53] MFT on-charged its costs arising from Prossors’ invoice to his students. Any remaining (usually small) balance was retained by MFT to cover regulatory and administration fees. 16

[54] According to Buckley, when MFT started trading 12 years ago, it was established on the principles of ‘word of mouth only’ and ‘payment of at least award wages for instructors, plus superannuation’. For that reason, MFT treats employees and contractors in the same way for the purposes of superannuation.

[55] A memo prepared by Buckley in or about 2007 reflects the commitment set out above. It says “this arose because we wanted staff treated as employees and not as contractors. We chose to do this because it afforded you better protection.” It goes on to explain to instructors that they should calculate their salary by identifying their salary under the ‘pilots award’, divide it by 800 and add 25% loading to obtain an ‘hourly rate’, which is the amount to invoice MFT. MFT will “then apply superannuation”.

[56] Prossor also earned income from his work outside MFT. 17 While undertaking flight reviews on his own initiative, Prossor would pay the cost of his travel there and back and then claim it on tax at the end of the year.

[57] Insofar as it relates to the arrangement between Prossor and MFT, I find that Prossor was remunerated according to the flights he undertook. He was not paid a periodic wage or salary. While the form of payment documentation has the appearance of employment, including in relation to the payment of superannuation and deduction of taxation, that reflects a policy decision of MFT to treat all of its workers in the same way. This factor weighs marginally in favour of Prossor being a contractor.

Holidays or sick leave

[58] Prossor could take as much leave as he wanted, and if not fit for duty, was under no obligation to notify MFT of his unavailability. As a casual flight instructor, he did not receive paid leave but was paid a 25% loading on his hourly invoiced rate.

[59] Noting my comments above about the approach taken by MFT to dealing with its employees and contractors alike, this factor weighs marginally in favour of an employment relationship between Prossor and MFT. 18

Distinct profession, trade or calling

[60] As the Full Bench noted inFrench Accent, persons engaged in a distinct profession, trade or calling may tend to be independent contractors rather than employees. 19

[61] The role of flight instructor is unique in that it requires access to significant capital assets and yet is a relatively autonomous skilled role, requiring the application of ones’ professional knowledge and experience for the benefit of individual clients each with their own particular needs and circumstances. It is the type of distinct profession, trade or calling that could readily provide services as a contractor, provided one had access to the facilities and equipment required to deliver those services. Equally, flight instructors without such access are also likely to be found in employment relationships with those who do, as is the case with other flight instructors employed by MFT.

[62] I have treated this matter as a neutral consideration.

Goodwill

[63] Generally speaking, a contractor will have an interest in establishing value in their business, while an employee will contribute to the goodwill of another’s business.

[64] Prossor says he has built up a solid reputation by flying at MFT, as well as writing industry columns and conducting interstate flight reviews in his own time. He also promoted the MFT school to students because of its business advantages compared to those of its competitors.

[65] Buckley says some of Prossor’s students were not known to MFT. Prossor says all of his flight students came to him from MFT as he did not have a source of external students. Buckley says Prossor built up his own student base through word of mouth and points to a number of Prossor’s students with no, or negligible, mention in MFT records. Student flights conducted by Prosser were generally undertaken using MFT facilities and equipment but sometimes not, if a student had access to other flight equipment and facilities.

[66] A review of the evidence establishes that some of Prossor’s students, including Raynesh Patel and ‘D Cook’, were not known to MFT. That is consistent with Prossor’s own evidence about the reputation he had built for himself over time. It points to the conclusion that Prossor developed goodwill both in his own services while also recommending and providing services to MFT. Emails adduced in the proceeding tend to support this conclusion, as does a 2013 memo from Buckley to MFT staff about Prossor’s decision “to take up an exciting new position at Avia” which says of Prossor:

“He has filled a niche role here at MFT and bought a very substantial amount of work into the business that was his own work.” 20

[67] On balance, this factor weighs in favour of Prossor carrying on his own business, including as a contractor to MFT.

Business expenses

[68] In addition to the ordinary business expenses of MFT, including in relation to aircraft, office and storage facilities, MFT holds an Air Operator Certificate (AOC) issued by CASA. The evidence establishes that the cost of acquiring an AOC is substantial and not always practical for individuals to obtain. Traditionally, businesses holding an AOC allowed flying instructors to operate under their AOC in return for a payment to the AOC holder by the instructor. Changes to CASA regulations in recent times have relaxed this position.

[69] MFT’s arrangement with Prossor allowed him to operate under its AOC effectively without charge, other than the small regulatory and administration fee referred to above.

[70] Prossor’s own business costs involved his self-styled uniform, flight kit, iPad, maps and charts, business cards, occasional work advertisements and the occasional cost of his licence renewal when that cost was not met by MFT. In addition, he undertook flight reviews every two years (at a cost of up to $1000 depending on what was required) and maintained his twin engine rating or night visual flight rules (NVFR) approval at a cost of approximately $630 per occasion.

[71] On occasion, MFT paid for some of his licence and ratings expenses, but otherwise it fell to Prossor to meet those costs. According to Buckley, he did not pay for the licence renewal of three of approximately 15 flight instructors, including Prossor, because he understood those individuals to derive the majority of their income from other sources and he covered flight instructor costs for those who worked approximately 200 hours or more. Buckley did not consider those working less than 200 hours per year as ‘staff’ of MFT.

[72] Prossor earned approximately $12,000 from MFT in the 2017-2018 financial year to 2 May 2018. 21 His yearly business costs were approximately ten to twenty per cent of that amount.

[73] On balance, I find this factor to resolve marginally in favour of his status as an employee.

Conclusion on jurisdictional objection

[74] Ultimately, the question is whether Prossor was the servant of MFT in its business, or whether he was carrying on a business on his own behalf. The matters set out above, including nature of the industry and in particular MFT’s lack of interest, direction or control over Prossor’s work, tend in favour of the conclusion that Prossor was conducting a business of his own.

[75] On balance, I find that Prossor was not an employee of MFT. The consequence of that finding is that Prossor is not eligible to apply for a remedy for unfair dismissal.

[76] Given that finding, it is not necessary to determine the additional questions of whether Prossor was dismissed, and if so when, or whether the dismissal was unfair.

[77] The application is dismissed.

COMMISSIONER

Appearances:

S Miller for the Applicant

G Buckley for Melbourne Flight Training Pty Ltd

Hearing details:

2018.

Melbourne:

September 12.

Printed by authority of the Commonwealth Government Printer

<PR702270>

 1   Form F3 – Employer Response to Unfair Dismissal Application, Attachment A

 2   [2015] FWCFB 3704

 3   [2011] FWAFB 8307

 4   Abdalla v Viewdaze Pty Ltd t/a Malta Travel (2003) 122 IR 215; Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16, 37 (Wilson and Dawson JJ); Hollis v Vabu (2001) 207 CLR 21, [47], [58]

 5   French Accent [2011] FWAFB 8307; (2011) 215 IR 235, [30]

 6   Audio recording of Hearing, 12 September 2018

 7   Exhibit 5, Business card of D Prossor

 8   Stevens v Brodribb Sawmilling, (1986) 160 CLR 16, 36 (Wilson and Dawson JJ)

 9   Ace Insurance v Trifunovski (2013) 235 IR 115, at [93]

 10  Exhibit 1, Statement of David Prossor, Attachment DP-1

 11   Form 3, Attachment A

 12   See, for example, Exhibit 1, Attachment DP-11

 13   Exhibit 3, 2016 Memo

 14   Form F3, Attachment A

 15   [2011] FWAFB 8307 at [30].

 16   Form F3, Attachment A

 17   Form F3, Attachment A

 18   Form F3, Attachment A

 19   [2011] FWAFB 8307 at [30].

 20   Exhibit 1, Attachment DP-4

 21   Exhibit 1, Attachment DP-09