David Smythe v Noilly Pty Ltd T/A Westral Sunshades

[2020] FWC 4069

[2020] FWC 4069

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

David Smythe
v
Noilly Pty Ltd T/A Westral Sunshades
(U2020/4081)

DEPUTY PRESIDENT BEAUMONT PERTH, 28 AUGUST 2020

Application for an unfair dismissal remedy – whether applicant ‘employed’ – consideration of contract of service or contract for service – applicant an independent contractor – application dismissed.

[1] On 2 April 2020, Mr David Smythe made an application to the Fair Work Commission for a remedy in respect of his dismissal from Noilly Pty Ltd T/A Westral Sunshades (Westral).

[2] Westral raised several jurisdictional objections to the application. In essence, those objections can be distilled into three propositions. The first, Mr Smythe was not an employee because he was an independent contractor. The second, Mr Smythe earnt over the high income threshold and therefore the application was moot. And the third, Mr Smythe was not dismissed but left the business of his own accord.

[3] If the Commission upholds any of the objections, then Mr Smythe’s application will be beyond the jurisdiction of the Commission and will have to be dismissed.

[4] In French Accent v Do Rosario, 1 a Full Bench of the Commission’s predecessor stated that, in determining whether a worker is an employee or an independent contractor, the ultimate question is ‘whether the worker is the servant of another in that other’s business, or whether the worker carries on a trade or business on his or her own behalf: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own of which the work in question forms part.’ The question is concerned with the objective character of the relationship and is to be answered by considering the terms of the contract and the totality of the relationship.2

[5] In short, I am satisfied the evidence establishes that Mr Smythe runs his own sales consultancy business. My conclusion, if one considers the objective character of the relationship - the arrangement between Mr Smythe and Westral was an independent contracting arrangement. The jurisdictional objection is therefore upheld, and the application dismissed. Given the conclusion reached, it has proved unnecessary to consider the other grounds raised by Westral. My reasons for the decision follow.

Background

[6] Westral has been in business in Western Australia for approximately 47 years. It manufactures doors, security screens and shutters, amongst other products. The business has 130 employees and some 30 contractors. The employees perform manufacturing work, marketing, management and administration. The contractors are engaged for the purpose of selling the product and installing the same. According to Westral, it is a model that has worked well for some 15 years.

[7] Mr Smythe is part of a 15 person sales force that takes home, according to Westral, approximately $2 - 3 million dollars per annum. Westral submitted that the business attracts people with a broad ability to interact with others, are able to understand the needs of others, and can ‘seal the deal’.

The services and context

[8] Mr Smythe was a sales representative selling the products of Westral. Each afternoon or evening he would download a list of customers that Westral had arranged. 3 These were referred to by the parties as ‘leads’. Mr Smythe would ring customers and arrange a suitable time to visit, with a view of taking measurements and providing a quote for the product.4 If there was insufficient time to prepare the quote in the customer’s home, this would be done later and emailed within the next day or so.5 If the leads were not quoted, a pricing program referred to as IntelliQuote would prompt Mr Smythe on his computer, as a reminder that the quote had not been done.6 Mr Smythe submitted this was a way for Westral to monitor his performance and demonstrated that Westral controlled the work flow.

[9] Westral submitted that all contractors were encouraged to develop their own sources of work. By way of example, Westral referred to another sales representative who had paid for his own marketing, developed his own website and Youtube channel. 7

[10] Mr Smythe’s engagement with Westral was initiated through his response to an advertisement in a newspaper, back in January 2011. The advertisement for a sales representative spoke of the provision of ongoing training, it was a commission based role with a retainer until the next level of earnings had been reached and individuals were to own their own vehicle, enjoy working independently in a customer’s home and measure accurately. 8

[11] Mr Smythe started work for Westral in or around February 2011 under an Agency Agreement. Relevant clauses of the Agency Agreement included:

1 Engagement of Agent

The Agent accepts the engagement as an Agent of the Company and undertakes to sell Company products in return for Commission as described in clause 5 of this Agreement.

2 Duties of an Agent

2.1 The Agent is authorized to sell Westral Sunshades products.

2.2 The Agent shall sell the products at the prices specified by the Company.

2.3 Whilst acting as an Agent of the Company, the Agent agrees that:

a) all expenses paid or incurred by the Agent shall be paid by the Agent;

b) The Agent has no authority to rent or lease any vehicles, real or personal property on behalf of the Company;

c) The Agent will not incur any debt or obligation chargeable to the Company;

d) All contracts must be written on the Company’s printed forms and all moneys received by the Agent shall be paid to the company immediately;

e) The Agent will forward to the company by close of working hours of the day following which contracts are secured, any deposits received on those contracts;

f) All deposits which are delivered to the Company with corresponding contracts and paperwork will be duly secured and signed by the purchaser;

g) The company reserves the right to accept or reject any application and to refund any payments made by the purchaser.

3 Provision of Facilities

The agent will supply his own mobile phone but may use the company’s telephones at such time as he is in the general office, but only for company related business.

4 Employees of the Agent to be Acceptable to the Company

4.1 The employees of the Agent must be acceptable to the Company and must be suitably qualified and experienced and able to perform in accordance with the terms and conditions of this Agreement.

4.2 If at the time an employee ceases to be acceptable to the Company for any reason whatsoever, then upon advice of this by the Company, the Agent will take immediate steps to remove the employee and provide an alternative employee acceptable to the Company to ensure there is no interruption to the provision of the Services.

5 Commission

5.1 The Agent will be paid at the rate and with the conditions specified by the Company.

5.2 The Agent will be paid Commission when the following requirements are met:

a) in the case of a finance deal, when the client has signed the finance contract which has been approved by the finance company;

b) cash deal, when the amount is paid in full.

5.3 Monies will not be paid to the Agent until each contract has had a 7 day cooling off period.

6 Liability of Agent

The Agent agrees, that, as an Agent, it is liable for nay claim against the Company arising out of or relating to the execution of the Agency Agreement. The Agent agrees to indemnify the company for any loss sustained as a result of any claim arising out of or relating to the execution of the Agreement.

7 Legal Relationship

The relationship between the parties will be that of Principal and Agent and neither the Agent not its employees will be deemed to be an employee of the Company.

8 Leave and Other Benefits

The Company has no responsibility to the Agent in respect of annual leave, sick leave, long service leave, public holidays, redundancy payments or any other benefits for the Agent or employees of the Agent.

9 Responsibility for Taxes, Superannuation and Insurances

9.1 Tax Payments

The Agent agrees that it is responsible for all tax payments in respect of the Commission.

9.2 Superannuation

The Agent agrees that it is responsible for the payment of superannuation for the Agent, its employees and neither the Agent nor its employees will be entitled to any superannuation contributions from the Company.

9.3 Insurances

The Agent agrees to take out and keep current appropriate insurances covering all claims and liabilities in respect of any statute and at common law the death of or injury to any of the Agent’s employees or in connection with the performance of the Agency Agreement.

10 Contact with the Company

10.1 The Agent is required to maintain regular contact with the Company for the purpose of discussing business and relevant issues.

10.2 The Agent agrees to report to the office on a daily basis at times agreed between the Company and the Agent.

10.3 Any and all oral statements or written memoranda or bulletins including the suggested forms of sales presentation or hints or advice that may be made available to the Agent are intended merely as suggestions for the purpose of assisting the Agent to become more proficient in the demonstration of the Company’s merchandise. 9

…

[12] Mr Smythe gave evidence that Westral set the pricing of the products on offer. 10 After discussing the customer’s requirements and measuring for the relevant products that were required, details would be typed into IntelliQuote, and a price would be generated.11 The quote would thereafter be given to the customer or emailed.12 Sales representatives were able to offer a discount of 2.5%, 5%, 7.5% or 10%. If a discount was applied then the sales representative’s commission would be reduced.13

[13] As noted, Mr Smythe was paid by way of commission. Westral’s Accounts Department generated weekly tax invoices, which Mr Smythe was able to retrieve out of the IntelliQuote system. Mr Smythe did not receive superannuation contributions, he paid PAYG tax directly to the Australian Tax Office, and completed a quarterly ‘BAS for the GST payments’. 14 On commencement with Westral, Mr Smythe was required to provide his ‘ABN’.15

[14] Mr Smythe was required to maintain his own motor vehicle, pay for his fuel and was responsible for paying for parking fees when required. 16 However, Mr Smythe received a regular payment of $45.00 for Westral to advertise on his motor vehicle.

[15] Westral and Mr Smythe were said to have entered into a lease agreement whereby Westral provided to Mr Smythe business cards, a computer, printer, name badge and, it would appear, marketing paraphernalia. In the hearing, Mr Smythe appeared unaware of such agreement. However, he acknowledged that the tax invoices that he had provided as part of his evidentiary material, included a weekly equipment lease payment of $27.50. 17

[16] Westral supplied all samples of the products on offer, including a full catalogue of fabric colour swatches, samples of security doors and so forth. 18 Mr Smythe attended initial training on commencement, whereby he was taught the specifics of the products he was measuring for. That training persisted for around three months. Following the initial training, further training was offered, but no sales representative was obliged to attend. There were also regular toolbox meetings, particularly in the months that were not so busy. However, again there was no obligation to attend. No action was taken if a sales representative did not attend the training. Mr Walmsley, a director of Westral, submitted that the training was simply an opportunity to guide and to assist.

[17] Asserting that Westral exercised control over how he worked and the hours that he worked, Mr Smythe referred to emails involving the provision of training, 19 product presentation,20 the wearing of a uniform,21 a name badge,22 and placing signs on motor vehicles.23 Mr Smythe gave evidence that he was required to work every fourth Saturday. However, Mr Smythe stated that hours of work were not stipulated.24

[18] Work hours were determined by the number of leads supplied by Westral. 25 Mr Smythe said that he averaged around 60-80 hours a week. From the evidence led, there did not appear to be any stipulated start or finish times. Emails produced showed that when Mr Smythe was not available on a particular day or for a period during the day, he simply emailed a Westral office staff member who would allocate leads for that day to another representative:

Hi Sharon

Can you please not book any leads for me this Wednesday 3^rd July.

I will be taking the day off.

Thank you

Kind regards

David Smythe 26

[19] Submissions were made that Mr Smythe’s wife performed work for Mr Smythe, organising for the filing of paperwork and clarification concerning commission payments. Emails were provided to show this, dated between 2013 and 2019. Westral submitted that there were in excess of 800 emails in the system from Mrs Smythe.

[20] Mr Smythe referred to there being an area for use by sales representatives at the Balcatta offices of Westral. He referred to the area being set aside specifically for use by sales representatives. However, Mr Walmsley disputed this and commented that it was an area set aside for staff members to take their crib or for sales representatives to use.

[21] Westral submitted that Mr Smythe never worked in a workplace controlled by it. The workplace was the customer’s home or his own home. He was never, essentially, required to go into the Westral office, and, as it was, there was no specific designated office for him. There were several outlets for Westral and, other than to occasionally drop off the leads, Mr Smythe could have picked them up from any office and dropped them off.

[22] Mr Smythe gave evidence that he was required to wear a uniform in the form of business trousers with belt, collared business shirt, business shoes, and a tie (the tie appears to have become optional as of January 2020). To support his contention that the uniform was ‘required’, Mr Smythe referred to an email sent by Mr Clarke, the Sales Manager of Westral. The email included content from a previous email from Mr Roland Walmsley, another director of Westral, which had set out the ‘requirements with regards to the expected level of dress when consulting for the company’. 27

[23] The level of control that Westral exerted, was, according to Mr Smythe, further evinced by Mr Walmsley’s instruction on the content of the voice message, and to record the message whilst smiling. 28 Further, Mr Smythe provided emails concerning Westral’s approach on call backs and the repercussions if sales representatives did not call back a customer (preference for lead allocation was said to be given to representatives who called back the customer),29 the style to be adopted when emailing clients,30 and a request to process more leads.31

[24] When it came to the reporting structure, Mr Smythe gave evidence that he reported into several staff members, including Mr Clarke. However, it was Mr Walmsley’s evidence that Mr Smythe did not report into any Westral staff member, was not performance managed or disciplined.

The end of the relationship between Mr Smythe and Westral

[25] According to Mr Walmsley, Westral did not dismiss Mr Smythe on 16 March 2020 or 17 March 2020.

[26] Mr Walmsley stated to the effect that he had become aware that Mr Smythe was ringing up and harassing ‘Paul’, the Chief Financial Officer for Westral, and ‘Roland’. Mr Walmsley said he formed the view that he should speak to Mr Smythe and make him see common sense. According to Mr Walmsley, Mr Smythe was dissatisfied with the cost of rectifying a problem, which Mr Smythe had incurred a cost for. From the evidence provided by the parties, it appeared that when a sales representative made an error concerning the measurements of a particular product and rectification was required, the sales representative incurred the rectification cost.

[27] Mr Walmsley called Mr Smythe at about 5.00pm on 16 March 2020 and informed him that he was liable to pay for his errors – that is to pay for the rectification work, because Mr Smythe had to take responsibility for his work. There was a $97.00 charge (presumedly the rectification cost).

[28] Mr Walmsley stated that during the discussion Mr Smythe called him a ‘narcissist’. Mr Smythe clarified that he said to Mr Walmsley in the telephone conversation ‘I think you are a narcissist’.

[29] Mr Walmsley said that he responded along the line of ‘What did you say – fair go this is ridiculous’. Mr Walmsley also gave evidence that Mr Smythe said that he was leaving as he could no longer work under the system.

[30] Mr Smythe gave evidence that Mr Walmsley told him ‘you should fuck off’. Mr Walmsley, speaking of himself, stated that it was ‘very rare for Albert Walmsley to swear’, and denied saying that to Mr Smythe.

[31] The next day, which was 17 March 2020, Mr Smythe said that he went to the Balcatta office because he had to go there to drop off paperwork. Earlier in the morning, he had been to a job in Subiaco to meet a fitter. He arrived at 10.00am and completed paperwork. Mr Clarke was there. Mr Clarke was said to have informed Mr Smythe that they had to speak, to which Mr Smythe said he responded ‘I am busy’. Mr Smythe said that he had leads to follow up that morning.

[32] Later that day, when Mr Smythe arrived home, he observed Mr Clarke had sent him an email. The email read:

Dear David,

As you were not wanting to speak to me this morning and you are leaving Westral we confirm Maurice will be available tomorrow at the Balcatta Showroom to help in your transition.

He will discuss a time frame for you to accommodate the return of Company property including laptop, phone, printer and all samples.

Also you can discuss a time frame for finishing outstanding paper work and orders not placed in the system as yet.

We would expect the above to be finalized by the end of trading this Friday 20/3/2020, then communicate with you in the coming weeks to tie up loose ends.

Regards
Joe Clarke
Sales Manager 32

[33] Mr Smythe stated that there were no leads for him the following day, and he did not follow up with respect to the leads or the status of his engagement.

Legal principles

[34] The basis for the jurisdictional objection arises from s 382. Relevantly that section provides:

382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period;…

[35] There are well-established principles that affect the analysis of whether a person is an employee or a contractor. 33 The courts have developed a multi-factorial approach to determining whether a particular relationship is one of employment or one subject to a contract for services.34 There is, however, an appreciable difficulty in attempting to categorise a relationship as one of employee or independent contractor. This difficulty was acknowledged by the Full Bench when it stated the following in the decision of Jiang Shen Cai T/A French Accent v Do Rozario (Jiang Shen Cai):

…The nature of the established general law approach to distinguishing between employees and independent contractors may be seen as contributing to the problem precisely because the nature of the general law test is such that it does not admit a clear answer in every case. Once one adopts the position, as the general law has done, that the distinction is rooted in the objective character of the work relationship two things follow. First, the infinite variety of human affairs means that work relationships present as a spectrum, some of which are clearly relationships of employment and others of which are clearly relationships of independent contract but some of which are less clear cut. Secondly, that character of a work relationship is what it is and cannot be changed simply because the parties agree to label it differently (unless, of course, the relationship is sufficiently ambiguous that a clear determination is not possible, the situation addressed by the Massey proposition). That is a matter clearly recognised by the courts and tribunals. 35

[36] In Kimber v Western Auger Drilling Pty Ltd (Kimber), 36 the Full Bench addressed the factors to consider when assessing whether an applicant was an employee or an independent contractor during the relevant period.37 It endorsed the general approach to distinguishing employees and independent contractors provided in Jiang Shen Cai:

(1) In determining whether a worker is an employee or an independent contractor the ultimate question is whether the worker is the servant of another in that other’s business, or whether the worker carries on a trade or business of his or her own behalf: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own of which the work in question forms part? This question is concerned with the objective character of the relationship. It is answered by considering the terms of the contract and the totality of the relationship.

(2) The nature of the work performed and the manner in which it is performed must always be considered. This will always be relevant to the identification of relevant indicia and the relative weight to be assigned to various indicia and may often be relevant to the construction of ambiguous terms in the contract.

(3) The terms and terminology of the contract are always important. However, the parties cannot alter the true nature of their relationship by putting a different label on it. In particular, an express term that the worker is an independent contractor cannot take effect according to its terms if it contradicts the effect of the terms of the contract as a whole: the parties cannot deem the relationship between themselves to be something it is not. Similarly, subsequent conduct of the parties may demonstrate that relationship has a character contrary to the terms of the contract.

(4) Consideration should then be given to the various indicia identified in Stevens v Brodribb Sawmilling Co Pty Ltd and the other authorities as are relevant in the particular context. For ease of reference the following is a list of indicia identified in the authorities:

•  Whether the putative employer exercises, or has the right to exercise, control over the manner in which work is performed, place o[f] work, hours of work and the like. 

Control of this sort is indicative of a relationship of employment. The absence of such control or the right to exercise control is indicative of an independent contract. While control of this sort is a significant factor it is not by itself determinative. In particular, the absence of control over the way in which work is performed is not a strong indicator that a worker is an independent contractor where the work involves a high degree of skill and expertise. On the other hand, where there is a high level of control over the way in which work is performed and the worker is presented to the world at large as a representative of the business then this weighs significantly in favour of the worker being an employee.

“The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter’s order and directions.”  “[B]ut in some circumstances it may even be a mistake to treat as decisive a reservation of control over the manner in which work is performed for another. That was made clear in Queensland Stations Pty. Ltd v Federal Commissioner of Taxation, a case involving a droving contract in which Dixon J observed that the reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract.”

•  Whether the worker performs work for others (or has a genuine and practical entitlement to do so).

The right to the exclusive services of the person engaged is characteristic of the employment relationship. On the other hand, working for others (or the genuine and practical entitlement to do so) suggests an independent contract.

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

•  Whether the worker provides and maintains significant tools or equipment.

Where the worker’s investment in capital equipment is substantial and a substantial degree of skill or training is required to use or operate that equipment the worker will be an independent contractor in the absence of overwhelming indications to the contrary.

•  Whether the work can be delegated or subcontracted.

If the worker is contractually entitled to delegate the work to others (without reference to the putative employer) then this is a strong indicator that the worker is an independent contractor. This is because a contract of service (as distinct from a contract for services) is personal in nature: it is a contract for the supply of the services of the worker personally.

•  Whether the putative employer has the right to suspend or dismiss the person engaged.

•  Whether the putative employer presents the worker to the world at large as an emanation of the business.

Typically, this will arise because the worker is required to wear the livery of the putative employer.

•  Whether income tax is deducted from remuneration paid to the worker.

•  Whether the worker is remunerated by periodic wage or salary or by reference to completion of tasks.

Employees tend to be paid a periodic wage or salary. Independent contractors tend to be paid by reference to completion of tasks. Obviously, in the modern economy this distinction has reduced relevance.

•  Whether the worker is provided with paid holidays or sick leave. 

•  Whether the work involves a profession, trade or distinct calling on the part of the person engaged.

Such persons tend to be engaged as independent contractors rather than as employees.

•  Whether the worker creates goodwill or saleable assets in the course of his or her work.

•  Whether the worker spends a significant portion of his remuneration on business expenses.

It should be borne in mind that no list of indicia is to be regarded as comprehensive or exhaustive and the weight to be given to particular indicia will vary according to the circumstances. Features of the relationship in a particular case which do not appear in this list may nevertheless be relevant to a determination of the ultimate question.

(5) Where a consideration of the indicia (in the context of the nature of the work performed and the terms of the contract) points one way or overwhelmingly one way so as to yield a clear result, the determination should be in accordance with that result. However, a consideration of the indicia is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture of the relationship from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another. The ultimate question remains as stated in (1) above. If, having approached the matter in that way, the relationship remains ambiguous, such that the ultimate question cannot be answered with satisfaction one way or the other, then the parties can remove that ambiguity a term that declares the relationship to have one character or the other 

(6) If the result is still uncertain then the determination should be guided by “matters which are expressive of the fundamental concerns underlying the doctrine of vicarious liability” including the “notions” referred to in paragraphs [41] and [42] of Hollis v Vabu. 38 (Citations omitted)

[37] As observed in the introductory paragraphs, the ultimate question to be answered then is whether ‘the worker is the servant of another in that other’s business, or whether the worker carries on a trade or business of his or her own behalf’. 39 To summarise, the determination of the ultimate question will inevitably require a ‘consideration of the nature of the work performed, the terms of the contract, and the so-called indicia must always be directed to the ultimate question’.40

Consideration

[38] Westral’s objections can be reduced to three. Mr Smythe was not an employee, if found to be an employee he earnt over the high income threshold, and as it was, he left the company and was not dismissed. On that basis, said Westral, the application is moot.

Not an employee

[39] Westral submitted the matter centred on a long standing independent contractor who was a good performer within the organisation, and, who for nine years, had enjoyed all the freedoms that come with running his own business. Having had a dispute with the principal over a relatively minor matter, Mr Smythe now asserted he was an employee and sought compensation for being unfairly dismissed.

[40] Westral remarked that at no point during the nine years Mr Smythe worked for it, was there a discussion with respect to his Agency Agreement. He worked well under those arrangements until the dispute with Mr Walmsley. While Mr Smythe may say, said Westral, that there had been long running issues between him and the business, it was Westral’s view that it was a good relationship until the events of 16 March 2020.

[41] The implications for Westral, regarding a finding that Mr Smythe was unfairly dismissed were said to be stark indeed. Westral submitted it used contractors to sell product and install product, and employees for manufacturing, management and administration. There was, in its view, a clear distinction between the two models of engagement within the business. It was a model that had worked well for some 15 years, submitted Westral, and gave sales representatives the freedom and choice to work how they liked. Westral submitted that a conclusion the model is broken should be approached with great caution.

Was Mr Smythe conducting a business of his own?

[42] Mr Smythe responded to an advertised position of ‘sales representative’. It was not the case that he was purporting to run his own sales consultancy business, prior to responding to the advertised position.

[43] However, he appeared to have provided and maintained his own home office and vehicle, and was able, for the most part (exception of being rostered every fourth Saturday) to determine his working hours and days, and the duration of such days. Mr Smythe could determine whether he did, or did not follow up leads, and he always worked unsupervised. He did not require authorisation to take a leave of absence, and while an annual leave request form was submitted as evidence, it was not apparent that approval was required to take such leave. Mr Smythe designed the course of his day. He could take breaks when he so desired and could arrange his hours of work to suit him.

[44] Mr Smythe was required to utilise set processes through the Westral Pricing Program, IntelliQuote, to generate customer orders and invoices, in addition to generating a weekly tax invoice for himself. There was evidence to suggest that Westral informed Mr Smythe of the number of leads to be contacted in a day, but it appeared that he was under no obligation to follow up a set number. As far as his work for Westral was concerned, he was restricted to selling its product. He did however have autonomy to price the Westral products sold within a certain range, noting of course that any discount afforded resulted in a reduction of his take home commissions.

[45] There appeared to be significant autonomy regarding when and how Mr Smythe would consult with clients (leads) about appointment setting and thereafter sales. Ultimately, Mr Smythe could determine the amount of time he invested in providing the services to each client. While Mr Smythe made much of the emails where he was informed what content should be included in a voicemail, the required standard of dress, and the necessity to conduct follow up calls, there does not appear to have been any consequence for non-compliance with the email content. Mr Walmsley referred to those emails as providing guidance, or recommendation. As it was, Mr Smythe conceded that he never wore the name badge that had been provided (notwithstanding it was a purported licencing requirement).

[46] Mr Smythe leased from Westral the office equipment required to comply with Westral’s IntelliQuote system. He presented as the face of its business when following up leads, albeit there appeared to be a contractual right to delegate the work. In this respect, it appears that Mr Smythe made the most of the services proffered by his wife regarding the following up of invoices. There is no evidence to show that she was paid for this work, but perhaps that is an issue between them. As it was, emails were tendered evincing the work Mrs Smythe undertook for her husband’s business. While there was no evidence before the Commission that Mr Smythe was advertising his services more generally – there was nothing precluding him from doing so.

[47] On balance, I am persuaded that, when viewed practically, Mr Smythe was providing to Westral sales services in the form of his own business. There was no probative evidence before me that showed he was precluded him from providing a similar service to others - whether contractually or pragmatically. While Mr Smythe contended that the work for Westral occupied all his time, his working week extending past 50 hours – ultimately, it was Mr Smythe who decided how much time to allocate to each customer, when he worked and whether to delegate any of the work. The Agency Agreement appeared to compel Mr Smythe to take out and keep current appropriate insurances (see cl 9 of the Agency Agreement) and while the evidence advanced appeared to suggest that Westral had assumed this responsibility, this does not dissuade from the conclusion reached. It is, after all, just one of the indicia that are considered in these matters.

The nature of the work performed and the manner in which it is performed

[48] Quintessentially, Mr Smythe was a sales representative. While Mr Walmsley spoke of skills required to measure frames and so forth, for certain products, and that the service was one that had in the past attracted persons holding a trade qualification, I am not convinced that work required a special skill. That is not to say the work required no skill at all. Clearly it did.

[49] Both parties gave evidence of training having been provided to Mr Smythe whilst at Westral. That training touched on product specification and measurement taking, and coaching on sales techniques or approaches. However, to say that a special skill or qualification was required would be to exaggerate the technicality of the work performed or service provided.

The terms of the contract

[50] Concerning working for others, Westral argued that Mr Smythe was not limited by the terms of the Agency Agreement, or in practice, to work for just it. He could develop his own sources of work. It contended that Mr Smythe had absolute freedom to carry out the work as he saw fit, and while Mr Smythe may contend he was limited to the work that was given to him by Westral– it submitted that was Mr Smythe’s choice rather than anything Westral wanted in particular.

[51] Westral submitted that Mr Smythe could delegate the work to others under the Agency Agreement. It was its understanding that a number of Mr Smythe’s colleagues employed outside people to assist them to develop their business, be it a bookkeeper or other skill set that is required. On this point, Westral submitted that it understood that Mr Smythe’s wife was intimately involved in the business – referring again to several emails with respect to the invoicing.

Indicia of employment relationship

Exercise of control

[52] Westral submitted that an employer has a right to control the manner in which a task is performed. However, Mr Smythe was not fettered by formalised work hours, he did not report to anyone, he was not supervised by anyone, he was not required to attend training (it was recommended) nor was he at any point disciplined or could he have been. Westral viewed him as a contractor, who undertook the business as he saw fit. It was entitled to give him the work, but was not able to control the manner in which the work was done.

[53] While Mr Smythe pointed to emails that manifested Westral’s exercise of control, I am persuaded that such emails simply set a standard regarding general business dress code, provided guidance on approaches to take regarding customer service, feedback to manufacturing, and requests. There was no evidence adduced that showed non-compliance resulted in disciplinary or other action. While Mr Walmsley had, back in 2015, requested that sales representatives increase the number of leads in a day, he noted ‘Westral asks you to work on certain days and do up to a certain number of leads but whether you do them is up to you’.

[54] The evidence shows in August 2019, Mr Smythe had approached a lead for payment regarding the cost of parking. Mr Walmsley had responded, directing Mr Smythe not to ring the customer regarding such costs. The evidence was such that the cost of parking was attributable to Mr Smythe not the customer – however, clearly Mr Smythe was disgruntled about paying for parking within the central business district of Perth and had sought such costs from the lead. Mr Walmsley wrote to Mr Smythe informing him that Westral would handle the lead, if he believed the policy of the company should be changed (presumedly regarding parking costs) the matter should not be taken into his own hands but discussed with management, and that Mr Smythe was not to direct Westral staff as to what they should or should not do, as they did not work for him.

[55] Mr Smythe argued that the email, amongst others, exhibited the ‘control method’. I am unpersuaded by Mr Smythe’s submission. What is evident from the email is that Westral, through Mr Walmsley, was clearly setting the parameters of the relationship between lead, Mr Smythe and Westral. Those parameters included Mr Smythe assuming liability for parking costs and not passing those onto a lead, or informing the lead that such liability rested with them. Such messaging is not, in my view, an exercise of control, but rather a reminder that the lead is not liable for the costs of the company or, in this case, the ‘contractor’.

[56] The ‘control method’ that Mr Smythe submitted manifested itself in the emails provided, is consistent with service specifications pursuant to a commercial contract, in a relationship of principal and independent contractor, and is not indicative of an employment relationship.

Did Mr Smythe work for others (or have a genuine and practical entitlement to do so)?

[57] Mr Smythe gave evidence that he did not work for others. However, based on the evidence given by Mr Walmsley and, when one considers the Agency Agreement, there was nothing to preclude Mr Smythe from doing so.

Did Mr Smythe have a separate place of work and/or advertise his services to the world at large?

[58] Westral stated that Mr Smythe never worked in a workplace controlled by Westral. Mr Smythe’s workplace was the client’s home, his motor vehicle and his own home. There was no designated office for Mr Smythe, and while at the Balcatta office there was a space where sales representatives and others could essentially ‘dump their gear’, or take lunch, there was no requirement for Mr Smythe to be in that workplace.

[59] Regarding the workspace in the Balcatta office, Mr Smythe refuted Westral’s characterisation of the Westral workspace. He referred to it as being an area for use by sales representatives, having been specifically set aside for that purpose.

[60] I am satisfied that, save for submitting paperwork, Mr Smythe was never required to go into one of the Westral offices, and, as it was, there was no specific designated space for him.

[61] Westral submitted that as a contractor Mr Smythe was able to undertake any activity he could to build his business – such as advertising. In this respect, Westral gave evidence that several of Mr Smythe’s colleagues, paid for their own marketing, had their own websites and one even had a Youtube channel to assist in the building of his business. Any notion that all advertising was paid for by Westral, and that Mr Smythe didn’t have the ability to advertise, was a nonsense, contended Westral.

[62] In giving his evidence, Mr Smythe referred to business cards, name badge, Westral brochures, business cards, car signage and, that with regard to the selling of products, he was the face of Westral.

[63] Having considered the evidence given in this respect, including the brochure of Mr Darren Teale, a sales representative colleague of Mr Smythe, whose brochure was referred to and viewed during the course of the hearing, I nevertheless consider that Mr Smythe was presenting to the world at large as an emanation of Westral.

Did Mr Smythe provide or maintain significant tools or equipment?

[64] In respect of tools and equipment, Westral said that Mr Smythe’s motor vehicle was a fundamental component of his tools because of the amount of work undertaking in the vehicle - whether on the phone or sitting in the vehicle and taking detailed notes regarding the particular client. Further, said Westral, there was a tax benefit and advantages to owning plant and equipment. That equipment included a measuring device, which Counsel for Westral estimated cost in the vicinity of $1,000.00. Mr Smythe gave evidence that the device was cheaper second hand.

[65] I observe the evidence that Mr Smythe paid an amount to Westral for the leasing of office equipment, pursuant to a lease agreement. However, expenditure on the motor vehicle, travel to the homes of leads, maintenance of the motor vehicle, and a home office was not traversed. Notwithstanding, it would appear implicit from the evidence led that the maintenance of a motor vehicle, home office, mobile phone and the leasing of the remainder of office equipment, would appear to be significant in the scheme of things – as would travel costs. How significant, such provision or maintenance was, is difficult to determine in the absence of further evidence regarding the same. Therefore, I am not positioned to make a finding in this respect based on the evidence before me.

Could the work be delegated or subcontracted?

[66] In short, Mr Smythe could delegate or subcontract out the work; there was no evidence to suggest otherwise.

Did Westral retain a right to suspend or dismiss the person engaged?

[67] The Agency Agreement set out a right to terminate the agreement by either party at any time. The evidence does not support a conclusion that Mr Smythe could be dismissed or suspended.

Was income tax deducted from remuneration paid to Mr Smythe?

[68] No income tax was deducted. It was Mr Smythe’s evidence that he assumed responsibility for this.

Did Mr Smythe receive a periodic wage or salary by reference to completion of tasks?

[69] A major issue that courts and tribunals look at, said Westral, was how the person was paid. It was uncontentious that Mr Smythe was paid for results and results alone (commission). He was not paid in substance for service or manual labour and the risk was his own alone. He was registered for GST and paid by invoice, said Westral. Income tax was not sourced by Westral (taken out of source). It was, said Westral, Mr Smythe’s responsibility to address taxation liability – and he benefited from the tax breaks and to the best of its understanding dutifully filed his BAS statements. There was no contest in this respect.

Did Mr Smythe receive paid annual leave or personal leave?

[70] Mr Smythe determined when he would be absent from the workplace, and the duration of the absence. There was no evidence that showed he received paid annual or personal leave.

Did Mr Smythe’s work involve a profession, trade or distinct calling?

[71] As set out above, while not undervaluing the work performed by Mr Smythe, it cannot be said that it required a particular skill or qualification.

Did Mr Smythe create goodwill or saleable assets in the course of his work?

[72] I do not accept that Mr Smythe created any goodwill or saleable asset in the course of his work. While some clients may have purchased Westral product from him again, I do not consider that this constitutes evidence which shows Mr Smythe created such goodwill. Further there is no evidence that saleable assets were created during the course of his work.

Did Mr Smythe spend a significant proportion of his remuneration on business expenses?

[73] It is not clear from the evidence whether Mr Smythe spent a significant proportion of his remuneration on business expenses.

Conclusion

[74] Stepping through various indicia appears to be somewhat of a methodical exercise. Some findings regarding an indicium support the contention that Mr Smythe was an employee and some do not. While methodical and perhaps laborious, the purpose of this detailed consideration is to establish the nature of the relationship between the parties premised on the whole picture. At times, the matter can be finely balanced, with little indubitable facts differentiating between a contract for service and a contract of service. However, this is not the case here.

[75] I am satisfied that there is sufficient evidence that weighs in favour of a conclusion that Mr Smythe was not an employee of Westral. It was not a relationship of employment, but one of principal and independent contractor. Amongst other indicia considered, I have found there was not a work-wages bargain; Mr Smythe enjoyed autonomy not characteristic of an employment relationship, his wife undertook work for him, he was able to delegate and subcontract the work, he could advertise his business if he so chose, he could not and was not disciplined or performance managed, he was not supervised, and he could choose the price of the product sold within defined parameters.

[76] On any objective basis, it could not be said that Mr Smythe was an employee. It follows that the second jurisdictional objection falls away as does the third.

DEPUTY PRESIDENT

Appearances:

D Smythe, Applicant.
M Baldwin of Kott Gunning Lawyers for the Respondent.

Hearing details:

2020:
Perth;
August 4.

Printed by authority of the Commonwealth Government Printer

<PR721517>

 1   [2011] FWAFB 8307, [30].

 2   Howard v LD&D Australia Pty Ltd t/a Lion[2019] FWC 7959.

 3   Courtbook Page 114.Applicant’s materials.

 4   Ibid.

 5   Ibid.

 6   Ibid.

 7   Exhibit R3 [2] (Court Book 183).

 8   Courtbook Page 79 Applicant’s materials

 9   Exhibit R2.

 10   Courtbook Page 113 Applicant’s materials.

 11   Courtbook Page 113 Applicant’s materials.

 12   Courtbook Page 114 Applicant’s materials.

 13   Ibid.

 14   Courtbook Page 115 Applicant’s materials.

 15   Courtbook Page 118 Applicant’s materials.

 16   Courtbook Page 116 Applicant’s materials.

 17   Courtbook Page 78 Applicant’s materials.

 18   Courtbook Page 118 Applicant’s materials.

 19   Courtbook Page 54—58 Applicant’s materials.

 20   Courtbook Page 59Applicant’s materials.

 21   Courtbook Page 65-67 Applicant’s materials.

 22   Courtbook Page 71 Applicant’s materials.

 23   Courtbook Page 83 Applicant’s materials.

 24   Courtbook Page 118 Applicant’s materials.

 25   Courtbook Page 113 Applicant’s materials.

 26   Courtbook P 188, Respondent’s Supplementary Materials, Annexure 3

 27   Courtbook Page 65 Applicant’s materials.

 28   Courtbook Page 36 Applicant’s materials.

 29   Courtbook Page 42 Applicant’s materials.

 30   Courtbook Page 43 Applicant’s materials.

 31   Courtbook Page 37 Applicant’s materials.

 32   Courtbook, Page 133, Applicant’s Annexure 38.

 33   Jiang Shen Cai T/A French Accent v Do Rozario [2011] FWAFB 8307, [25].

 34   Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16, 24 per Mason J.

 35   Ibid.

 36   [2015] FWCFB 3704.

 37   [2015] FWC 38, [10].

 38   [2011] FWAFB 8307.

 39   Abdalla v Viewdaze Pty Ltd (2003) 122 IR 215, 222; Jiang Shen Cai T/A French Accent v Do Rozario [2011] FWAFB 8307, [18].

 40   Jiang Shen Cai T/A French Accent v Michael Anthony Do Rozario [2011] FWAFB 8307 [20].