Domenic Gugliandolo v Live Trader Global Pty Ltd T/A LTG Goldrock

[2013] FWC 3887

[2013] FWC 3887

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Domenic Gugliandolo
v
Live Trader Global Pty Ltd T/A LTG Goldrock
(U2012/16055)

SENIOR DEPUTY PRESIDENT ACTON MELBOURNE, 19 JUNE 2013

Application for unfair dismissal remedy - jurisdiction - whether applicant employee or independent contractor.

Introduction

[1] On 28 November 2012, Mr Domenic Gugliandolo made an application to Fair Work Australia (FWA) under s.394 of the Fair Work Act (FW Act) for an unfair dismissal remedy in respect of the termination of his employment by Live Trader Global Pty Ltd T/A LTG Goldrock (LTG). On 12 December 2012, an objection to the application was filed by LTG seeking that the application be dismissed on the basis that Mr Gugliandolo was engaged as an independent contractor and was therefore not eligible to make an unfair dismissal remedy application. On 1 January 2013 FWA was renamed the Fair Work Commission (FWC).

[2] This decision deals with LTG’s jurisdictional objection only.

[3] At the hearing of LTG’s jurisdictional objection, I granted Mr Gugliandolo permission to be represented by a paid agent as I determined that it would enable the matter to be dealt with more efficiently taking into account the complexity of the jurisdictional objection.

Statutory and the legal context

[4] Section 394 of the FW Act provides that a person who has been dismissed may make an unfair dismissal remedy application to the FWC. Section 390 of the FW Act provides that the FWC may only order a remedy if satisfied the person is “protected from unfair dismissal” at the relevant time. Under s.382 of the FW Act one of the requirements for a person to be “protected from unfair dismissal” at the relevant time is that the “person is an employee” at that time.

[5] The matter of whether a person is an employee or independent contractor was recently considered by Perram J in ACE Insurance Ltd v Trifunovski and Others. 1 His Honour said:

“…first, the distinction between an employee and an independent contractor is ‘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’; secondly, the answers to that question are to be determined by reference to the ‘totality’ of the relationship; thirdly, a number of indicia have accreted over time in the authorities which are thought to throw light to varying degrees on the outcome without being determinative: the terms of the contract; the intention of the parties; whether tax is deducted; whether sub-contracting is permitted; whether uniforms are worn; whether tools are supplied; whether holidays permitted; the extent of control of, or the right to control, the putative employee whether actual or de jure; whether wages are paid or instead whether there exists a commission structure; what is disclosed in the tax returns; whether one party ‘represents’ the other; for the benefit of whom does the goodwill in the business inure; how ‘business-like’ is the alleged business of the putative employee – are there systems, manuals and invoices; and so on – the list is neither exhaustive nor short.” 2 [Original references omitted]

[6] The decision of Perram J in ACE Insurance was affirmed on appeal by the Full Federal Court in ACE Insurance Limited v Trifunovski. 3 Buchanan J, with whom Lander and Roberston JJ agreed, extensively surveyed the case law on whether an employment relationship exists. Thereafter his Honour said:

“102 It is trite to say that the foregoing survey yields no single or unifying test to determine whether an employment relationship exists. Some features of a particular relationship may tend strongly against such a conclusion. Principal amongst such features, in my view, are contractual terms which deny any requirement for personal service or represent clear indications of the pursuit of an independent business. Even where such features are absent the proper conclusion may be that a particular relationship is not one of employment, but the analysis is less straightforward.

103 Of the indicia of employment it is clear that a right of control remains an important consideration in many cases. It may be found in a right of organisation and allocation of work, as much as in some theoretical right to say how actual work should be done.

[7] Subsequent to the decision of Perram J in ACE Insurance, a Full Bench of Fair Work Australia in Jiang Shen Cai trading as French Accent v Michael Anthony Do Rozario 4 summarised the general law approach to distinguishing between employees and independent contractors as follows:

“[30] …

(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 of 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.” [Original endnotes omitted]

The Facts

[8] LTG is a small business which provides foreign exchange market education, training and support to its clients. 5 Mr Peter Elsworth, a director of LTG, said that Mr Gugliandolo “operated as one of an online ‘live trading room team’ providing general advice on the market, educating clients on technical aspects of trading and importantly, taking trades based on his expertise and informing clients of trades he had taken. Clients could follow these trades via an Auto Trader which would, place these same trades on the clients account or alternatively, clients can place trades independently.”6

[9] Mr Gugliandolo worked for LTG from June 2009 until 20 November 2012 from his home office using his own computing facilities. In the latter period of his engagement by LTG, he was trading in the foreign exchange market using a trading account funded by LTG.

[10] Mr Gugliandolo initially began working for LTG in 2009 for four hours a night at $25 per hour. He was instructed by LTG to invoice them for his work. Subsequently Mr Gugliandolo’s hours of work for LTG increased and he was instructed by LTG to invoice LTG for more hours per week at $48 per hour plus GST.

[11] In September 2010, LTG advised Mr Gugliandolo as follows:

“New Timetable and Contractor Rates

Hi Guys,

As discussed in Melbourne, we are adding an additional Moderator … to reduce the length of each individual ‘on air shift’ and also provide cover for holidays and the possibility of sickness. This also recognizes your role as an integral part of the LTG Team with remuneration based on an Annual Fee rather than being an hourly rate.

So as to explain the relativity between what is proposed and what has existed to date, let’s start with the current arrangement … $48 per Hr and hours as Moderators

Dom	6.30AM till 1.30AM)
…	1.00AM till 8.00PM) 7 Hours x 5 days = 35 Hrs x $48 =$1680p x 48 weeks = $80,640 (No Holiday Pay)
…	6.00PM till 1.00AM)

The essential difference being proposed is with the introduction of an additional Moderator, you will each have 2 hours less ‘on air time’ each day, you will qualify for 4 weeks paid leave and when the market is closed on such days as Good Friday, Xmas Day, Boxing Day, NY Day and other like holidays, you will be paid.

Proposed hours for ‘on air’ are

Dom	6.30AM till 11.30AM)
…	11.30AM till 4.30PM) 5 Hours x 5 days = 25 Hrs. No hourly rate, but a basic contractor rate of $6000 a month ($72,000 PA) including all exchange holidays, plus 4 weeks annual leave.
…	8.30PM till 1.30AM)

The new timetable will therefore be:

Dom	6.00AM till 11.30AM …

There will need to be added to this, 15/20 min handover shifts …

As part of this revised structure, you will still be expected to make the same contribution to classrooms and attend conferences. You will also cover for other members of the team when they are on leave and others Members will cover for you and those covering will extend to Avril and Penny.

All leave requests must be submitted at least 6 weeks in advance and, only one Moderator can take leave at any point in time.

What is being proposed follows almost exactly what was discussed with you in Melbourne, so I am sure won’t come as much of a surprise, it’s just taken a little while to bed everything down.

Finally, can you please ensure that all invoices include GST.” 7

[12] In February 2011, LTG reduced Mr Gugliandolo’s annual payment from $70,000 to $50,000 for the same hours.

[13] In March 2012, Mr Gugliandolo signed a contract with LTG which provided as follows:

“Contract Between Domenic Gugliandolo and LTGGoldrock Pty Ltd

As part of a team, Domenic will be responsible for assisting clients becoming profitable traders by demonstrating their own profitable trading in a live account and assisting in answering trading questions as posed by clients.

Key Duties/Responsibilities:

- Managing live trading calls to members. These will be identified and executed by the Trader on his own real live account (funded by LTG) and will be linked to clients individual accounts as they confirm. Whist the Trader will provide profit targets and stops and recommended risk, the client will maintain complete control over the account and can amend these trades at will.

- Developing signals - as part of the team, the Trader will be expected to monitor their own performance and contribute to the development of trade set ups and refinements as·market dynamics change.

Performance Expectation

- Profitable Trading is a fundamental prerequisite to this role. Trades to be executed at 1% risk on a live account and a drawdown of 5% in a single month will require consultation with the RM and review of performance.

- Negative ROI over a 3 month period will be regarded as unsatisfactory performance. However, if the cumulative return for the 12 months up to current date is positive, then such a 3 month negative return will be accepted as not representative of your performance. In this case, the a 6 month period of negative ROI will be a guideline of unsatisfactory performance.

- Termination if performance is unsatisfactory in terms of the above ROI performance Criteria, this contract can be terminated at the discretion of the Board of LTGGoldrock. One month notice will be period of notification. Other than unsatisfactory performance, 3 months notice will apply to both parties to this contract.

Reward Structure

- Base Fee of $6,250 Per Month plus Bonus.

- Bonus to be drawn from a Pool which will be generated at the rate of $1000 for each program sold in excess of 240 programs over a designated 6 month bonus period. For the sake of clarity, 320 programs sold in a bonus period will be 80 programs in excess of the 240 base and will generate a Bonus Pool of $80,000. If tally is 220, then the next bonus period, this will be 20 programs short of the 240 base and and the following bonus period the base will be increased to 260 programs to qualify for contribution to the Bonus Pool.

- Allocation of Bonus between Traders will be in proportion to their performance based on ROI. If traders A, B and C had respective ROI of 7%, 5% and 3% at conclusion of bonus period and the Bonus Pool was $80,000 then bonus would be shared 7/15th, 5/15th and 3/15th of $80,000. (an individual with a negative ROI will not share in the bonus Pool)

- Discretionary bonus The Board preserves the prerogative to grant a bonus at its discretion the event that it considers a Moderator performance deserving of such, even though the moderator might not qualify under the terms of the Reward Structure described above.

Role as Contractors

- You will be employed as an Independent Contractors and will provide your own equipment and office accommodation to carry out your role. You will be responsible for your own superannuation and will receive base for 4 week leave. Only those public holidays where the FX market is closed will qualify as paid public holidays.

- RG 146 qualification is required to hold a Proper Authority under the AFSL and ongoing education as specified from the Lazorne Learning Platform must be completed inside the first week from each month end.

- You are registered with ASIC as contractors holding a Proper Authority Holder under the LTGGoldrock Pty Ltd AFSL and as such must carry out your duties as Moderators accordance with the provisions of this License. (You have copies of this License) In essence, this permits LTG to provide general advice, as distinct from specific advice, and was recently amended to permit us to provide such advise via the Auto Trader facility.

- LTGGoldrock has Personal indemnity insurance as required under its AFSL and as a registered contractor, you are covered under this policy.” 8

[14] At the time Mr Gugliandolo signed this contract, he signed it for and on behalf of himself and thought he was signing it as an independent contractor.

[15] In July 2012, LTG sent Mr Gugliandolo an email as follows:

“Re Bonus …

I will shortcut a number of issues I intended discussing with you when I plan to visit Melbourne in the next fortnight and take this opportunity to inform you directors wish to offer you an increase of $10,000 PA in your moderator fee, effective July 1st.

I’m sure you appreciate, bonus payment is part of profit sharing …

Dom you, together with … are viewed by the Directors of LTGGoldrock as great contributors and are a valued part of the team.

Goldrock is on the way up and you three will contribute to and enjoy the ride.” 9

[16] Up to mid October 2012, when Mr Gugliandolo worked for LTG he worked from 7.30 am to 12.30 pm. He described his work for LTG as follows:

“7. I would open the ‘room’ in a virtual sense. I would work on the computer from my home. Then I would take questions from members; I would analyze charts and markets. I would provide instructions on the daily market conditions and what was likely to happen. Much of what I did was teaching members to trade.

8. Members would type in - it was a web-based conference. What members see was the screen on my computer. They type in questions to a chat facility and I would provide advice.

9. At 10am I would do a comprehensive analysis of the market for the day.

10. Typically 70 members would be in the room while I was working.” 10

[17] Mr Gugliandolo saw his time in the trading room as primarily concerned with teaching LTG’s clients about how to trade in his methodology on how to take trades.

[18] In mid October 2012, Mr Gugliandolo was told by LTG that they had to make changes and he agreed. Mr Gugliandolo’s evidence about this was as follows:

“45. … I changed to start at 9am and to do a ½ hour recording of the day’s market. So there was a change from being live to a reduced recording. This took from 9am to 10am; there was a bit of preparation and 5 hours on Wednesday night. So I was then changed to 11 hours per week.

46. I was still to be paid $30,000 pa for the trade copier component…

48. My new contract was $65 per hour for 11 hours and $30,000 pa for the trade copier. I agreed to it; I had no choice.” 11

[19] Mr Gugliandolo’s key duties and responsibilities at this time were those set out in the written contract of March 2012, and towards the end of his engagement with LTG he was largely being rewarded by LTG as a trader. Mr Gugliandolo decided the foreign exchange trades he made for LTG, subject to certain requirements of LTG. At this time, as earlier, Mr Gugliandolo was issuing invoices to LTG for his work. The invoices were issued under the name “Hiquest Computer Solutions”, citing an Australian Company Number (ACN) for “Hiquest Enterprises Pty Ltd”, a company of which Mr Gugliandolo is the sole director and shareholder, and an Australian Business Number (ABN) for the entity “The Domkin Trust” and the trading name “Hiquest Computer Solutions”. LTG paid Hiquest Computer Solutions for Mr Gugliandolo’s work.

[20] In November 2012, Mr Gugliandolo ceased working for LTG.

[21] When asked about the written contract between Mr Gugliandolo and LTG, LTG conceded it had engaged a person, being Mr Gugliandolo, rather than Mr Gugliandolo’s company; the contract was signed by Mr Gugliandolo for and on his own behalf; and Mr Gugliandolo could not delegate the performance of his work. Mr Gugliandolo was presented to the clients of LTG as part of the LTG team, he sent out messages to LTG clients in the name of LTG, and he was given a name tag with “Domenic, LTG” on it when he attended conferences for LTG.

[22] Nonetheless, LTG received monthly invoices from Hiquest Computer Solutions and paid Hiquest Computer Solutions, not Mr Gugliandolo, for Mr Gugliandolo’s work. The invoices included a Goods and Services Tax (GST) component. LTG was not requested to and did not make Pay As You Go (PAYG) taxation or superannuation payments in respect of Mr Gugliandolo or Hiquest Computer Solutions. Hiquest Computer Solutions forwarded business activity statements (BAS) to the Australian Taxation Office (ATO) for the period of the last quarter of 2009 to the end of 2012. The BAS for the periods 1 January 2010 to 31 December 2012 reported only sales from LTG and the GST owed to the ATO from those sales. No salary, wages and other payments were recorded on the BAS.

[23] While working for LTG, Mr Gugliandolo also undertook foreign exchange trades using accounts in his own name and that of his superannuation fund.

Consideration

[24] The jurisdictional issue before me is whether Mr Gugliandolo was an employee of LTG at the time he ceased to work for LTG on 20 November 2012. Mr Gugliandolo’s work for LTG before the end of his engagement with LTG was essentially training clients of LTG, and trading, in respect of the foreign exchange market.

[25] There are a number of factors favouring a conclusion that Mr Gugliandolo was an employee of LTG at the time he ceased working for them. At the relevant time, LTG had engaged Mr Gugliandolo, not his company. LTG’s contract with Mr Gugliandolo was personal in nature, he could not delegate his work for LTG. LTG set Mr Gugliandolo’s hours of work and also presented Mr Gugliandolo as an emanation of its business in its dealings with others, though such actions as having messages from Mr Gugliandolo to its clients go out in the name of LTG. In addition, neither Mr Gugliandolo nor his company were engaged in any other business outside of that he performed for LTG, other than some personal trading on his own account and using his superannuation fund.

[26] The factors favouring a conclusion that Mr Gugliandolo was an independent contractor for LTG include that LTG was invoiced for his work by Hiquest Computer Solutions, a trading name for a company of which Mr Gugliandolo is the sole director and shareholder, and those invoices included GST; LTG paid Hiquest Computer Solutions in accordance with the invoices; Hiquest Computer Solutions forwarded BAS to the ATO for the work Mr Gugliandolo performed for LTG; and LTG deducted no PAYG taxation and paid no superannuation in respect of Mr Gugliandolo’s work. Further, at least at the time he signed his written contract with LTG in March 2012, Mr Gugliandolo thought he was doing so as an independent contractor.

[27] Mr Gugliandolo’s provision of his own office and computing facilities to conduct his work for LTG and his performance of his work for LTG subject to only certain requirements of LTG are also factors favouring a conclusion that Mr Gugliandolo was an independent contractor for LTG. However, their impact in that regard is diminished by the fact that LTG funded the account that Mr Gugliandolo traded in his work for LTG and by the high degree of skill and expertise required for the work Mr Gugliandolo performed for LTG.

[28] On balance, I am satisfied Mr Gugliandolo was an employee of LTG at the time he ceased to work for them on 20 November 2012. In my view, the factors favouring a conclusion Mr Gugliandolo was an employee of LTG at the relevant time are more strongly indicative of the actual relationship between the parties than the factors suggestive of another relationship. As a practical matter and having regard to the totality of the relationship, I do not think Mr Gugliandolo can be regarded as having, at the relevant time, carried on a trade or business of his own of which his work for LTG formed part, rather he was serving LTG in LTG’s business.

[29] Accordingly, I conclude Mr Gugliandolo was an employee of LTG at the time he ceased to work for LTG.

Conclusion

[30] For the foregoing reasons, LTG’s jurisdictional objection against Mr Gugliandolo’s unfair dismissal remedy application is dismissed. I emphasise that I have made no determination as to the merits of that application. The application will now be referred to the FWC Panel Head for Termination of Employment matters for further processing.

SENIOR DEPUTY PRESIDENT

Appearances:

G. Dircks, paid agent,for Domenic Gugliandolo.

P. Elsworth for Live Trader Global Pty Ltd T/A LTG Goldrock.

Hearing details:

2013.

Melbourne:

5 April.

 1 (2011) 200 FCR 532.

 2 Ibid at [29].

 3 [2013] FCAFC 3.

 4   [2011] FWAFB 8307 [27].

 5   Exhibit, R1 at paragraph 2.

 6   Exhibit R1 at paragraph 3.

 7   Exhibit A1 at DG2.

 8   Exhibit R1 at PE1.

 9   Exhibit A1 at DG4.

 10   Exhibit A1.

 11   Ibid.

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