Fair Work Ombudsman v Ecosway Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Fair Work Ombudsman v Ecosway Pty Ltd [2016] FCA 296

File number: SAD 21 of 2015
Judge: WHITE J
Date of judgment: 24 March 2016
Catchwords:

INDUSTRIAL LAW – civil penalty proceedings – alleged contravention of General Retail Industry Award 2010 – alleged contravention of the Fair Work Act 2009 (Cth) – whether worker worked under a contract of service – factors relevant to determining nature of relationship – whether misrepresentation that the engagement was not one of employment.

Held: Putative employee worked under as an independent contractor.  No contravention of Award or of the Fair Work Act.

Legislation:

Crimes Act 1990 (NSW) s 61R(1)

Criminal Code Act 1995 (Cth) s 5.4

Criminal Law Consolidation Act 1935 (SA) s 47

Fair Work Act 2009 (Cth) ss 14, 44, 45, 46, 47, 357

Income Tax Assessment Act 1997

Principles of the Criminal Law (3rd edition, Lawbook Co, 2010)

Retail Award

Sexual Offences (Amendment) Act 1976 (UK)

Superannuation Guarantee Act

Trade Practices Act 1974 (Cth)

Workplace Relations Act1996 (Cth) ss 900, 901

Cases cited:

ACE Insurance Ltd v Trifunovski [2011] FCA 1204; (2011) 200 FCR 532

ACE Insurance Ltd v Trifunovski [2013] FCAFC 3; (2013) 207 FCR 146

ACT Visiting Medical Officers Association v Australian Industrial Relations Commission [2006] FCAFC 109; (2006) 153 IR 228

Australian Mutual Provident Society v Chaplin (1978) 18 ALR 385

Banditt v The Queen [2005] HCA 80; (2005) 224 CLR 262

Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239; (2008) 39 WAR 1

Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337

Director of the Fair Work Building Industry Inspectorate v Bavco Pty Ltd (No 2) [2014] FCCA 2712; (2014) 291 FLR 380

Fair Work Ombudsman v Ecosway Pty Ltd [2015] FCA 102

Fair Work Ombudsman v Ecosway Pty Ltd [2015] FCCA 202

Fair Work Ombudsman v Metro Northern Enterprises Pty Ltd [2013] FCCA 216

Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] FCAFC 37; (2015) 228 FCR 846

Forstaff v Chief Commissioner of State Revenue [2004] NSWSC 573; (2004) 144 IR 1

Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21

Jones v Dunkel (1959) 101 CLR 298

Krakowski v Eurolynx Properties Ltd [1995] HCA 68; (1995) 183 CLR 563

Lee v Westpac Banking Corporation [2015] FCA 467

Lehigh Valley Coal Co v Yensavage 218 Fed 547 (1914 2nd CCA)

Lopez v Deputy Commissioner of Taxation [2005] FCAFC 157; (2005) 143 FCR 574

Lustig v The Queen [2009] NSWCCA 143

Marshall v Whittaker’s Building Supply Co (1963) 109 CLR 210

On Call Interpreters & Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366; (2011) 214 FCR 82

R v Allan; Ex parte Australian Mutual Provident Society (1977) 16 SASR 237

R v Saengsai‑Or [2004] NSWCCA 108; (2004) 61 NSWLR 135

Roy Morgan Research Pty…

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Details
Case
[2016] FCA 296
Decision Date

CaseChat Overview and Summary

In the case of Fair Work Ombudsman v Ecosway Pty Ltd, the Fair Work Ombudsman (FWO) brought civil penalty proceedings against Ecosway, alleging contraventions of the General Retail Industry Award 2010 and the Fair Work Act 2009 (Cth). The primary dispute centred on whether a worker, Ms Wardale, was employed under a contract of service or as an independent contractor. The court was required to determine the nature of the relationship between Ms Wardale and Ecosway and assess whether there were any misrepresentations regarding the employment status.

The court analysed various factors to ascertain the true nature of the relationship, including the terms of their agreement, the level of control Ecosway exercised over Ms Wardale, and the economic reality of their arrangement. The court found that Ms Wardale was an independent contractor, not an employee, because the agreement between the parties indicated a level of autonomy and risk-taking by Ms Wardale consistent with an independent contractor. Furthermore, the court concluded that Ecosway's representations about the nature of the engagement were not misleading, as Ms Wardale indeed operated as an independent contractor.

Consequently, the court dismissed the FWO's application, finding no contraventions of the Award or the Fair Work Act. The detailed examination of the agreement and the nature of the working relationship led to the conclusion that Ms Wardale was properly classified as an independent contractor. The court's decision was grounded in the specific terms of the agreement and the economic reality of the arrangement, which did not align with the characteristics of an employment relationship.

The final orders of the court were to dismiss the application brought by the FWO. This decision underscores the importance of carefully examining the terms of agreements and the actual working relationship to determine the nature of the employment status correctly.

Orders

Orders of the court

1. The application is dismissed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

For these reasons, had it been necessary to do so, I would have found that Ecosway did not discharge the s 357(2) onus. However, for the reasons given earlier, I am not satisfied that the representations made by Ecosway were incorrect, as I consider that Ms Wardale was an independent contractor. Conclusion For the reasons given above, the application of the FWO is dismissed.

Ratio Decidendi

Legal Principle Established

It convenient to make findings as to the content of the Agreement under the following headings. Ms Wardale’s remuneration Clause 1 specified that Ms Wardale was entitled to “benefits” of three types. First, there were “Handling Charges”. These were in fact commissions on the monthly sales in the store of Ecosway products. A commission of 5% inclusive of GST was paid on monthly sales of Ecosway “Special eV Product sets” and a commission of 12% inclusive GST on monthly sales of all other Ecosway products. There were no minimum or maximum amounts of handling charges so that the amount which Ms Wardale received depended on the number of each type of product sold in the store. Ms Wardale was not entitled to handling charges in respect of “certain products and promotional items” to which a separate scheme applied (cl 1(b)). The evidence did not indicate the content of this scheme, nor the form or amount of these payments. I infer that they were not significant. The third source of Ms Wardale’s remuneration was to arise from her participation in “various competitions and/or incentive programs organised by Ecosway for Ecosway Store Operators”. Again, these do not appear to have been significant. The Agreement did not contain any stipulation as to how or when Ms Wardale would receive the remuneration to which she was entitled. In practice, Ecosway made monthly payments of the accrued handling charges into Ms Wardale’s bank account, and provided a reconciliation statement to her.Arrangements concerning stock Clause 2 of the Agreement contained detailed prescriptions concerning Ecosway stock. Stock was delivered to the store on a consignment basis (cl 2(a)). Ecosway retained ownership, the “exclusive right” to deal with stock in whatever manner it deemed fit (cl 2(a)), and to recall it for any reason whatsoever (cl 2(b)). Ms Wardale was obliged to store the stock at premises approved by Ecosway (cl 2(b)) and to ensure that it was kept in proper condition (cl 2(e)). Ecosway was entitled to enter the store, whether or not Ms Wardale was present, to inspect or retrieve stock if it had been unable to contact Ms Wardale for three consecutive days (cl 2(c)). Ms Wardale was to carry the risk of products being damaged as a result of poor storage conditions as she was required to purchase all such stock (cl 2(e), (g)). She could return stock to Ecosway only with its prior written approval and, even then, Ecosway had the discretion to accept or reject the return (cl 2(f), (g)). Ms Wardale was required to check each delivery of stock for completeness, and to verify it to Ecosway (cl 2(h)); to check the monthly Ecosway “Sales and Inventory Statement” against her physical stock inventory (cl 2(k)); and to conduct at least two stocktakes each year as and when directed by Ecosway (cl 2(l)). She was to submit the stocktakes to Ecosway in accordance with its “Stock Check Procedures”. In the event of discrepancies, Ms Wardale was obliged to purchase the stock which could not be located (cl 2(m)).