Gang Ma v Yan Massage Wynnum West Pty Ltd
[2024] FWC 1329
•28 MAY 2024
| [2024] FWC 1329 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Gang Ma
v
Yan Massage Wynnum West Pty Ltd
(U2023/12107)
| DEPUTY PRESIDENT LAKE | BRISBANE, 28 MAY 2024 |
Application for an unfair dismissal remedy – jurisdictional objection – not an employee – independent contractor – jurisdictional objection upheld – application dismissed.
Mr Gang Ma (the Applicant) brought an application to the Fair Work Commission (the Commission) seeking a remedy pursuant to s.394 of the Fair Work Act 2009 (the Act) stating that he was unfairly dismissed from Yan Massage Wynnum West Pty Ltd (the Respondent).
The Respondent raised a jurisdictional objection that the Applicant was not dismissed within the definition of s.386 of the Act as he was an independent contractor. To consider the merits of the Application, the Commission must determine whether the Applicant was a persons protected from unfair dismissal under s.396 of the Act.
Directions were issued and a hearing was held on 14 March 2024. The Applicant was self-represented, and Mr Blade Atton from Gadens Lawyers appeared on behalf of the Respondent. Representation was granted to the Respondent for the purposes of efficiency, and to address the complexity arising from identifying the indicia of the employment relation under s.596 of the Act. I have considered all the materials provided and the evidence provided at Hearing. I provide my consideration below.
Is the Applicant an employee or an independent contractor?
Section 386 of the Act provides:
(1) A person has been dismissed if:
(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.
The definition of an employer is determined in its plain and ordinary meaning.[1] The High Court of Australia in Jamsek and Personnel Contracting provide the test of characterising whether a person is an employee or contractor.[2] The characterisation of the relationship is to be determined by reference only to the parties’ legal rights and obligations.
Where a comprehensive written contract is in place, this will be the primary source of the parties’ legal rights and obligations, and it will be decisive in characterising the relationship. This will apply unless the contract is a sham, varied after it was made, or post agreement conduct, or context demonstrates that a term is legally ineffective.[3]
Where no comprehensive written contract is in place, the High Court stated in Jamsek that the “multifactorial” test remains appropriate in identifying the applicable legal rights and obligations which is not derived from the post contract conduct.[4] Therefore, a multifactorial approach is to be adopted. In reliance on a considerable body of case law developed, general legal principles are applied to specific circumstances.[5] Multiple indicia are to be considered, though none alone are determinative. Analysis of the totality of the relationship between the parties is required to determine whether the relationship was one of an employee or independent contractor.
In Roy Morgan Research Pty Ltd v Commissioner of Taxation, the Full Court of the Federal Court quoted with approval the following passage from Hall (Inspector of Taxes) v Lorimer:
“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”.[6]
The Full Bench of the Commission adopted this passage in Jiang Shen Cai trading as French Accent v Michael Anthony Do Rozario, and summarised the general approach to distinguish between employees and independent contractors as follows:
“(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[7]: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own[8] 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.[9]
(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.[10]
(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.[11] 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:[12] the parties cannot deem the relationship between themselves to be something it is not.[13] Similarly, subsequent conduct of the parties may demonstrate that relationship has a character contrary to the terms of the contract.[14]
(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 or 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.[15] 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.[16]
“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.”[17] “[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.”[18]
· 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[19] and or advertises his or her services to the world at large.
· Whether the worker provides and maintains significant tools or equipment.[20]
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. [21]
· Whether the work can be delegated or subcontracted.[22]
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.[23] 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.[24]
· Whether the putative employer presents the worker to the world at large as an emanation of the business.[25]
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.[26]
· 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.[27]
(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.”[28]
There is no comprehensive written contract in place. There is advertisement which indicate what the role was intended to be. The advertisement on 22 April 2022 states:
“B: Quality Massage Parlor Seeks Partnership
Store Description:
Located in a large shopping mall in Brisbane’s East End, with a high flow of people, a good customer base and a very high-quality clientele. The store is well decorated and has an excellent working environment. The atmosphere in the store is relaxing and harmonious and there are opportunities for immigration.
Payment:
Basic share 50%-60%
Opportunity to increase commission every 6 months
Therapists with a 60% commission will be eligible for partner benefits and company dividend”.
The relationship appears to be defined as a ‘partnership’ with a share in profits indicating that the Applicant is an independent contractor. The Applicant contends that this was not reflective of the advertisement. The Applicant tendered an advertisement which he believed was similar to his working arrangement or advertisement. There were a few differences. The subject line states ‘Good quality massage shop really needs staff on Saturday and Sunday.’ Furthermore, the advertisement offered training and a support salary.
Given that the parties have not formally entered into a written agreement, the advertisements cannot be relied upon as the primary source of the Applicant’s and Respondent’s legal obligations. Therefore, the other indicia will need to be explored to determine whether the Applicant is an employee or independent contractor.
Control
With the evidence before me, the Applicant had sufficient control in his working relationship with the Respondent.
The Applicant is paid a base rate of $150 regardless of how many clients he performed massages for. If the Applicant earns above $150, he would receive a 55% commission if he completed the work above $150 threshold. The Applicant had a choice to maximise his commissions. The Applicant did have control over the days which he had worked. This was done with the initial agreement between the Applicant and the Respondent. These factors indicate that the Applicant was an independent contractor.
The Applicant also sent some of his timetables which provide the following information:
The Applicant submits that his working hours are 9:00am to 5:30pm from Tuesday to Saturday except on Thursdays where he would leave at 9:00pm. It appeared that the Applicant had significant breaks during some periods compared to some of the other workers. It indicated the Applicant’s level of control of how much work he wished to perform.
There are factors where the Applicant did not have control. The Applicant did not have control over booking clients, or the rates to perform the massage. The Applicant submitted some of the duties that were required if he was not performing a massage, along with store regulations.
“The duties include:
-Folding towels and rewashing them with hot water.
-Dumping rubbish
-Sweeping and mopping floor
-Maintaining clean and tidy work environment
-Supplying disposable water cups
-Refilling water
Store regulations:
-Keep quiet and do not make loud noises, especially when there are customers.
-Speak to customers with a lower voice. Do not disturb customers in other rooms
-Those who argue or fight in the store shall be directly dismissed
-No one is allowed to use the computer except for the receptionist on that day
-Massagists should arrive at the store at 9:15 the latest. For special reasons, please ask for leave from the receptionist in advance.
-The person who refuses to be on duty will deduct $10 from their daily salary and give it to the employee who helps to be on duty.
-The last person who leaves the store shall make sure to turn off all power, especially the electric blanket and towel machine.
-After seeing off customers, the massagists shall tidy up the room that was used.
-Do not eat food with strong smell in the store
-Couches should be returned to its original position in a timely manner after foot therapy
-Do not steal items from store.”
There is mention of the term ‘employee’. However, this was not made clear given that there is a receptionist duty. The term ‘duty’ appears to be referring to receptionist duty. Mr Ma was engaged as a receptionist on the roster that was provided to Chambers which could indicate that he is an employee. However, it was not Mr Ma’s primary duty, nor was there any evidence establishing this.
In Mr Chen’s statement, it was noted that the Applicant was not paid for periods he did not service clients as he generated no billings from which a commission could be deducted. It appeared that the term ‘on duty’ was a reference to general maintenance of the store, where there would be a deduction $10 from their daily salary (which is assumed to be the $150 threshold). The Applicant did not appear to be penalised for not taking in massage bookings indicating control.
It appeared that the Applicant had the freedom not to work or take a massage if he had wished. However, this would not be incentivised to do so given the commission structure. The Applicant was able to freely take off time, such as study for his citizenship without resistance from the Respondent.
It appears that the Applicant had sufficient control over his ability to work, and when to work which slightly favour him being found as an independent contractor over an employee.
Ability to work for others
I have also considered the Applicant’s ability to work for others. Mr Chen stated that he recalled the Applicant stating he worked at “Wonderful Massage” located in Alexandra Hills Shopping Centre between April 2022 and June 2022. The Applicant commenced his employment on 26 April 2022, and this would be consistent with the Applicant’s ability to support himself. When asked about this during the determinative conference, the Applicant did not appear to be truthful or explain a reason for this answer.
The Applicant states he was unable to work for others as a full-time employee. I did not find this to be particularly credible. When the Applicant started his engagement with the Respondent, it was only for 3 days a week. The Applicant stated that he was able to sustain this arrangement through relying on his savings of $20,000. I did not find the explanation to be particularly credible. Upon the evidence provided before me, it appeared the Applicant was not constrained by the Respondent to work for others if he wished. This factor indicates that the Applicant was an independent contractor.
Advertises services to the world at large
The Applicant states that him wearing a uniform is indicative of him being an employee. The Respondent states that the Applicant did not have to wear a uniform and provided CCTV footage of the Applicant not wearing a uniform at reception. I am not satisfied that the Applicant demonstrated that he advertised his services to the world at large as an employee of the Respondent, nor that he was required to wear a uniform while he was providing massages.
Employee entitlements/Insurance/ABN
The Applicant was not provided any annual leave, and the Applicant’s income tax was not deducted from the remuneration. The Applicant was required to provide an ABN and provide his own insurance. This factor marginally favours a finding that the Applicant was a contractor.
Conclusion
In considering the indicia above and the evidence that has been provided the Commission, I am satisfied that the reflection of the arrangement between the Applicant and Respondent is an independent contracting relationship rather than an employee. Therefore, the Applicant is not a persons protected from unfair dismissal under s. 396 of the Act. The Respondent’s jurisdictional objection is upheld, and the Application is dismissed. I order accordingly.
DEPUTY PRESIDENT
Appearances:
G. Ma appearing for himself as the Applicant.
B. Atton appearing on behalf of the Respondent from Gadens Lawyers.
Hearing details:
14 March 2024.
Brisbane.
Hearing via Microsoft Teams.
[1] Fair Work Act 2009 (Cth) s.12.
[2] Asim Nawaz v Raiser Pacific Pty Ltd [2022] FWC 1189 at [50]-[51] citing Jamsek v ZG Operations Pty Ltd [2022] HCA 2 ('Jamsek’); CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 (‘Personnel Contracting’).
[3] Jamsek per Kiefel CJ, Keane and Edelman JJ at [40]-[62], Personnel Contracting per Gordon J at [172]-[178]:
[4] Personnel Contracting per Kiefel CJ, Keane and Edelman JJ at [33]-[34], [47], [61], per Gordon J at [174], [186]-[189].
[5] Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16; Hollis v Vabu Pty Ltd (2001) 207 CLR 21; Abdalla v Viewdaze Pty Ltd (2003) 122IR 215; Roy Morgan Research Pty Ltd v Commissioner of Taxation (2010) 184 FCR 448; Jiang Shen Cai trading as French Accent v Michael Anthony Do Rozario [2011] FWAFB 8307.
[6] Hall (Inspector of Taxes) v Lorimer [1992] 1 WLR 939; endorsed in Roy Morgan Research Pty Ltd v Commissioner of Taxation (2010) 184 FCR 448.
[7] Marshall v Whittaker's Building Supply Co (1963) 109 CLR 210, 217 per Windeyer J approved by the majority in Hollis v Vabu (2001) 207 CLR 21 [40]; Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16.
[8] Hollis v Vabu (2001) 207 CLR 21 [47] and [58].
[9] Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16
[10] Ibid.
[11] The parties cannot create something which has every feature of a rooster, but call it a duck and insist that everyone else recognise it as a duck”: Re Porter (1989) 34 IR 179, 184 per Gray J; Massey v Crown Life Insurance [1978] 2 All ER 576, 579 per Lord Denning approved by the Privy Council in AMP v Chaplin (1978) 18 ALR 385, 389.
[12] AMP v Chaplin (1978) 18 ALR 385, 389.
[13] Hollis v Vabu (2001) 207 CLR 21 [58].
[14] AMP v Chaplin (1978) 18 ALR 385, 394.
[15] Zuijs v Wirth Bros. Pty Ltd (1955) 93 CLR 561, 571.
[16] Hollis v Vabu (2001) 207 CLR 21.
[17] Humberstone v Northern Timber Mills (1949) 79 CLR 389, 404 per Dixon J.
[18] Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16, 36.
[19] Ibid.
[20] Ibid 24.
[21] Hollis v Vabu (2001) 207 CLR 21 [47] and [58].
[22] Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16, 24.
[23] Queensland Stations Pty Ltd v Federal Commissioner of Taxation (1945) 70 CLR 539; AMP v Chaplin (1978) 18 ALR 385, 389.
[24] Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16, 24.
[25] Hollis v Vabu (2001) 207 CLR 21 [39].
[26] Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16, 24.
[27] Massey v Crown Life Insurance [1978] 2 All ER 576, 579 per Lord Denning.
[28] Jiang Shen Cai trading as French Accent v Michael Anthony Do Rozario[2011] FWAFB 8307 [30].
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