John Rohde v Bedlam Enterprise Pty Ltd T/A Cola Solar
[2016] FWC 2357
•18 APRIL 2016
| [2016] FWC 2357 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
John Rohde
v
Bedlam Enterprise Pty Ltd T/A Cola Solar
(U2015/13986)
COMMISSIONER RYAN | MELBOURNE, 18 APRIL 2016 |
Application for relief from unfair dismissal – jurisdictional objections – no dismissal and not an employee – applicant was an employee – applicant dismissed – dismissal harsh – remedy – compensation.
[1] The Applicant filed an Unfair Dismissal Application with the Fair Work Commission on 28 October 2015 in which he contended that he had been dismissed from his employment with the Respondent on 12 October 2015. On 10 November 2015 the Respondent filed with the Fair Work Commission a Form F3 – Employer Response to Unfair Dismissal Application in which the Respondent raised two jurisdictional objections to the Applicant’s application, namely, that the Applicant was not an employee of the Respondent but was an independent contractor, and that there was no dismissal of the Applicant by the Respondent.
[2] The jurisdictional challenges to the application and the substantive application were listed for hearing at Bendigo on 9 and 10 February 2016. The Applicant gave evidence on his own behalf and the Respondent led evidence from Mr Ruff, a Director of and effective owner of the Respondent, and from Mr King, an apprentice employed by the Respondent, and from Mr Lewis, Business Projects Manager for the Respondent, and from Mr Stradbrook, an electrician employed by the Respondent.
Employee or Independent Contractor
[3] It was an agreed fact that the Applicant had been employed by the Respondent until August 2014 when the Applicant specifically sought to end his employment relationship with the Respondent and to become an independent contractor providing contracted installation services for the Respondent.
[4] The issue in dispute is whether the Applicant was at all times after the employment relationship ended in August 2014 providing services to the Respondent as an independent contractor, or was there an employment relationship in existence between the Applicant and the Respondent as at 12 October 2015.
[5] The Applicant’s case is that whilst the relationship after 22 August 2014 started as one of client/independent contractor, that relationship changed and became a relationship of employer/employee and the Applicant was in an employment relationship as at 12 October 2015.
[6] The Respondent’s case is that the Applicant became an independent contractor providing services to the Respondent because the Applicant made a deliberate and considered decision to resign his employment and to run his own business. The Respondent contended that it was accepting of the decisions made by the Applicant to resign his employment and become an independent business and as from the time the Applicant commenced being an independent contractor providing services to the Respondent, the Respondent has treated the Applicant as an independent contractor and that the Applicant was never treated as being an employee and never was an employee.
Relevant Authorities
[7] The most appropriate authority is the Full Bench decision in Cai (t/as French Accent) v Do Rozario, 1 which restated, with only a slight modification, the approach adopted by an earlier Full Bench decision in Abdalla v Viewdaze P/L T/as Malta Travel2. The Full Bench decision in Cai (t/as French Accent) v Do Rozario said:
“[30] The general law approach to distinguishing between employees and independent contractors may be summarised 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 3: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own4 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 relationship5.
(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 6. However, the parties cannot alter the true nature of their relationship by putting a different label on it7. 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 whole8: the parties cannot deem the relationship between themselves to be something it is not9. Similarly, subsequent conduct of the parties may demonstrate that relationship has a character contrary to the terms of the contract10.
(4) Consideration should then be given to the various indicia identified in Stevens v Brodribb Sawmilling Co Pty Ltd 11 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. 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.”
[references omitted]
“Whilst it is undoubtedly the case that a party to an employment relationship can carry on a trade or business in his or her own right independently of that employment relationship we do not think that that is what was occurring in the relation to the VMOs in this case.”
[9] The Full Bench in Cai (t/as French Accent) v Do Rozario, 13 said:
“[37] …… There can be no doubt that it is possible for a person to be an employer of another and also have a separate business arrangement with that other.”
[10] Since the Full Bench decision in Cai (t/as French Accent) v Do Rozario there have been a number of decisions in the Federal Court which have addressed the employee/independent contractor issue. The most relevant of these later decisions were the Full Federal Court decisions in ACE Insurance Limited v Trifunovski, 14 and Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd15and Tattsbet Ltd v Morrow16 and the decision of Bromberg J in On Call Interpreters and Translators Agency Pty Ltd v Federal Commissioner of Taxation (No. 3).17
[11] The Applicant contends that the correct approach is to follow the decision in On Call Interpreters and Translators Agency Pty Ltd v Federal Commissioner of Taxation (No. 3) whereas the Respondent contends that correct approach is to follow the Full Court decisions in ACE Insurance Limited v Trifunovski and Tattsbet Ltd v Morrow.
[12] The Full Bench decision in Cai (t/as French Accent) v Do Rozario, whilst pre-dating both ACE Insurance Limited v Trifunovski and Tattsbet Ltd v Morrow, is consistent with both of those decisions.
[13] The questions that have to be answered in the present matter are set by the terms of the Fair Work Act. The Commission must determine (1) if the Applicant was an employee of the Respondent as at the date of the dismissal and (2) whether the Applicant was an employee of the Respondent for the six month period immediately preceding the date of dismissal. These two questions flow from s.382(a) and 384(1).
[14] If the answer to those two questions is in the affirmative then determining that the Applicant may have other contractual relationships with the Respondent may be interesting but is essentially irrelevant.
[15] The approach suggested by Bromberg J in On Call
“208 Simply expressed, the question of whether a person is an independent contractor in relation to the performance of particular work, may be posed and answered as follows:
Viewed as a “practical matter”:
(i) is the person performing the work an entrepreneur who owns and operates a business; and,
(ii) in performing the work, is that person working in and for that person’s business as a representative of that business and not of the business receiving the work?
If the answer to that question is yes, in the performance of that particular work, the person is likely to be an independent contractor. If no, then the person is likely to be an employee.
209 The question which this approach poses appears to me to be the central question in the application of the totality test. The question provides the focal point around which the indicia thrown up by the totality test may be examined. The central question has two elements. The first is whether the person has a business. The second is whether the work or the economic activity being performed is being performed in and for the business of that person: Sweeney at [31].”
could lead to error where a person is both an entrepreneur conducting their own business and an employee working for another’s business.
The simplest approach is to answer the “ultimate question”: Is the Applicant an employee of the Respondent at the relevant time?
Consideration
[16] The competing positions of the Applicant and the Respondent are clearly identified in the following tables which replicates the list of matters which each side relies on in support of their primary contention.
Applicant |
● First, while it is true that it was the Applicant’s idea to label the relationship as one of “contracting”, that label is not determinative. The Commission must consider the substance of the relationship. ● Second, the facts show that the Applicant did not perform work for the Respondent as an “entrepreneur” running his own business but rather worked in, for, and as a representative of, the Respondent’s business. ● To the extent that the Applicant did have his own business, Bendigo Solar, he conducted that business on weekends and after hours. That business was entirely separate to his work for the Respondent. ● The only cross-over between the Applicant’s private business and his work for the Respondent was the fact that the Applicant invoiced the Respondent, and was paid for his work, via his Bendigo Solar business. However, it can be inferred this was merely done out of convenience for the Applicant. It is not strong evidence that the Applicant did his work for the Respondent in his capacity as the operator of the Bendigo Solar business. ● He appeared to customers as a representative of the Respondent’s business, in that he wore a Cola Solar uniform, introduced himself as “John from Cola Solar”, erected a Cola Solar corflute on their property, handed out Cola Solar business cards, and used a Cola Solar email address (when it was working); ● His work was controlled by the Respondent, in that it assigned him jobs via a roster (which he was then obliged to perform and could not decline), and required him to work according to its policies and procedures; ● He used the Respondent’s materials and equipment to perform the installations. ● Although he brought his own (unbranded) vehicle to some jobs, that was simply a mode of transport. The vehicle was not used to perform the work; ● He had a regular and systematic pattern of work, and the parties had a mutual expectation (at least until October 2015) that he would be rostered for work each and every week, save for those weeks he was on leave; ● He worked five days a week, until his hours were reduced starting in the week of 28 September 2015. ● He never sub-contracted to a different person the jobs assigned to him, nor could he; ● He was trusted with the keys to the office, and could come and go as he pleased; ● He stood to make little or no profit, in that his earnings rate ($45/hr) was only 22% higher than the legal minimum for an employee – and, given his skills and experience, in all likelihood the Respondent would have employed him on above-award earnings more closely approximating $45/hr – and there was no real capacity for him to make additional profits, say by reducing his expenses (as he had no controllable costs) or increasing his fees; ● He carried little or no downside business risk. For example, if he had to rectify any defective work, the Respondent would pay for his time in doing so; and ● his main “business” expense (fuel) was paid for by the Respondent. ● Indeed, it is submitted that the position of the Applicant, and also Steve McQueen (who was similarly integrated into the Respondent’s business), can be contrasted with the true contractors used by the Respondent, principally Daniel Ralph and Michael Brown. Those contractors were irregularly engaged; brought their own branded vehicles to the job; brought their own crew; wore their own uniforms; and were in a real sense independent of the Respondent. |
Respondent |
● He established his own business and produced business cards advertising that business; ● He invoiced for work done and included GST; ● He submitted invoices on an irregular basis; ● He performed work for others during the time he was engaged as an installer by Cola Solar; ● He used his own private email address to communicate with clients and did not copy those emails to a Cola Solar email address; ● He used his own mobile phone; ● He used his own vehicle and tools (on occasion); ● He controlled his own hours, in that it was up to him to make himself available or not available to perform work for Cola Solar; ● He was not required to clock in or clock out; ● He was paid at a significantly higher hourly rate than he would have been paid if he was an employee and did not receive statutory entitlements; and ● He could delegate work to others (but never did so). |
[17] The above lists simply show that each of the Applicant and the Respondent have focussed on the facts which best support their respective positions.
[18] Using the painting a picture analogy referred to in Cai (t/as French Accent) v Do Rozario at [30] (5) it would appear that each of the Applicant and the Respondent have looked at a picture that is painted by numbers and the Applicant has painted a picture only using even numbers and the Respondent has painted a picture only using odd numbers. In either case the picture is incomplete.
[19] After the Applicant resigned from his employment with the Respondent in August 2014 and sought to become a contractor for the Respondent, arrangements were put in place as between the Applicant and the Respondent whereby the Applicant invoiced the Respondent for work performed and the Respondent paid the Applicant according to the invoices. The invoices were issued in the name of the Applicant’s business and the payments were made to the Applicant’s business. The arrangements remained in place until the date of the alleged dismissal. These agreed arrangements necessarily involved the Respondent not deducting tax from the payments made to the Applicant and necessarily presumed that the Applicant would make his own arrangements for superannuation and would accept responsibility for any tax liabilities on money received from the Respondent.
[20] These arrangements were consistent with, and in expectation of, a relationship where the Applicant was an independent contractor providing services to the Respondent. The existence of, and continued use of, such arrangements is a factor to be considered in answering the “ultimate question” but it cannot be determinative of the answer given to the “ultimate question”.
[21] As relevant as they are in answering the “ultimate question” the details identified by and relied on by the Respondent to paint a picture of the Applicant being an independent contractor are in reality swamped by the details which paint a picture of the Applicant being an employee of the Respondent. This is not to say that the Respondent is wrong to paint a picture of the Applicant being an entrepreneur conducting his own business. The real difficulty is that the Respondent has not considered the picture painted by the accumulation of details which show that the Applicant was an employee of the Respondent.
[22] It is this larger and clearer picture which emerges most clearly from the accumulation of the details in the present matter. And most importantly it is this larger and clearer picture which effectively answers the “ultimate question”.
[23] The clarity of the overall picture is nicely illustrated by some issues of fine detail.
[24] In a commercial arrangement an independent contractor may deliberately or inadvertently underquote on a particular contracted piece of work. The client is almost always happy to accept the error in its favour and to the extent that the contractor is not able to finish the job in the time specified or within the cost specified it is the contractor who pays the penalty. The penalty can either be the cost of completing the job which is not reimbursed by the client or the cost of paying for someone else to complete the job.
[25] In the present matter it is clear that the Respondent was angry with the Applicant for underquoting an installation job because the Respondent accepted and understood that it was the Respondent who would bear the cost of the Applicant’s underquoting. The Respondent’s approach to such errors on the part of the Applicant is inconsistent with a client/contractor relationship but is consistent with an employer/employee relationship.
[26] The putative client/contractor arrangement was for the performance of solar panel installation work where clients of the Respondent had entered into contracts for the installation of solar power systems, either on grid or off grid systems and where the putative client/contractor arrangement between the Respondent and the Applicant was for the Applicant to undertake the installation of the relevant solar power system.
[27] One of the tasks performed by the Applicant for the Respondent whilst engaged in the putative client/contractor relationship was the follow up of potential clients of the Respondent who had expressed interest in but who had not yet entered into any contract with the Respondent. This was not installation work but was sales work. The provision of an installation quote by the Applicant was not provided to the Respondent for the purpose of the Respondent deciding whether or not to allocate an installation contract to the Applicant but rather was provided to the Respondent so that the Respondent could sell a contract to the potential customer of the Respondent.
[28] Whilst in the present matter it is easy to come the concluded view that the Applicant was an employee of the Respondent because the overall picture painted by the accumulation of details is so clear it is still necessary to address the list of indicia identified by the Full Bench in Cai (t/as French Accent) v Do Rozario.
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.
[29] In the present matter the work performed by the Applicant for the Respondent was subject to significant control by the Respondent. As is often the case where tradespersons are performing work the tradesperson exercises a degree of autonomy in applying his/her trade skills to the task at hand. However, in the present matter the Respondent exercised significant control over the work performed by the Applicant through supplying the extra labour needed to assist the Applicant in the installation of the solar power systems and in setting the time frame for the completion of the work.
Whether the worker performs work for others (or has a genuine and practical entitlement to do so).
[30] Whilst the Applicant was performing work for the Respondent the Applicant did not have a genuine and practical entitlement to work for others. The Applicant was free to work for others, and did so, but only when the Applicant gave specific notice to the Respondent that the Applicant would not be performing work for the Respondent. Whilst the Applicant was performing work for the Respondent he was their man and not anyone elses!
Whether the worker has a separate place of work and or advertises his or her services to the world at large.
[31] Whilst the Applicant was performing work for the Respondent he operated out of the Respondent’s premises and at all times was identified with the Respondent’s business. The Applicant was not able to or entitled to advertise his own business whilst performing work as an installer for the Respondent.
Whether the worker provides and maintains significant tools or equipment.
[32] Whilst the Applicant was performing work for the Respondent he was required to use the vehicles and tools of the Respondent and not his own vehicle or tools.
Whether the work can be delegated or subcontracted.
[33] In every practical sense the Applicant was engaged as a preferred installer by the Respondent because it was the Applicant who was engaged as the installer not other persons delegated by or subcontracted to the Applicant.
Whether the putative employer has the right to suspend or dismiss the person engaged.
[34] The issue was never tested during the period that the Applicant performed installation work for Respondent. The Respondent did significantly alter the relationship existing between the Applicant and the Respondent from one of permanent regular ongoing work to one of irregular ‘as needed’ work. However, this falls far short of the Respondent having a right to suspend or dismiss.
Whether the putative employer presents the worker to the world at large as an emanation of the business.
[35] The evidence clearly shows that at all times whilst the Applicant was performing work for the Respondent that the Respondent ensured that its business was identified with the work of the Applicant and that the Applicant was presented to the world at large as being part of the business of the Respondent.
Whether income tax is deducted from remuneration paid to the worker.
[36] No income tax was deducted from remuneration paid to the Applicant.
Whether the worker is remunerated by periodic wage or salary or by reference to completion of tasks.
[37] The Applicant was remunerated by reference to jobs undertaken but the method of calculating remuneration was based upon an agreed hourly rate. The evidence shows that whilst invoices were issued for completed tasks the invoices reflected the hours of work performed rather than a fixed fee for a task.
Whether the worker is provided with paid holidays or sick leave.
[38] The Applicant was not paid holidays or sick leave.
Each of these three indicia reflect the initial arrangements made between the Applicant and the Respondent when the Applicant resigned his employment with the Respondent in August 2014 and commenced to be an installer for the Respondent.
Whether the work involves a profession, trade or distinct calling on the part of the person engaged.
[39] The work performed by the Applicant required that the Applicant be trades qualified.
Whether the worker creates goodwill or saleable assets in the course of his or her work.
[40] Whilst the Applicant was performing work for the Respondent the Applicant was neither creating nor able to create saleable assets for his own benefit or for the benefit of his own business. Whilst the Applicant was performing work for the Respondent the Applicant was creating any goodwill in relation to his own business. Any good will which flowed from the performance of work by the Applicant for the Respondent was to the advantage and benefit of the Respondent’s business.
Whether the worker spends a significant portion of his remuneration on business expenses.
[41] Whilst the Applicant was performing work for the Respondent the Applicant spent little of his remuneration on business expenses. Most of the remuneration received by the Applicant was for his personal effort and not to cover significant business expenses.
[42] Whilst four of the indicia point away from the Applicant being an employee the remaining indicia point strongly towards the Applicant being an employee. Even though the majority of the indicia point strongly towards the Applicant being an employee it is necessary to take the requisite step back from an examination of the individual indicia and to have a considered regard for the picture painted by the individual indicia 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.”
[43] Having applied this approach the outcome is clear – the picture painted in this matter is one of the Applicant being an employee of the Respondent. The Applicant was an employee of the Respondent as at the date of the termination of the employment relationship and had been for a continuous period of six months prior to the termination of the employment relationship.
Termination at the Initiative of the Respondent or resignation by the Applicant.
[44] On 12 October 2015 the Applicant attended the Respondent’s premises to pick up the necessary equipment to perform an installation job on that day. The Applicant and Mr Ruff had a conversation which ended with the Applicant leaving the premises in his own vehicle and not undertaking the installation job allocated to him for that day.
The Respondent contends that the Applicant chose to end the relationship with the Respondent and that the Applicant did so using quite strong language. The Respondent contends that it was seeking to reduce the permanent ongoing role of the Applicant from 4 days per week to 3 days per week due to a downturn in work. 18
[45] The Applicant contends that the Respondent effectively ended the permanent ongoing relationship that existed between the Applicant and the Respondent and that the Applicant’s leaving the Respondent’s premises was simply an acknowledgement of the Respondent’s decision. In the alternative the Applicant contends that if it is considered that the Applicant’s leaving the Respondent’s premises constituted the ending of the relationship then the Applicant had no choice but to do so given that the Respondent had clearly changed the relationship from a permanent ongoing relationship into an irregular casual relationship.
[46] Mr Ruff clearly admitted that in the conversation with the Applicant on 12 October 2015 he said:
"The work's not there, so from now on, you will be like the other contractors, like Ralphy and Brown, we'll let you know when we need you." 19
[47] The reference to “Ralphy and Brown” was to two contractors who worked for the Respondent on an as needed basis. In contrast the Applicant had worked for the Respondent as an installer on a permanent basis since he commenced as an installer in September 2014.
[48] The words admittedly used by Mr Ruff do not appear in his witness statement or in his evidence in chief. Rather Mr Ruff’s evidence was that he told the Applicant that there was three days’ work for him on an ongoing basis. 20 Given the admission made by Mr Ruff as to his use of the words which appear in the description of the conversation at para 31 of the witness statement of the Applicant I do not accept that Mr Ruff ever put to the Applicant that there were 3 days per week of work for the Applicant on an ongoing basis.
[49] It is clear from the evidence in this matter that in the conversation on 12 October 2015 the Respondent intended to significantly alter the nature of the relationship that had existed between the Applicant and Respondent from September 2014 to that date. The intended change to the relationship was to convert the Applicant from a permanent ongoing relationship to an irregular casual relationship. The change in the relationship was unilaterally initiated and implemented by the Respondent.
[50] The effect of the unilateral change was to end the ongoing permanent relationship then existing between the Applicant and the Respondent.
[51] The consequences flowing from the unilateral change initiated by Mr Ruff are not changed by such issues as when did Mr Ruff ask the Applicant to return his keys or when did the Applicant use the expletive language he did. The critical material fact is that Mr Ruff determined to unilaterally change the relationship existing between the Applicant and the Respondent and the Applicant’s non-acceptance of that unilateral change was reasonable. The unilateral change was so significant that it was the act of the Respondent which brought to an end the relationship between the Applicant and the Respondent.
[52] In the circumstances of the present case I understand the contention of the Respondent that it was acting as if the correct relationship between the Applicant and the Respondent was one of client and contractor. However, having already determined that the correct characterisation of the relation was one of employer and employee then, the Applicant was dismissed within the meaning of s.386 in that the Applicant’s employment with the Respondent has been terminated on the Respondent’s initiative.
Was the Dismissal Unfair
[53] The criteria for the Commission’s consideration as to whether the dismissal of the Applicant was harsh, unjust or unreasonable are set out in s.387. The Commission must take into account those criteria which are relevant.
[54] In the present matter the Respondent contends that its actions in proposing a reduction in the number of days of work to be performed by the Applicant was because:
“The Respondent intended to reduce the amount of work it allocated to the Applicant due to a substantial downturn in solar panel sales and installations, particularly domestic sales. Further, the Respondent had decided that it would not continue to actively market (sic) off-grid solar systems. In part, the decision to reduce the work allocated to the Applicant was because the Respondent believed he was a contractor and did not want to make employees of the business redundant, but it was also because the Applicant was the preferred off-grid installer.” 21
[55] The Respondent repeated, in an expanded form, these contentions in its Respondent’s closing Submissions at paras 20 and 21.
[56] The contentions of the Respondent, although presented under the criteria in s.387(a) in its Outline of Submissions, have nothing to do with the capacity or conduct of the Applicant.
[57] The reason for the dismissal of the Applicant is not a valid reason for the purpose of s.387(a) and the reason for dismissal means that each of the criteria in s.387 (b), (c) and (e) are not relevant in the present matter.
[58] In the present matter the criteria in s.387(d) is not relevant.
[59] The criteria in s.387(f) and (g) are always relevant as they require consideration as to the degree to which the size of the employer’s business and the lack of HR expertise impact on the procedures followed in effecting the dismissal. In all of the circumstances of the present matter I consider that each of these criteria has a neutral value in considering whether the dismissal is harsh, unjust or unreasonable.
[60] The reason for the dismissal as advanced by the Respondent is a relevant matter that must be considered under s.387(h). The Respondent’s contention that:
12. The Respondent genuinely believed that the Applicant was a contractor, rather than an employee, which had a significant impact on the decision to decrease the amount of work allocated to the Applicant and the way in which that decision was implemented.
is also a relevant matter to be considered under s.387(h).
[61] The Applicant’s contentions in relation to the dismissal not being a case of a genuine redundancy and as to the harsh outcome of the dismissal are also relevant matters to be considered under s.387(h).
[62] The very fact that the Respondent treated the Applicant as a contractor rather than as the employee he was, meant that the Applicant was denied the opportunity provided by the relevant modern award to be consulted about any decision made by the Respondent to reduce the Applicant’s hours of work. Once the Respondent decided that it no longer required the Applicant’s four day a week job done by anyone because of changes in the operational requirements of the Respondent’s business then the Respondent was obligated to consult with the Applicant before implementing the decision. Any such consultation between the Respondent as employer and the Applicant as employee may have avoided the dismissal of the Applicant or may have ameliorated the impact of the decision on the Applicant.
[63] The very lack of consultation before the implementation of the decision weighs strongly in favour of a finding that the dismissal was harsh, unjust or unreasonable.
[64] In the present matter it is also directly relevant that the Respondent intended to implement its decision not by guaranteeing the Applicant 3 days a week installation work but rather by removing any guarantee of work and by treating the Applicant as an “as needed” installer who had no certainty of work being provided by the Respondent. This also weighs in favour of a finding that the dismissal was harsh, unjust or unreasonable.
[65] Having taken into account the relevant criteria under s.387 I am satisfied that the dismissal of the Applicant was harsh.
Remedy
[66] Whilst the grant of remedy in a case of unfair dismissal is discretionary (once the preconditions in s.390 have been met, which they have in this matter) I intend to exercise that discretion and order a remedy,
[67] Reinstatement is a totally inappropriate remedy in the present matter.
[68] I am satisfied that compensation is an appropriate remedy.
[69] I am required to determine an amount of compensation by taking into account all of the circumstances of the case including the matters set out in s.392(2) to the extent that such matters are relevant.
[70] The matter identified in s.392(2)(a) is not relevant in the present matter.
[71] The Applicant contends that if the Applicant had not been dismissed then the Applicant would most likely have continued working for the Respondent for at least two years. Against this speculation is the fact that if the relationship had not ended on 12 October 2015 then the relationship that continued would still have been an employer/employee relationship but where the Respondent would have continued to mislabel the relationship as a client/contractor relationship. In such circumstances the Respondent considered that it had the right at any time to alter the amount of work provided to the Applicant including having the right not to provide any work to the Applicant. In such circumstances it is unlikely that the relationship between the Applicant and the Respondent would have continued for any reasonable length of time. The very fact that the Respondent was getting out of the business of installing off the grid solar installations meant that the work available for the Applicant was going to be reduced or be changed.
[72] For the purpose of the matter identified in s.392(2)(c) I consider that an amount of
3 months’ remuneration is appropriate.
[73] I am satisfied that the Applicant has made an appropriate effort to mitigate the loss suffered because of the dismissal and although the Applicant has put effort into building up his own business rather than seeking employment elsewhere. The Respondent contends that because the Applicant walked out the Respondent was required to engage other contractors for three days per week and this was work that could have been performed by the Applicant. The evidence in this matter falls well short of establishing that this 3 days a week work was ever going to be available to the Applicant. In all of the circumstances of the present matter the matter raised by s.392(2)(d) does not require any alteration to be made to the amount of compensation I would order under s.392(1).
[74] I have taken into account the amount of remuneration identified by the Applicant as having been earnt between the date of dismissal and the date of the hearing and I can extrapolate that out to calculate an amount earnt or likely to be earnt for the purposes of both s.392(2)(e) and (f).
[75] In the present matter the Applicant’s period of service with the Respondent includes his first period of employment up until his resignation in August 2014 and then the period of service up until the 12 October 2015. For the purposes of considering the relevance of length of service as a matter to be taken into account in calculating an amount of compensation I note that the Applicant was dismissed whilst employed as an installer. I also note that the Applicant specifically sought to resign his employment with the Respondent in August 2014 so as to become an installer for the Respondent. In all of the circumstances of this matter the relevant period of service of the Applicant is his service as an installer, a period of just over a year. This period is neither so short nor so long as to have any impact on the calculation of an amount of compensation. It is of neutral effect in the present matter.
[76] A relevant consideration in the present matter is the Respondents intention to reduce the work that had been performed by the Applicant. If the Respondent had correctly identified the relationship between the Applicant and the Respondent as that of employer and employee the Respondent would necessarily have had to act differently towards the Applicant as an employee.
[77] It is reasonable to consider that had the Applicant as an employee been dismissed on 12 October 2015 the Respondent could only have done so (given the reasons already advanced by the Respondent) as a redundancy in which both payment in lieu of notice and a redundancy payment in accordance with the NES would have been made to the Applicant. Alternatively, had the Respondent consulted with the Applicant as an employee in relation to the decision to make redundant the Applicants job as a 4 day a week installer the outcome may still have been dismissal but without the need to make a payment in lieu of notice.
[78] Having taken into account all of the circumstances of the case, including those relevant matters in s.392(2) I determine that the appropriate amount of compensation is $7,000.00.
[79] The amount of compensation does not include any amount excluded by s.392(4) and no reduction to the amount is required because of s.392(3).
[80] An order will be issued requiring that the Respondent pay to the Applicant an amount of $7,000.00, to be taxed at the appropriate rate, within 21 days.
COMMISSIONER
Appearances:
Mr J. Fetter of Counsel for the Applicant.
Ms A. Duffy of Counsel for the Respondent.
Hearing details:
2016.
Bendigo.
February 9 and 10.
Final written submissions:
Applicant by 4 March 2016.
Respondent by 21 March 2016.
1 [2011] FWAFB 8307.
2 (2003) 122 IR 215.
3 Marshall v Whittaker's Building Supply Co (1963) 109 CLR 210 at p. 217 per Windeyer J approved by the majority in Hollis v Vabu (2001) 207 CLR 21 at para [40]; see also Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 (Brodribb) at p. 37.3 per Wilson and Dawson JJ.
4 Hollis v Vabu (2001) 207 CLR 21 at [47] and [58]
5 Brodribb esp Mason J at p. 29.3
6 Brodribb per Wilson and Dawson at p. 37.2
7 “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 at p. 184 per Gray J; Massey v Crown Life Insurance [1978] 2 All ER 576 at p. 579 per Lord Denning approved by the Privy Council in AMP v Chaplin (1978) 18 ALR 385 at p. 389.
8 AMP v Chaplin (1978) 18 ALR 385 at 389
9 Hollis v Vabu (2001) 207 CLR 21 at para [58]
10 AMP v Chaplin (1978) 18 ALR 385 at p. 394
11 (1986) 160 CLR 16
12 Print PR958666.
13 [2011] FWAFB 8307.
14 [2013] FCAFC 3.
15 [2015] FCAFC 37.
16 [2015] FCAFC 62.
17 [2011] FCA 366.
18 Exhibit R2 at para 24 and Transcript at PN760.
19 Transcript at PN1236.
20 Exhibit R2 at para 24 and Transcript at PN760.
21 Respondent’s Submissions at para 7, 25 January 2016.
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