June Laing v The trustee for JD Family Trust
[2024] FWC 3604
•31 DECEMBER 2024
| [2024] FWC 3604 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.365—General protections
June Laing
v
The trustee for JD Family Trust
(C2024/5831)
| COMMISSIONER SCHNEIDER | PERTH, 31 DECEMBER 2024 |
Application to deal with contraventions involving dismissal
Ms June Liang (Ms Liang or the Applicant) has made an application to the Fair Work Commission under section 395 of the Fair Work Act 2009 (Cth) (the Act) claiming that she was dismissed from her employment with the Trustee for the JD Family Trust T/A Polyline Industries (Polyline or the Respondent).
Polyline objects to the application on the grounds that Ms Liang was not dismissed as she was not an employee. Polyline contends that Ms Liang was engaged as an independent contractor. Ms Liang is only able to make this General Protections application if she is a person who has been dismissed as required under the Act. Relevantly, section 386 of the Act provides that a person is dismissed with reference to the individual’s employment under an employer.
This decision considers whether Ms Liang is an employee or not. If Ms Liang is not an employee, the application must be dismissed.
Relevant Law
Central to the objection in the matter currently before the Commission, section 386 of the Act reads as follows:
“386 Meaning of dismissed
(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.”
I highlighted that the Act, as quoted above, discusses dismissal in the circumstances of an individual’s employer terminating their employment, or forcing one to resign from their employment. It follows that the dismissal contemplated in the Act is that of an employee and not an individual performing work under an arrangement that is not consistent with that of an employment relationship.
Accordingly, it is necessary in the present matter for the Commission to determine whether the Applicant was an employee and therefore able to meet the dismissal requirement under section 386 of the Act as prerequisite to pursue this application under section 365.
The recent advances in relevant case law and the leading authorities pertaining to the consideration of whether an individual is an employee were comprehensively outlined by Deputy President Easton, in Abdulai Salim v AFA Sheetmetal Components Pty Ltd, Daniel Paragallias,[1] as follows:
“The law after Jamsek and Personnel Contracting
In Waring v Hage Retail Group Pty Ltd[2022] FWC 540 (Waring) Deputy President Anderson provided the following helpful summary of the significance of the High Court decisions in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 312 IR 1, [2022] HCA 1 (Personnel Contracting) and ZG Operations Australia Pty Ltd v Jamsek (2022) 312 IR 74, [2022] HCA 2 (Jamsek):
“[52] In two judgements delivered on 9 February 2022 the High Court of Australia pronounced on the law that applies in determining whether, absent a specific statutory rule, a person is an employee or contractor. In doing so, the Court reviewed past decisions of the Court (and other courts) and set out afresh relevant legal principles.
[53] In important respects the law as expressed by the High Court in Jamsek and Personnel Contracting has modified, if not replaced, former approaches. In particular, the past approach of the Commission (itself based on past court authority) as outlined in the leading full bench case of [Jiang Shen Cai trading as French Accent v Rozario[2011] FWAFB 8307 at [30]] is, with some limited caveats, no longer good law.
[54] The High Court, via the combination of judgements in both Jamsek and Personnel Contracting, has largely rejected an approach whereby the relationship between parties across its life span is examined (including how the relationship operates in practice). The Court has stated that contractual terms and not performance, where those terms can be ascertained and where the contract is not a sham, will determine the true nature of the relationship. However, the Court has observed that the manner in which the relationship is worked in practice may be relevant for certain limited purposes, such as to find contractual terms where they cannot otherwise be ascertained or to determine the nature of any variation to agreed terms.
[55] Indicia (such as those identified in earlier cases in the Court) may be relevant but only insofar as the terms of the contract give voice to them. One approach, to be used as a guide, is to look at whether, under the contract, the worker is engaged to work in the business of another, though this may not necessarily be useful in all cases. The extent of a contractual right to control, as evident from the terms of the contract itself, remains a major signifier of an employment relationship. That an arrangement was brought about by the superior bargaining power of one party has no bearing on the meaning and effect of the contract.
[56] Amongst the caveats expressed by the Court, is that a mere label acting as a subterfuge to the true nature of the contractual relationship will not determine the status of the parties. In this respect at least, the law remains unchanged by these recent decisions.”
The Deputy President’s summary was endorsed by the Full Bench in Azad v Hammond Park Family Practice Pty Ltd T/A Jupiter Health Warnbro[2022] FWCFB 66 at [14].
In Chambers and O’Brien v Broadway Homes Pty Ltd [2022] FWCFB 129 at [74] a subsequent Full Bench provided this summary of the key propositions in Personnel Contracting:
“(1) When characterising a relationship regulated by a wholly written, comprehensive contract which is not a sham or otherwise ineffective, the question is to be determined solely by reference to the rights and obligations under that contract. It is not permissible to examine or review the performance of the contract or the course of dealings between the parties (Personnel Contracting at [40]-[62], [172]-[178] and [203]);
(2) The subsequent conduct of the parties may be considered to ascertain the existence of variation of contractual terms (Personnel Contracting at [42], [45], [177]-[178], [188]-[190] and [203]);
(3) The multifactorial approach only has relevance in respect of the required assessment of the terms of the contract (Personnel Contracting at [33]-[34], [47], [61], [174], [186]-[189] and [203]);
(4) It is necessary to focus on those aspects of the contractual relationship which bear more directly upon whether the worker’s work was so subordinate to the employer’s business that it can be seen to have been performed as an employee of that business rather than as part of an independent enterprise (Personnel Contracting at [39]). The question is: whether, by the terms of the contract, the worker is contracted to work in the business or enterprise of the purported employer (Personnel Contracting at [180]-[186] and [203]);
(5) Existence of a contractual right to control the activities of the worker (including how, where and when the work is done) is a major signifier of an employment relationship (Personnel Contracting at [73]-[74], [113]-[114] and [121]); and
(6) The label or characterisation placed on the relationship by the contract is not relevant even as a “tie breaker” (Personnel Contracting at [58], [63]-[66] and [79]), or at least it is not determinative (Personnel Contracting at [127], [184] and [203]).”
In Deliveroo Australia Pty Ltd v Franco [2022] FWCFB 156 at [34]-[35] (Deliveroo) the Full Bench endorsed the above summary and added a further point:
“… A contractual freedom on the part of the party performing the relevant work to accept or reject any offer of work and to work for others is not necessarily a contraindication of employment and may rather be consistent with casual employment.”
The significance of the High Court’s decisions in Personnel Contracting and Jamsek are most apparent in the Full Bench decision in Deliveroo (at [53]-[54]):
“In the circumstances described, the application of the Personnel Contracting decision has obliged us to ignore certain realities concerning way in which the working relationship between Mr Franco and Deliveroo operated in practice…
…
Had we been permitted to take the above matters into account, as the Commissioner did, we would have reached a different conclusion in this appeal. As a matter of reality, Deliveroo exercised a degree of control over Mr Franco’s performance of the work, Mr Franco presented himself to the world with Deliveroo’s encouragement as part of Deliveroo’s business, his provision of the means of delivery involved no substantial capital outlay, and the relationship was one of personal service. These matters, taken together, would tip the balance in favour of a conclusion that Mr Franco was an employee of Deliveroo. However, as a result of Personnel Contracting, we must close our eyes to these matters.” ”
Submissions and Evidence
Applicant
Ms Liang gave evidence in support of the position that she was not an independent contractor and was instead an employee of Polyline.
Ms Liang outlines that she was initially offered an hourly position with Polyline for $30.00 per hour which she submits was below the required rate of pay under the relevant Modern Award. Ms Liang confirms that, following further discussions with Polyline, she agreed to an hourly rate of $45.00 per hour as a contractor.
Ms Liang submits that, despite being a contractor, Ms Christine Broadhurst (Ms Broadhurst), the Chief Financial Officer, would fully direct her on the duties she was to perform.
Ms Liang outlines her concerns regarding Polyline’s payroll management and compliance with relevant industrial instruments. Ms Liang also provided extensive submissions regarding the merit of her application and various protected workplace rights she asserts Polyline breached during her engagement.
Respondent
Mr Justin Reed (Mr Reed), the Managing Director, gave evidence on behalf of the Respondent.
It is the evidence of Mr Reed that JKJ Bookkeeping (the Applicant’s business) entered into a contract for services with Polyline on 8 April 2024. It is asserted that Ms Liang requested this arrangement, due to the lower hourly rate on offer as an employee.
JKJ Bookkeeping was paid at an hourly rate of $45.00 per hour through an invoice arrangement and no PAYG tax was deducted. JKJ Bookkeeping and the Applicant were responsible for any relevant tax arrangements.
JKJ Bookkeeping provided services for bookkeeping and payroll. It was the evidence of Mr Reed that these services were performed autonomously, with minimal supervision or direction from Polyline.
JKJ Bookkeeping was provided with a workstation at Polyline. However, JKJ Bookkeeping was required to procure its own laptop computer for duties. Mr Reed states that JKJ Bookkeeping was able to service multiple clients and was not restricted to performing duties only with Polyline. Mr Reed confirms that, whilst working from the Polyline offices, JKJ Bookkeeping was free to work for other clients as well.
Mr Reed states that, whilst there were preferred times and attendance at the Polyline office, JKJ Bookkeeping had control over when, where, and how the work was performed.
Mr Reed states that JKJ Bookkeeping was required to obtain and maintain insurances, such as professional indemnity insurance.
Consideration
The Full Bench of the Commission, in Chambers and O’Brien v Broadway Homes Pty Ltd,[2] outlined the key propositions to be considered in characterising the nature of such working relationships, derived from the leading authorities, as follows:
“(1) When characterising a relationship regulated by a wholly written, comprehensive contract which is not a sham or otherwise ineffective, the question is to be determined solely by reference to the rights and obligations under that contract. It is not permissible to examine or review the performance of the contract or the course of dealings between the parties.
(2) The subsequent conduct of the parties may be considered to ascertain the existence of variation of contractual terms.
(3) The multifactorial approach only has relevance in respect of the required assessment of the terms of the contract.
(4) It is necessary to focus on those aspects of the contractual relationship which bear more directly upon whether the worker’s work was so subordinate to the employer’s business that it can be seen to have been performed as an employee of that business rather than as part of an independent enterprise. The question is: whether, by the terms of the contract, the worker is contracted to work in the business or enterprise of the purported employer.
(5) Existence of a contractual right to control the activities of the worker (including how, where and when the work is done) is a major signifier of an employment relationship.
(6) The label or characterisation placed on the relationship by the contract is not relevant even as a “tie breaker”, or at least it is not determinative.” (Footnotes omitted)
The parties agree that there is no written agreement in place between Ms Liang and Polyline that could be described as a contract. As a result, I have considered the nature of the engagement and the conduct of the parties in determining whether Ms Liang was an employee or an independent contractor.
From the limited material that has been provided to the Commission, I observe that the following items weigh in favour of the position that the Applicant was an employee:
· No formal independent contractor agreement being entered into by the parties.
· Ms Liang preforming her duties through an accounts email which used Respondent’s domain.
· Ms Liang working at the Respondent’s office.
· Ms Liang being directed and managed by the Chief Financial Officer, Ms Broadhurst.
Conversely, I observe that the following items weigh against the position that the Applicant was an employee:
· Ms Liang emailing Ms Broadhurst on 10 April 2024, asking if she could contract to Polyline through her business.
· Ms Liang providing invoices to Polyline from JKJ Bookkeeping.
· JKJ Bookkeeping being paid an hourly rate of $45.00 and being responsible for taxation and leave arrangements.
· Ms Liang providing the primary tool utilised to carry out the work, being the laptop.
· JKJ Bookkeeping providing confirmation of professional indemnity insurance to Polyline.
· JKJ Bookkeeping being able to continue to provide professional services to other clients.
Having considered the nature of the engagement between the parties, I have determined that Ms Liang was not an employee, rather she was an independent contractor providing services to the Respondent.
Ms Liang was able to provide her services to multiple clients, she was paid an hourly rate on the provision of an invoice, she was required to administer her own PAYG taxation, and she maintained her own professional indemnity insurance. These factors combined suggest that the nature of the working relationship between Ms Liang and Polyline was that of an independent contractor providing services for a client business.
I am not satisfied that the Applicant has established support for, or that the totality of evidence before the Commission supports, a conclusion that the Respondent exercised such a level of control over the Applicant’s work and business that the relationship between the parties could be characterised as that of an employee and employer.
I am similarly not persuaded that the matter currently before the Commission arises in circumstances where a business has sought to avoid providing the required benefits or obligations to an employee by engaging that individual through some other form of questionable contractor arrangement.
Accordingly, I am not satisfied that Ms Liang was dismissed as defined in the Act. Therefore, I have no alternative but to dismiss the application before the Commission. An Order to that effect is issued.[3]
COMMISSIONER
[1] [2023] FWC 1834, [8] – [12].
[2] [2022] FWCFB 129, [74].
[3] [PR782903].
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