Kyyim Carter v Rubik3 Pty Ltd
[2021] FWC 2812
•20 JULY 2021
| [2021] FWC 2812 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Kyyim Carter
v
RUBIK3 Pty Ltd
(U2021/1868)
DEPUTY PRESIDENT DEAN | CANBERRA, 20 JULY 2021 |
Application for an unfair dismissal remedy – employee or independent contractor – minimum employment period – application dismissed.
[1] On 5 March 2021 Mr Kyyim Carter made an application pursuant to s.394 of the Fair Work Act 2009 for a remedy in respect of his alleged unfair dismissal from Rubik3 Pty Ltd (Rubik3).
[2] In his unfair dismissal application, Mr Carter stated that he commenced employment with Rubik3 on 13 July 2020 and that his dismissal took effect on 12 February 2021.
[3] Rubik3 raised a jurisdictional objection on the ground that Mr Carter was engaged as an independent contractor and was not an employee of Rubik3. In the alternative, Rubik3 contended that if it was determined that Mr Carter was an employee, his seven months employment with Rubik3 does not meet the minimum employment period as it is a small business employer.
[4] Mr Carter argued that he was an employee and performed work pursuant to an employment agreement. He also contended that Rubik3 was not a small business employer and therefore he had met the minimum employment period.
[5] The Commission must be satisfied that a person is protected from unfair dismissal at the time of being dismissed before it may make an order for an unfair dismissal remedy. Section 382 of the Act defines when a person is protected from unfair dismissal which requires that the person be an ‘employee’. Further, the Act requires that employees have met the minimum employment period.
[6] The matter was listed for hearing by telephone on 17 May 2021. Mr Carter appeared on his own behalf and Mr W Marshall, solicitor, appeared with permission for Rubik3. I granted permission because I was satisfied that the requirements of s596(2)(a) were met. Oral evidence was given by Mr Carter and Ms J Kamira.
[7] For the reasons set out below, I find that Mr Carter was an independent contractor and was therefore not a person protected from unfair dismissal within the meaning of s.382 of the Act. If I am wrong in relation to this finding, I am satisfied that Mr Carter has not met the minimum employment period as Rubik3 is a small business employer.
Background
[8] Rubik3 operates a business which provides strategic workforce solutions to clients in the private and public sectors through contractual arrangements.
[9] On 7 July 2020, Mr Carter entered into a Contractor Agreement (the Agreement) with Rubik3 to perform services as a data officer for a client of the Respondent, the Department of Industry, Science, Energy and Resources (the Department).
[10] The Agreement relevantly provides the following:
• confirms that Mr Carter was engaged as an independent contractor to perform services for the Department;
• confirms that Rubik3 and Mr Carter do not intend to constitute or create an employee-employer relationship, agency, joint venture or partnership between Mr Carter, Rubik3 and the Department.
• The Contract provided a commencement and end date, and provided that the contract may be extended at the Department’s discretion and subject to acceptance in writing by Mr Carter.
• Neither Rubik3 nor the Department is liable to make any payment or accrual in respect of any leave entitlements including (but not limited to) sick leave, annual leave, long service leave, maternity leave or any other leave provision.
• Mr Carter was to provide evidence to Rubik3 that services have been delivered to the Department by submitting time sheets in the timeframe and format reasonably required by Rubik3.
• Mr Carter was to rectify the services at his own costs if the Department deems that his services do not meet the required standards. Failure to remedy and rectify the services within a scheduled timeframe will be considered a breach of the Agreement and may result in the immediate termination of the Agreement.
• The fees paid to Mr Carter is inclusive of the prescribed Superannuation Guarantee Charge (‘SGC’).
[11] Mr Carter did not attend work at the Department for a period of 10 days, following which, by email dated 5 February 2021, Mr Carter was advised that Rubik3 had determined to terminate his contract. The email reads:
“After careful evaluation between Rubik’s management team and key stakeholders at the Department of Industry, a decision has been made regarding your contract at the Department of Industry,
The outcome of the decision is to finalise/close your contract with the Department and Rubik3, effective from today, 05 February 2021 with a 1 week notice period being offered. This means that your last contract date shall be 12th February, 2021, inclusive.
In reference to the next steps, the Department shall be in touch with you on the off-boarding process, which includes returning Department material and resources,
Please acknowledge receipt of this email.”
[12] Mr Carter denied any wrongdoing and claimed that he was unfairly dismissed.
Submissions and Evidence
Rubik3
[13] Rubik3 contended that Mr Carter was engaged as an independent contractor pursuant to the Agreement and was therefore not a person protected from unfair dismissal.
[14] Ms Kamira gave evidence in these proceedings and provided a witness statement. She is the Principal of Capital Workplace, a human resources service provider, which has been engaged by Rubik3 since March 2020. She gave evidence as to the nature of Rubik3’s business which predominately involved in the provision of labour to clients requiring workforce solutions in both the private and public sector.
[15] In terms of Mr Carter’s engagement, Ms Kamira said that in or about June 2020 Rubik3 was required to recruit a data specialist for a short term project and Mr Carter was referred by an entity to which he had previously provided services. Ms Kamira said that Mr Carter operates a business called Work Collaboration and provides data and information technology services.
[16] Ms Kamira gave evidence that Mr Carter’s contractor agreement was terminated after he failed to turn up for work for a period of ten days and did not respond to any emails from the Department or Rubik3.
[17] Rubik3 submitted that if Mr Carter was found to be an employee, he would not have completed the minimum employment period of twelve months and his application should be dismissed, as Rubik3 is a small business employer which employed twelve persons at the time of Mr Carter’s dismissal.
[18] Rubik3 relied on a number of authorities to support its contention that Mr Carter was not an employee. In particular, Rubik3 made reference to the decision of the Full Bench in Jiang Shen Cai T/A French Accent v Do Razario 1 (French Accent) which sets out a list of indicia in considering whether a person was a contractor or an employee. In addressing the indicia, it was submitted that:
(a) Mr Carter was carrying on his own specialised business as a data specialist engaged in the information technology industry, as evidenced through his business ‘Work Collaborations’, his business email address and the holding of an Australian Business Number, even if he was not engaged on that basis;
(b) Mr Carter was engaged pursuant to a clear independent contractor agreement which did not contain terms consistent with an employment relationship;
(c) Rubik3 maintained no control over the hours worked by Mr Carter or the manner in which he performed the services due to the specialised nature of the services;
(d) Mr Carter's hours fluctuated based upon his performance of the services, and the needs of the specific project to which he was engaged;
(e) Mr Carter was genuinely allowed to work for others during the engagement, whether he did so is not known to Rubik3;
(f) while Mr Carter was provided with a laptop in the role, this was solely due to the confidential security requirements that were associated with the contracted position;
(h) while Mr Carter's engagement was ultimately terminated by Rubik3, this was not done on notice or otherwise, rather due to the Applicant not performing the Services and not responding to any requests in relation to the contractor arrangement;
(i) Mr Carter's work involved a distinct and specialised skillset;
(j) while PAYG was withheld from payments made to Mr Carter, this is not definitive in determining the nature of the relationship;
(k) Mr Carter did not receive holiday pay or personal leave in the role.
[19] Rubik3 highlighted various terms of the Agreement of which it argued demonstrated that Mr Carter was engaged as an independent contractor, including the following:
(a) "Rubik3 Pty Ltd (Rubik) has entered into a contract (the ‘Principal Agreement’) to provide services to the Client" (Recital A);
(b) "Rubik wishes to engage the Contractor as an independent contractor to perform the Services" (Recital B);
(c) "Rubik engages the Contractor and the Contractor agrees to provide, in the capacity of an independent contractor, the Services to the Client in accordance with the terms and conditions of this Agreement" (Clause 3.1);
(d) "The parties to this Agreement do not intend to constitute or create an employee- employer relationship, agency, joint venture or partnership between the Contractor, Rubik and the Client" (Clause 3.2);
(e) "Nothing in this Agreement expressed or implied constitutes an employee relationship, a partnership or joint venture relationship or a principal and agency relationship as between Rubik and the Contractor" (Clause 19.1); and
(f) "The Contractor acknowledges that they have requested that Rubik provide PAYG Services and Insurance Services on behalf of the Contractor for the Services. Rubik has agreed to provide the PAYG Services and Insurance Services in consideration for the provision by the Contractor of the Services at the Rate" (Clause 8.1).
[20] Rubik3 submitted that the terms of the Agreement demonstrate its clear intention to engage Mr Carter as an independent contractor.
[21] Rubik3 submitted that Mr Carter was solely engaged for the purposes of fulfilling a project because of his highly specialised skillset. Mr Carter was a service provider who Rubik3 engaged for a specific purpose, that is to assist with a short-term project for one of its clients, and there was no intention for an ongoing employment relationship.
[22] In the alternative, Rubik3 contended, even if Mr Carter had been an employee, he had not met the minimum employment period because it had fewer than 15 employees at the time his contract was terminated, and his length of service was less than 12 months.
[23] Ms Kamira gave evidence of the employees Rubik3 employed as at the date of the termination of Mr Carters’ contract, providing the names and employment status of 12 persons, excluding Mr Carter. Ms Kamira was not challenged on this evidence.
Mr Carter
[24] Mr Carter provided a witness statement and gave sworn evidence in support of his case. He claimed that he was in an employee/employer relationship with Rubik3. He contended that Rubik3 is not a small business and his employment therefore satisfies the minimum employment period of six months.
[25] Mr Carter provided a detailed explanation as to why he contended he was an employee. He submitted that all indicia point to him being an employee of Rubik3 rather than an independent contractor, including that:
a. The employment conditions working for Rubik3 were similar to an employee.
b. He provided a tax file number (TFN) to Rubik3 and income tax is deducted by Rubik3.
c. Rubik3 paid superannuation to his nominated superannuation fund.
d. He was required by Rubik3 to complete weekly timesheets and received periodic wage.
e. He was not able to delegate or ask someone else to perform the work he did for the Department.
f. He was required to work standard hours with slight fluctuations based on when the Department was in peak period.
g. He did not own any of the intellectual property made, developed or discovered by him while working for the Department.
h. He did not bear any financial risk while working for the Department. If he had an incident on site at the Department, this was covered by Rubik3.
[26] In terms of whether Rubik3 was a small business employer, and therefore whether Mr Carter had met the minimum employment period, Mr Carter raised a number of questions as to the status of various persons associated with Rubik3, including Ms Kamira, and requested that the Commission conduct an audit of Rubik3. He did not otherwise provide any evidence as to why he contended that Rubik3 was not a small business employer.
Consideration
[27] The general law approach to distinguishing between employees and independent contractors was summarised by the Full Bench in French Accent and is set out below:
“(1) In determining whether a worker is an employee or an independent contractor the ultimate question is whether the worker is the servant of another in that other’s business, or whether the worker carries on a trade or business of his or her own behalf: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own of which the work in question forms part? This question is concerned with the objective character of the relationship. It is answered by considering the terms of the contract and the totality of the relationship.
(2) The nature of the work performed and the manner in which it is performed must always be considered. This will always be relevant to the identification of relevant indicia and the relative weight to be assigned to various indicia and may often be relevant to the construction of ambiguous terms in the contract.
(3) The terms and terminology of the contract are always important. However, the parties cannot alter the true nature of their relationship by putting a different label on it. In particular, an express term that the worker is an independent contractor cannot take effect according to its terms if it contradicts the effect of the terms of the contract as a whole: the parties cannot deem the relationship between themselves to be something it is not. Similarly, subsequent conduct of the parties may demonstrate that relationship has a character contrary to the terms of the contract.
(4) Consideration should then be given to the various indicia identified in Stevens v Brodribb Sawmilling Co Pty Ltd and the other authorities as are relevant in the particular context. For ease of reference the following is a list of indicia identified in the authorities:
• Whether the putative employer exercises, or has the right to exercise, control over the manner in which work is performed, place 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.”2 (citations omitted)
[28] In Kimber v Western Auger Drilling Pty Ltd 3, the Full Bench observed:
“[41] The courts have developed a multi-factorial approach, in which there is no single decisive criterion to determine whether a contractual relationship is one of employment or one subject to a contract for services. This approach requires the consideration of the various indicia as summarised in French Accent set out above. It is also clear from the decision of the Full Bench of the Federal Court in ACE Insurance Limited v Trifunovski and others, that no one single criterion will necessarily be determinative and that each matter will turn upon the particular circumstances of the case, with the decision maker weighing all the relevant factors.” (citation omitted)
Was Mr Carter an employee or independent contractor?
[29] The evidence demonstrates, and I find that:
a. The written terms of Mr Carter’s engagement, i.e. the Agreement, clearly spell out that he was engaged as an independent contractor and the parties did not intend to create an employment relationship;
b. Mr Carter was engaged to provide services because of his specialised skillset as a data specialist, explaining why he was unable to delegate or assign the work to others;
c. Rubik3 did not control the hours Mr Carter worked, and his hours fluctuated during the course of his engagement;
d. Mr Carter was able to undertake work for others even though he may not have done so;
e. While he was provided with a computer, this was due to the high level security requirements that were associated with the work he was performing;
f. While PAYG was deducted from the monies paid to Mr Carter, this is not in itself determinative of an employment relationship;
g. No paid leave was provided to Mr Carter;
h. There was no evidence of the creation of Goodwill or saleable assets; and
i. There was no evidence of any requirement (or otherwise) to spend a significant proportion of remuneration on business expenses.
[30] A consideration of the indicia outlined in French Accent in light of the evidence before me points clearly in one direction, that being an independent contractor arrangement, and I so find.
Minimum employment period
[31] Had I found that Mr Carter was an employee rather than an independent contractor, Mr Carter’s application would still fail as I am satisfied that he did not meet the minimum employment period.
[32] As outlined earlier, Rubik3 provided evidence of its employees at the time of the termination of Mr Carter’s contract. There being no evidence to the contrary, I am satisfied that Rubik3 is a small business employer.
[33] Mr Carter worked for less than 12 months, and accordingly did not meet the minimum employment period.
[34] Accordingly, Mr Carter’s application is dismissed.
DEPUTY PRESIDENT
Appearances:
K Carter on his own behalf.
W Marshall for Rubik3 Pty Ltd.
Hearing details:
2021.
Canberra (By telephone):
May 17.
Printed by authority of the Commonwealth Government Printer
<PR729909>
1 [2011] FWAFB 8307.
2 Ibid at [30].
3 [2015] FWCFB 3704.