Laura Spiers v Bodycraft Tattoo Belmont

[2014] FWC 5009

[2014] FWC 5009

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Laura Spiers
v
Bodycraft Tattoo Belmont
(U2014/4210)

COMMISSIONER STANTON NEWCASTLE, 24 JULY 2014

Application for an unfair dismissal remedy - jurisdictional objection - whether an employee or independent contractor - jurisdictional objection upheld.

[1] In an application filed on 31 January 2014, Ms Laura Spiers (the applicant) alleges she was dismissed by the respondent employer, Bodycraft Tattoo Belmont on 28 January 2014. The applicant’s Form F2 Unfair Dismissal Remedy application stated she commenced working with the respondent on 2 February 2013. However, in submissions filed with the Commission the applicant stated she commenced with the respondent on 23 September 2013. This date was subsequently confirmed.

[2] The respondent objected to the application on jurisdictional grounds and asserts that at all times the applicant was a contractor and not an employee. That objection was set out in the respondent’s Form F3 Employer response lodged on 28 February 2014 by the business proprietor, Mr Greg Smart.

[3] The application was not resolved in conciliation and was referred to me for arbitration. It was the subject of a hearing in Newcastle on 29 May 2014.

[4] The parties in this matter are self represented. Given the very limited nature of the filed materials concerning the jurisdictional issue to be determined by the Commission, the parties agreed that proceedings should take the form of a determinative conference hearing. Both the applicant and respondent gave sworn evidence during the course of the conference hearing.

[5] Neither the applicant nor the respondent was able to tender any documents concerning the nature of the “relationship” between the parties.

[6] In determining this matter I have considered all the material, limited as it was, put to the Commission by the parties.

Nature of Filed Material

Respondent

[7] The respondent filed a short statement which set out the following grounds in support of the jurisdictional objection:

i. When the applicant commenced tattooing with the respondent there was a verbal contract that the respondent would supply a place for her to work from, provide basic supplies and sterilisation for an agreed payment of 50 per cent of her daily earnings. “The amount and application of work and hours was at her discretion.”

ii. At no time did the respondent “advertise to obtain the applicant’s service as tattoos are gained by her clients and not by the business”. No business cards were supplied. “Any cards for the artist are to be supplied by the artist advertising themselves.”

iii. The applicant was contracted and she regulated her own workload. There were no regular hours or shifts. Work times were at the applicant’s discretion each day.

Applicant

[8] The applicant filed a statement in support of her claim that she was an employee. However, much of that statement was directed towards the merit aspects of her claim rather than the jurisdictional objection raised by the respondent. In the course of that statement, the applicant stated she had an ABN number at the time she commenced with the respondent. The applicant also made a number of comments concerning the use of her ABN number.

[9] The applicant filed a copy of an Australian Tax Office Employee/Contractor Report dated 26 March 2014 which, on the information provided by her, deemed her to be an employee. The Report also provides a caveat that it “provides guidance on the status of a worker.” 1 The applicant provided no evidence concerning the basis upon which she completed the required fields to determine her status as an employee.

[10] Details concerning the applicant’s taxation return for the year ended 30 June 2013 prepared by her taxation accountants were also filed. Her income for that period was less than the threshold amount required to be registered for the goods and services tax.

Consideration

[11] The question as to whether or not a person is an employee or an independent contractor requires a consideration quite beyond the label attached to the by the parties. Such an assessment can on occasions be ambiguous and unclear. The indicia concerning the principles to be applied when determining such matters need to be carefully balanced between the nature of the work performed and the manner in which it is actually performed.

[12] In Jiang Shen Cai trading as French Accent v Do Rozario, 2 the Full Bench summarised the “general law approach to distinguishing between employees andindependent contractors with particular reference to the High Court authority in Stevens v Brodribb Sawmilling Co Pty Ltd:3

[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: 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.

[13] In the absence of any written agreement or related evidence supporting the parties’ respective positions concerning the relationship governing the applicant’s work, the conference hearing to determine whether the applicant is an employee or contractor was conducted against the indicia determined by the Full Bench in Jiang Shen Cai under the following headings:

• Whether the employer exercised, or has the right to exercise, control over the manner in which work is performed, place or work, hours of work and the like.



• Whether the worker performs work for others (or has a genuine and practical entitlement to do so).



• 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.



• Whether the work can be delegated or subcontracted.



• Whether the employer has the right to suspend or dismiss the person engaged.



• Whether the employer presents the worker to the world at large as an emanation of the business.



• 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.



• 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.



• 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.

Whether the 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.

[14] The applicant agreed during the course of the conference that she could choose whether to work or not work on a particular day:

C: “...if you don’t wish to do any work... you don’t have to attend for work? Is that the case?”

A: “Yes, it is the case.”

C: “...the fact that you have got the flexibility to come and go as you please, that isn’t normally afforded to an employee.”

A: “I understand that.” 4

[15] In response to a question concerning the respondent’s control over her hours of work, the applicant stated she would come to work to do the tattoos that had been booked for her. The applicant agreed with the respondent that on completion of the work booked, she was free to go home for a few hours or “do whatever she wanted”. 5

[16] The respondent contended there were “tonnes of times” when the applicant did not do any work or was able to take the afternoon off or, go away for a few days. 6 The applicant agreed such flexibility was available to all tattoo artists who worked in the shop.7

[17] The applicant stated she would organise her own tattoos and in the event she required time off, “...I would call each customer or ask the receptionist– who usually wouldn’t do it – to re-organise those tattoos.” 8

Whether the worker performs work for others (or has a genuine and practical entitlement to do so).

[18] The applicant expressed an opinion that the industry was a “tight knit” one and “every other shop is a rival shop.” On that basis, it would appear that the competitive nature of the industry would impede the capacity of a worker within it to work for more than one entity. There was no evidence that the respondent had placed any restrictions on her capacity to work for others.

Whether the worker has a separate place of work and or advertises his or her services to the world at large.

[19] The applicant stated she paid 50% of the tattoo price to the respondent for a dedicated studio space within the tattoo shop. She denied that payment amounted to rent. 9

[20] The respondent stated the 50% payment referred to by the applicant was a standard industry practice and covered the tattooist’s “basic supplies, sterilisation, the girl at the front counter if she’s too busy to take the calls or book people in for you or put it in the book for you.” 10

[21] The applicant agreed tattoo artists engaged by the respondent built up their own clientele. 11 In that regard, the respondent contended a tattoo artist’s clientele grows:

“...some people come in for a $100 tattoo, and say they like (the applicant), they come back ...(and) might get a $400 tattoo.” 12

Whether the worker provides and maintains significant tools or equipment.

[22] The applicant agreed that ordinarily, she would supply her own tattoo gun and power supply. In the event an item of her equipment was faulty or had been left elsewhere, the applicant stated she was able to borrow a replacement from the respondent. 13

Whether the work can be delegated or subcontracted.

[23] The artistic and personal nature of the applicant’s work suggests that it cannot be readily delegated or subcontracted.

Whether the employer has the right to suspend or dismiss the person engaged.

[24] There was no evidence that the respondent had the right to suspend or discipline the applicant other than the action taken to terminate the arrangement on 28 January 2014.

Whether the employer presents the worker to the world at large as an emanation of the business.

[25] There is no evidence before the Commission that the applicant was required to wear a uniform or was provided with business cards.

Whether income tax is deducted from remuneration paid to the worker.

[26] The respondent contended the applicant was responsible for her own taxation arrangements. 14 For her part, the applicant confirmed that arrangement:

C: The question is this: income tax wasn’t deducted from the monies paid to you. You were responsible for your own taxation?

A: Yes. 15

Whether the worker is remunerated by periodic wage or salary or by reference to completion of tasks.

[27] The evidence before the Commission was that clients paid the applicant directly and generally each day. She would subsequently pay the respondent 50% of her “takings” for the studio space, basic supplies, sterilisation and reception. The applicant further explained:

“Fifty per cent of every tattoo goes to him, so no matter what I do, it goes to him. I don’t have a set wage each week I have to give to him.” 16

[28] The applicant agreed the arrangement in place between the respondent and herself was not dissimilar to that of a taxi driver who may receive 40 or 50 per cent of the taxi’s earnings over the period the driver works. 17

[29] It was the respondent’s position that “Every customer that came in paid her. She gave me the percentage back.” 18

Whether the worker is provided with paid holidays or sick leave.

[30] The applicant confirmed that she was not paid public holidays or sick leave and this practice was common across the industry. 19

Whether the work involves a profession, trade or distinct calling on the part of the person engaged.

On the material before the Commission, the applicant would best describe herself as a professional tattoo artist. 20 Moreover, the nature of the applicant’s work is excluded from the Health Professionals and Support Services Award 2010 (MA000027).

Whether the worker spends a significant portion of his remuneration on business expenses.

[31] The applicant stated her income was variable and dependent on the number of tattoos undertaken:

“So, one month I might spend $50 on supplies, the next month I might spend $500 on supplies.” 21

Whether the worker creates goodwill or saleable assets in the course of his or her work.

[32] There was no evidence before the Commission that the applicant created any good will or saleable assets as such in the course of her work. However, the applicant did confirm that tattoo artists build their own clientele. 22

[33] 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. 23

[34] Whilst not exhaustive, each of the relevant indicia outlined and considered in the French Accent decision nevertheless give a structured view of the relationship between the applicant and the respondent:

Whether the 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.

[35] Shortly stated, the applicant was not told what days she was to work, when to start and finish work or what tasks she was required to perform on a daily basis.

[36] There was flexibility for the applicant and the evidence was that she could independently decide when she worked.

[37] It is clear on the material before the Commission that applicant was not supervised in her work and had absolute discretion as to how a particular tattoo would be applied to a client.

[38] The applicant was responsible for the quality of her work. There was no arrangement between the applicant and respondent for her to perform a specific task for any determined amount. On the contrary, the applicant herself determined the charge for particular tattoos.

Whether the worker performs work for others (or has a genuine and practical entitlement to do so).

[39] The evidence shows that the nature of the industry is very competitive. There was no formal restriction placed on the applicant preventing her from working for others (although she expressed a view that as a result of her dismissal, it was difficult to secure alternative work).

Whether the worker has a separate place of work and or advertises his or her services to the world at large.

[40] The applicantworked from her dedicated studio space.

Whether the worker provides and maintains significant tools or equipment.

[41] The applicant provided her own tattoo gun and power supply which she required in the course of her work.

Whether the work can be delegated or subcontracted.

[42] Given the artistic nature of her work, it is unlikely that she could delegate or subcontract that work to others.

Whether the employer has the right to suspend or dismiss the person engaged.

[43] The respondent had a common law right to terminate its relationship with the applicant.

Whether the employer presents the worker to the world at large as an emanation of the business.

[44] The respondent did not require the applicant to represent herself as a part of the respondent’s business.

Whether income tax is deducted from remuneration paid to the worker.

[45] There was no remuneration paid to the applicant as her income was determined by the amount she herself charged her clients. The applicant was responsible for her own taxation.

Whether the worker is remunerated by periodic wage or salary or by reference to completion of tasks.

[46] The applicant was not remunerated in any way other than the profit she derived from her customers after paying expenses. The applicant billed her clients directly and subsequently paid a fixed percentage of that particular charge to the respondent to cover rent for her studio space, basic supplies, sterilisation and reception.

Whether the worker is provided with paid holidays or sick leave.

[47] The applicant was notpaid holidays or sick leave. Nor was the applicant afforded superannuation benefits or workers compensation insurance.

Whether the work involves a profession, trade or distinct calling on the part of the person engaged.

[48] The applicant would best describe herself as a professional tattoo artist, an occupation which is award free.

Whether the worker creates goodwill or saleable assets in the course of his or her work.

[49] There was no goodwill or saleable asset created during the course of her work.

Whether the worker spends a significant portion of his remuneration on business expenses.

[50] There was no fixed remuneration as the applicant’s income was determined by the profitability of her business.

Finding

[51] Based on the indicia determined by the Full Bench in French Accent, the evidence before the Commission supports the proposition that the substantive nature of the relationship between the applicant and respondent is one of principal and contractor, rather than employer and employee. The applicant is not a person protected from unfair dismissal and is not able to pursue this application. Accordingly, the application is dismissed. An Order [PR553534] to this effect will be issued simultaneously with this decision.

COMMISSIONER

Appearances:

The applicant was self-represented.

The respondent was self-represented.

Hearing details:

2014

Newcastle

29 May

 1   Statement - Applicant at Para 5

 2   [2011] FWAFB 8307

 3 (1986) 160 CLR 16

 4   Transcript at PN46-49

 5   Ibid at PN53-55

 6   Ibid at PN77

 7   Ibid at PN79

 8   Ibid at PN81

 9   Ibid at PN70

 10   Ibid at PN73

 11   Ibid at PN104

 12   Ibid at PN100

 13   Ibid at PN90-92

 14   Ibid at PN137

 15   Ibid at PN144-145

 16   Ibid at PN72

 17   Ibid at PN24

 18   Ibid at PN149

 19   Ibid at PN157 and 159

 20   Ibid at PN88

 21   Ibid at PN170

 22   Ibid at PN104

 23   Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; (1986) 160 CLR 16 at 24 per Mason J

Printed by authority of the Commonwealth Government Printer

<Price code C, PR553529>