Leigh Goss v CJD Equipment Pty Ltd
[2023] FWC 2593
•9 OCTOBER 2023
| [2023] FWC 2593 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.365—General protections
Leigh Goss
v
CJD Equipment Pty Ltd
(C2023/4352)
| DEPUTY PRESIDENT COLMAN | MELBOURNE, 9 OCTOBER 2023 |
Section 365 application – whether applicant an employee – no written contract – findings of fact as to oral terms – jurisdictional objection upheld – application dismissed
Leigh Goss has made an application under s 365 of the Fair Work Act 2009 (FW Act) for the Commission to deal with a general protections dispute involving a dismissal. He contends that CJD Equipment Pty Ltd (CJD) dismissed him in circumstances that involved a contravention of Part 3-1 of the FW Act. CJD objects to the application on the jurisdictional basis that Mr Goss was not an employee and was therefore not dismissed. It contends that Mr Goss was an independent contractor who provided invoiced services to CJD through his business, Steering Dynamics, which he operated as a sole trader.
Section 365 of the FW Act states that if a person has been dismissed and alleges that the dismissal was in contravention of Part 3-1, the person may apply to the Commission to ‘deal with the dispute’. Generally, the Commission does not have a determinative function in relation to applications made under s 365. It will conduct a conciliation conference and, if satisfied that all reasonable attempts to resolve the matter have been or are likely to be unsuccessful, it will issue a certificate that allows an application to be made in a court. The Commission’s involvement in the matter then ends and it is up to the applicant to decide whether to take the matter to a court. However, in cases where a respondent raises a jurisdictional objection, the Commission is required to determine it (see Coles Supply Chain Pty Ltd v Milford [2020] FCAFC 152).
CJD is a construction equipment and trucking business that provides services to customers from a network of branches around Australia. Mr Goss is a qualified diesel mechanic who performed work for CJD at its Hobart depot from 2015 until June 2023.
Barnaby Terry gave evidence that until 2020, he was employed by CJD as its service manager, and that in 2015 he engaged Mr Goss to provide mechanical services to the company. Mr Terry said that there was no written contract. Rather, he agreed orally with Mr Goss that CJD would engage Mr Goss to provide services, and that Mr Goss would invoice CJD for his work every week. The rate of payment would be ‘inflated’ to reflect his status as a contractor. Mr Goss could continue working for his own clients. He could also subcontract. For several months in 2018 he did so, engaging his brother to help him provide services to CJD. In his witness statement, Mr Terry said that the contracted services consisted of heavy vehicle wheel alignments, but in his oral evidence he acknowledged Mr Goss was initially engaged to provide general diesel mechanical work, and that several months later this was extended to include wheel alignment services.
Mr Terry said that CJD agreed to give Mr Goss a consistent week’s work every week if he kept coming back. He said that the company wanted to give Mr Goss as much work as possible and as a result he worked Monday to Friday during normal business hours, averaging 38 to 40 hours a week. As a contractor, he had the freedom to take time off without paperwork and to come and go as required. He was allocated work by the workshop supervisor. He had a company uniform, in order to ensure that there was a consistent presentation to customers in the workshop. Mr Goss was not expected to comply with company policies, except in relation to safety matters.
Mr Terry’s evidence was that CJD required Mr Goss to provide it with details about his business, which were then logged on CJD’s contractor portal. These included the name of the business, its ABN, the address of the business, and a contact. The portal recorded a supplier identification number and a supplier risk rating, together with details of Mr Goss’s personal and public liability insurance. Mr Goss was required to undergo a contractor induction. He continued to service his own clients outside of his work for CJD. Mr Terry said that he had several discussions with Mr Goss about his status, and would have preferred for him to become an employee, however Mr Goss wanted to remain a contractor and run his own business.
Kade Chapple has been CJD’s general manager for Tasmania for the last six years. Mr Chapple gave evidence that he had wanted Mr Goss to become an employee, and that from 2020 to 2023 he had numerous conversations with him about this, but Mr Goss declined because he said that he preferred the flexibility of being a contractor and the higher rate of pay. Mr Chapple said that in 2022, CJD asked Mr Goss to work as the temporary workshop supervisor, and that he did so, still on a contracting basis and providing CJD with weekly invoices in the usual fashion. As to the invoices provided by Mr Goss to CJD, Mr Chapple said that they were in the name of Steering Dynamics, cited the business’s ABN, and charged GST. In addition to hours worked, invoices would charge a per axle rate for wheel alignments, and include any other relevant items, such as batteries that Mr Goss supplied to the company.
Mr Chapple said that for most of the time that he was working at CJD, Mr Goss was the most senior mechanic, and CJD exercised little control over him. Mr Goss had discretion as to when he worked and if he wanted a day off he could just take it, provided he gave CJD notice as a courtesy. Mr Chapple said that he was happy for Mr Goss to service his other clients, and Mr Goss told him that he did so. Mr Chapple said that his only rule was that Mr Goss could not service his clients in CJD’s workshop unless they were put through CJD’s booking system, so that CJD could keep track of the jobs being done in its workshop.
Mr Chapple’s evidence was that in mid-August 2021, Mr Goss approached him with a request to raise his charge rate to $75 an hour, due to an increase in the cost of his insurance, and because his rate had not increased for several years. CJD did not agree to this. Sometime afterwards, Mr Goss told Mr Chapple that he believed that he was entitled to employment benefits. Mr Chapple said that he would take this up with head office and did so however it took a long time for the matter to be looked into. Mr Goss raised the matter again on a number of occasions over the next two years. Ultimately, the company’s view was that he was an independent contractor.
Mr Chapple said that on 8 May 2023, Mr Goss sent him a message asking again whether CJD would increase his charge rate. Mr Chapple said that by this time, he believed that CJD needed to make Mr Chapple an employee if he was to continue working for the company. The next day, he replied to Mr Goss, stating that the contracting arrangement would end on 30 June 2023 and that he wanted a decision from Mr Goss as to whether he would become an employee. Mr Chapple said that he understood from Mr McLaughlin that in late May 2023, Mr Goss told him that he agreed to become an employee of CJD but later decided to take a job elsewhere.
Jason McLaughlin is CJD’s state service manager for Tasmania. He gave evidence that everyone enjoyed working with Mr Goss and that he was an excellent technician. He said that he had some ten conversations with Mr Goss about his future with CJD, and that he had encouraged him to become an employee. Mr McLaughlin said that eventually, on around 22 May 2023, Mr Goss agreed to become a full-time employee on a salary of $120,000 per year, plus a laptop and telephone, but without a car. They shook hands on their agreement. Mr McLaughlin then arranged a medical examination for Mr Goss, as is the usual course for new employees. Mr McLaughlin said that on or about 15 June 2023, Mr Goss came into his office and said words to the effect that he had decided to accept another offer elsewhere, so he would not be staying at CJD. Mr McLaughlin said that it was Mr Goss who decided to end the relationship with CJD.
Mr Goss gave evidence that in 2015 Mr Terry spoke to him about working for CJD, and said that the company wanted him to provide mechanical services on a full-time basis and would pay him at the rate of $60 an hour. There was no mention of him being an employee or a contractor. Mr Goss understood that he would have to submit invoices to be paid but said that he had no real understanding of the difference between employees and contractors. Mr Terry told him that he was expected to work from 8.00am to 4.00pm Monday to Friday.
Mr Goss said that CJD ‘made it clear’ that he was not allowed to work for anyone else and that he would have to book his existing clients in through CJD’s booking system. Mr Goss said that several of his customers ended up becoming clients of CJD, and that eventually his customer base was diminished and he was often left wondering whether he had a business anymore. Mr Goss said that he wore a company uniform and that most customers would have regarded him as an employee. He submitted witness statements to this effect from several customers of CJD.
Mr Goss said in his evidence that he was treated like a genuine employee and was part of the team. He provided his own tools, but so did other mechanics. He said that he was often required to work overtime and had little flexibility, and felt pressured if he was not available to work. Mr Goss said that he worked very hard, sometimes as many as 70 hours a week, and that he was a very efficient and profitable worker. He said that he often finished jobs within the time quoted to customers, but that while CJD’s customers would pay the quoted fee, he would only be paid per hour of actual work. Mr Goss said that, like other employees, he was on the on-call roster, although only sporadically so.
Mr Goss said that in July 2021 he told Mr Chapple that he believed he had been the subject of a sham arrangement, and that he was in fact an employee and should be receiving employment benefits, including superannuation. Mr Chapple agreed to check with head office. Mr Goss said that despite following up with Mr Chapple several times over the next 18 months about the payments he was expecting, he received no response. Only in July 2023 did he receive a letter from CJD stating that he was entitled to superannuation contributions from CJD because the relevant legislation deemed him to be an employee for superannuation purposes.
Mr Goss said that in July 2022 he agreed to act as the supervisor. He was required to oversee all service technicians and allocate jobs in the workshop. He attended to staffing and business matters, and conducted disciplinary and recruitment processes. He had a company email and computer, as well as an office. Mr Goss said that this was a position where he was simply not able to come and go as he pleased.
Mr Goss’s evidence was that in May 2023, Mr McLaughlin told him that he had to sign a contract of employment at a lower hourly rate, and that his existing arrangement with CJD would end on 30 June 2023. Mr Goss said that he made it clear to Mr McLaughlin that he would continue to work at CJD if his hourly rate remained the same and he was given employment-related conditions. Mr Goss disputed Mr McLaughlin’s evidence that he agreed to become a full-time employee on $120,000 a year, and said that he made it clear that he would not do this unless his ‘entitlements and claims’ were settled. Mr Goss thought that if he signed a contract with CJD, this might jeopardise the prospect that he would be paid the past employment benefit to which he believed he was entitled. He considered that this was part of the company’s motivation for seeking to have him agree to new terms.
Summary of submissions
CJD contended that it engaged Mr Goss to provide services as a contractor through his business, Steering Dynamics. The terms of its oral contract with Mr Goss were borne out by the evidence of its witnesses and Mr Goss understood those terms perfectly well. Mr Goss would provide services to the company and be paid an hourly rate of $60. He would invoice CJD weekly. He would be responsible for his own work. CJD would provide Mr Goss with work during regular business hours. He could continue to service his own customers. The services comprised general mechanical duties. In October 2015, the scope of services was varied to include wheel alignments, and in 2022 it was varied again to cover supervision of the workshop. These agreed terms reflected Mr Goss’s preference to be a contractor; he would receive a higher hourly rate of pay than the rate afforded to CJD employees, and would be able to service his business’s clients. The subsequent conduct of the parties was in keeping with the contract that was established between the parties. There was nothing artificial about their arrangement. Later, it was CJD that instigated the discussions with Mr Goss about becoming an employee, and in 2022 it pressed this matter because it considered that it was no longer appropriate for him to continue to supervise its workshop as a contractor. Mr Goss was reluctant to agree to the proposal, but ultimately did so, shaking hands with Mr McLaughlin on a deal to take up employment on a full-time basis for an annual salary of $120,000. However, before the employment commenced, Mr Goss resiled from the agreement and accepted a position with another company for more money. CJD said that Mr Goss had not been its employee and was not dismissed, and that the Commission therefore had no jurisdiction to deal with the application.
Mr Goss contended that the purported contracting arrangement was a sham and that in fact he was engaged by CJD as an employee in August 2015. He said that the reality of his working life at CJD was one which was consistent with that of an employee, and while he earned a higher hourly rate than others in the workshop, he did essentially the same work as them. He was subject to CJD’s control, was required to attend work on a full-time basis, wore a uniform, and was held out to the public as an employee of CJD. The written statements he submitted from various customers of CJD attested to the fact that this was how they perceived him. Later, he was engaged as the supervisor of the workshop, and had responsibilities for a wide range of commercial, technical and human resources matters. These were not duties in keeping with a contracting relationship. They further demonstrated that he was in substance an employee. Mr Goss submitted that he had been an integral part of CJD’s workshop team, and that he had made a substantial contribution to its success and profitability. Because he had been working essentially full-time for CJD, and serviced some of his customers in its workshop, his own business was greatly diminished and the business of CJD was enhanced. Mr Goss further contended that he worked excessive hours due to the great demand for his labour, and that he suffered burnout, but despite approaching management, he received no assistance. Mr Goss submitted that in 2023 CJD tried to force him to agree to a lower rate of pay, and when he refused, it terminated his employment with effect from 30 June 2023.
Consideration
In order to make an application under s 365 of the FW Act, a person must have been ‘dismissed’. To be dismissed, the person must have been an employee of the respondent (see s 386). The question of whether a person was an employee or an independent contractor is governed by the common law. In two recent decisions, the High Court of Australia has confirmed that the legal relationship between the parties will be determined by reference to the rights and obligations created by any contract that they have made, not by reference to their subsequent conduct: see CFMMEU & Anor v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd & Anor v Martin Jamsek & Ors [2022] HCA 2. These decisions dealt with cases in which the parties had made written contracts. But the same approach applies to other contracts (see Secretary, Attorney General’s Department v O’Dwyer [2022] FCA 1183 per Goodman J at [29]). In the present matter, there is no written contract that can speak for itself. The terms of any contract will be oral or implied by fact or law, or some combination of these. The Commission must make factual findings from which conclusions can be drawn about the existence of such terms. From these terms the Commission can then ascertain the legal character of the relationship between the parties.
I make the following factual findings on the balance of probabilities. In relation to what was orally agreed between Mr Goss and Mr Terry in August 2015, I prefer and accept the evidence of Mr Terry. I found him to be a credible witness. In my assessment, he gave evidence candidly and to the best of his knowledge and recollection. He made appropriate concessions about matters that might tend to point against his own conclusion that Mr Goss had been a contractor. He did not seek to downplay the extent of Mr Goss’s work for CJD, and drew comparisons between the circumstances of Mr Goss of those of CJD’s employee mechanics. Mr Terry’s account of events was more detailed and compelling than that of Mr Goss.
I find that Mr Terry and Mr Goss agreed in 2015 that Mr Goss would provide his services to CJD as a contractor. I do not accept that Mr Goss did not understand this. He knew that he was required to submit weekly invoices in order to be paid. He did so in the name of his business, Steering Dynamics, which had been in existence for several years. He charged GST. The hourly rate of pay that he received for his work greatly exceeded that of mechanical employees. This rate was commensurate with his status as a contractor. I find it implausible that Mr Goss did not understand that he was being engaged as an independent contractor. In his witness statement, Mr Goss said that this ‘scenario of using (his) services’ was advantageous to CJD because it did not involve affording him employment conditions. This ‘scenario’ was a contracting arrangement which Mr Goss understood perfectly well. This is also clear from the fact that CJD made numerous unsuccessful attempts to have Mr Goss become an employee of the company. At no time did Mr Goss respond to these efforts by saying that he was already an employee of the company. This is because it was entirely clear to the company and to Mr Goss that he was presently a contractor, receiving a contractor’s rate pursuant to invoices issued to CJD every week, in the name of his business.
I find that Mr Goss worked for CJD on weekdays during regular business hours and was in effect working full-time at the company’s workshop. But it was ultimately up to Mr Goss to decide how much work he wanted to do. CJD expected him to be available during business hours and had agreed to give him a full week’s work, but he was not obligated to accept all of this work, and he did not need the company’s permission to do other things; CJD asked only that he provide notice if he would not be available. Mr Goss chose to accept the work he was given. CJD was a very important client. But it was not his only client. I would note that it is not uncommon for an independent contractor to have a major client for whom it performs most or even all of its work.
I reject Mr Goss’s evidence that CJD ‘made it clear’ that he was not allowed to work for anyone else. I accept the evidence of Mr Terry and Mr Chapple that he was able to service his own clients and that he did so. The evidence clearly shows that Mr Goss had his own customers and was perfectly entitled to service them. This was most starkly revealed by an email message sent from Mr Goss to Mr Chapple on 24 August 2021 in which he asked CJD to agree to an increase in his hourly rate to $75, and stated that if it did so, he would arrange for all of the customers he had been seeing on his weekends and after hours to bring their vehicles to CJD. Further, Mr Goss’s witness statement lamented the fact that over time his own business diminished because he was doing so much work for CJD.
I find that throughout the relevant period Mr Goss was running a genuine small business, Steering Dynamics. This was not some artificial shell. It was a business established and run by Mr Goss from a time well before his relationship with CJD commenced in 2015. Steering Dynamics was established and registered for GST in 2011.
I find that in July 2022, when Mr Goss agreed to undertake the supervisory role, he did so within the framework established by the oral contract in 2015. He would perform work for CJD as a sole trader and his business would invoice the company for his services. This framework remained unchanged. What changed over time was the scope of the services. Mr Goss assumed the supervisory duties on a temporary basis after the company had been unable to recruit an employee to do the work. CJD recognised that it was not ideal to have a contractor performing such a role for a long period. It had tried on a number of occasions to have Mr Goss become an employee of the company. But now it was determined to do so. However, it was not prepared to maintain Mr Goss’s ‘contractor’ rate of pay. And Mr Goss wanted to keep it.
I prefer and accept the evidence of Mr McLaughlin that on 22 May 2023, Mr Goss accepted the company’s offer that he become an employee and receive an annual salary of $120,000 without a car. Mr McLaughlin’s evidence was detailed and convincing. Mr Goss agreed to the proposal and shook hands with Mr McLaughlin on their deal. Mr Goss did not provide a persuasive alternative account of this interaction. Mr McLaughlin then proceeded to arrange a pre-employment medical for Mr Goss. However, on 15 June 2023, Mr Goss told Mr McLaughlin that he had accepted an offer of employment with another company, on better terms.
From my factual findings, it is clear that in 2015 Mr Goss and CJD made an oral contract that he would provide services to the company as a contractor for $60 per hour plus GST, invoiced weekly by Steering Dynamics, and that the company would provide him with a full week’s worth of work. The objectively manifested intention of the parties was to establish a relationship of principal and contractor. And that is what they in fact did. Mr Goss was running his own business. He was allowed to sub-contract and did so. He could service other clients and did so. He owned his own equipment. He had his own insurance, and raised his public liability coverage to meet CJD’s requirements. Although he was provided with a full week’s worth of work, it was for Mr Goss to decide how much of it to accept. He did not need permission to be absent. But Mr Goss was eager to work, and worked very hard. Over time, the scope of services under the contract was expanded to include other work, most notably in 2022 when Mr Goss agreed to take on the supervisory role in the workshop. But the expansion of the scope of the services did not alter the legal nature of the relationship between the parties.
The fact that a number of CJD’s customers may have had the impression that Mr Goss was an employee of the company is not relevant to the legal character of the relationship between Mr Goss and CJD, because that character derives from the terms of the contract made by the parties. Similarly, it is beside the point that certain factors might, under the old multifactorial test, have weighed in favour of a conclusion that Mr Goss was an employee. I would add that even applying that test, I would still have concluded that Mr Goss was an independent contractor.
This is not a case of some sham arrangement. Mr Goss had his own business, which pre-existed his relationship with CJD by four years. Later, CJD wanted him to become an employee of the company. Both Mr Chapple and Mr McLaughlin had numerous discussions with Mr Goss about this, but he was reluctant to accept, because it would involve a lower hourly rate of pay. Mr Goss wanted to have employment conditions, such as leave and other benefits, as well as a higher ‘contractor’ rate of pay. The company would not agree to this.
On 23 May 2023, Mr Goss ultimately did accept an offer of employment from CJD. But before the employment commenced, he changed his mind and took a job with another employer. In my view, the significance of this is that if Mr Goss had indeed been an employee of CJD, as he contended, it was nevertheless Mr Goss’s decision to accept employment elsewhere that brought his notional employment with CJD to an end. His last day of work at CJD was 30 June 2023, this being the date that Mr Chapple had set as the end of the arrangements established in 2015. But the reason that this was his last day of work was because he had decided to accept another job with a different company. Therefore, even if Mr Goss had been an employee of CJD, he was nevertheless not dismissed. His employment was not terminated ‘on the employer’s initiative’, nor was he forced to resign (see s 386(1)).
Mr Goss said that since the end of his relationship with CJD, Steering Dynamics has had no business. He said that CJD had taken away his opportunity for business growth because he had been working for it. He said in his submissions that he was seeking compensation for the loss of his business operations. All of this only underscores the fact that Mr Goss was running a genuine business. He decided to devote most of his energies to one important client, CJD. Mr Goss now believes that this was to his detriment. On the other hand, there are advantages in having one major client that provides a steady stream of work. Striking the right balance is a challenge for many small businesses like the one that Mr Goss was running.
Conclusion
Mr Goss was not an employee. He was a contractor providing services to CJD pursuant to an oral contract made in August 2015. In May 2023 he agreed to accept an offer of employment with CJD, but before that employment commenced, he changed his mind and took up employment elsewhere. On any view, Mr Goss was not dismissed by CJD. His application therefore does not meet the requirements of s 365, and the Commission has no power to deal with it. The application is dismissed.
DEPUTY PRESIDENT
Appearances:
E. Batt, solicitor for the applicant
G. Lake of counsel for the respondent
Hearing details:
2023
Melbourne and Hobart (by Microsoft Teams)
3 October
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