Levi Capper v Compass Global Holdings Pty Ltd
[2017] FWC 3525
•4 JULY 2017
| [2017] FWC 3525 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Levi Capper
v
Compass Global Holdings Pty Ltd
(U2017/4339)
COMMISSIONER MCKINNON | MELBOURNE, 4 JULY 2017 |
Application for an unfair dismissal remedy.
Introduction
[1] Mr Levi Capper was a Senior Business Manager for Compass Global Holdings Pty Ltd (Compass Global), trading foreign exchange products in the Australian retail financial services market. According to his application, he commenced working for Compass Global in February 2015 as an independent contractor. It is not in dispute that on and from 1 February 2017, Mr Capper became an employee of Compass Global. After working continuously with Compass Global since 2015, MrCapper claims he was unfairly dismissed on 4 April 2017 and has applied to the Fair Work Commission for an unfair dismissal remedy under section 394 of the Fair Work Act 2009 (the Act). Mr Capper represented himself in the proceedings and gave evidence in support of his claim.
[2] Compass Global objects to Mr Capper’s application. It claims that Mr Capper has not served the minimum employment period under section 383 of the Act and accordingly is not a person “protected from unfair dismissal” under section 382. Compass Global was represented by Ms Susie Block, Head of Legal and Compliance, Compass Global. Ms Block and Mr Michael Sarpi, Chief Operations Officer, Compass Global, gave evidence in the proceeding.
[3] Mr Capper’s application was filed on 21 April 2017. There is no dispute that his employment was terminated on 4 April 2017 and, in accordance with section 396 of the Act, I find that his application was filed within 21 days after the dismissal took effect.
[4] As at 4 April 2017, Compass Global says it employed 24 employees. This fact is not disputed by Mr Capper and I have no reason to doubt it. I find that the Small Business Fair Dismissal Code is not relevant in this case, because Compass Global was not a small business employer immediately before the time of the dismissal.
[5] No issue of redundancy arose and I find that the dismissal was not a case of genuine redundancy.
[6] To be protected from unfair dismissal, Mr Capper must have been employed by Compass Global for at least 6 months immediately before 4 April 2017. 1 The parties agree that Mr Capper was employed by Compass Global from 1 February 2017 until 4 April 2017. Mr Capper says he was also continuously employed by Compass Global in the period immediately prior to 1 February 2017. Compass Global disputes this. It agrees that it had a continuous relationship with Mr Capper from 2015 until the commencement of the employment relationship on 1 February 2017, but says that prior to this time, Mr Capper (through his company Goddergib Pty Ltd) (Goddergib) was an independent contractor.
[7] The question is whether Mr Capper has completed the minimum employment period as an employee of Compass Global. To answer this question, it is necessary to determine whether Mr Capper was an employee or independent contractor in the period prior to 1 February 2017.
[8] If Mr Capper has completed the minimum employment period, there is a separate question about whether a Deed of Release between Compass Global and Goddergib dated 14 February 2017 affects Mr Capper’s ability to seek relief under section 394 of the Act. I return to this question later in the decision.
Was the Applicant an employee prior to 1 February 2017?
[9] The meaning of the word "dismissed" is set out in section 386 of the Act. It refers broadly to a person having been dismissed from “employment”. The terms “employee” and “employer” are defined in section 12 of the Act, and for the purposes of unfair dismissal, mean respectively, a “national system employee” and a “national system employer” (see sections 380, 30C and 30D of the Act).
[10] Determiningwhether a person is an employee or a contractor requires the application of multifactorial tests established through the Courts and recently confirmed in Kimber v Western Auger Drilling Pty Ltd 2(Kimber).In Kimber, the Full Bench endorsed the approach in French Accent v Do Rozario3 (French Accent), which had regard to the earlier Full Bench matter of Abdalla v Viewdaze Pty Ltd t/a Malta Travel4 and followed the principles laid out by the High Court in Stevens v Brodribb Sawmilling Co Pty Ltd5and Hollis v Vabu6 (Hollis).
[11] I adopt and apply the approach confirmed in Kimber for the purposes of this decision. Ultimately, it comes down to whether, in the relevant period, Mr Capper was the servant of Compass Global in its business, or was carrying on a business on his own behalf.
Control over the manner in which work is performed, place of work, hours of work and the like.
[12] The facts in this matter are largely without dispute. Mr Capper entered into a contract with Compass Global on 29 January 2015. The contract was for the provision of his services, described in Schedule 1 to the contract as:
“Opening FX payment accounts from Compass Global Holdings Pty Ltd and offering clients services related to the provision of FX payments and hedging and any other duties which the Company deems as required which the Contractor is capable of performing.”
[13] Relevant terms of the contract included:
- acknowledgment that Mr Capper’s services were provided as a contractor;
- regular monthly commission-based payments to Mr Capper by electronic transfer;
- no entitlement to paid leave or employee entitlements;
- payment of relevant taxes and maintenance of professional liability insurance by Mr Capper;
- provision by Compass Global of information and equipment reasonably required for Mr Capper to provide his services;
- ownership by Compass Global of all property created or used by Mr Capper and assignment of any related intellectual property rights to Compass Global;
- a restriction on Mr Capper providing his services to any person directly or indirectly in competition with Compass Global without its prior written consent;
- no ability to assign obligations or rights in relation to the contract without the prior written consent of the other party; and
- termination of the contract by Mr Capper on 8 weeks’ notice or by Compass Global in the event of default or during a 6 month probation period.
[14] As part of Compass Global’s “onboarding process”, Mr Capper was required to set up a company. An extract from the Australian Business Register provided by Compass Global confirms that Goddergib was registered on 27 January 2015. Mr Capper was the sole director, shareholder, company secretary and public officer of Goddergib, and its registered business address was the same as Mr Capper’s address.
[15] Mr Capper commenced providing services to Compass Global on or around 9 February 2015. He described his role as being “to bill revenue” for Compass Global, using his own contacts and networks as well as clients referred to him by Compass Global. He made trades on the foreign exchange market and had a sales function, approaching clients with their own foreign exchange clients and trying to win their business over to Compass Global. Mr Capper personally carried out the work he was contracted to perform and it appears that Goddergib generated invoices for payment by Compass Global.
[16] Under its contract with Mr Capper, Compass Global could exercise control over how Mr Capper’s services were provided, including to ensure they were carried out “in a manner consistent with the Company’s interests”, and to require him to perform “any other duties which the Company deems as required which the Contractor is capable of performing.” 7
[17] On 5 August 2015, Ms Block sent Mr Capper a separate “Service Level Agreement” for execution between Compass Global and Goddergib.
[18] The Service Level Agreement is very similar to the contract between Compass Global and Mr Capper dated 29 January 2015. Key differences include:
- Goddergib and Compass Global as the contracting parties;
- no references to any probation period;
- greater emphasis on the nature of the contract as one of ‘independent contractor’ rather than employee or agent (including express terms dealing with Goddergib’s responsibility to meet its own business related expenses, wages, superannuation and insurances, provide its own computer hardware and software, mobile phones and an obligation to provide valid tax invoices for services rendered); and
- a 12 week notice period for termination of the contract by Goddergib, and the ability to terminate the contract in the event of “non compliance with [Compass Global] policies and procedures”.
[19] There is no evidence as to when or if this contract was signed, and it is not clear what if any effect it had on the relationship between Compass Global and Mr Capper.
[20] As a practical matter, Mr Capper had significant autonomy over his working hours and what he did during those hours. From time to time he was required to attend staff meetings or training days, including a mandatory training day and end of year dinner for all staff in Sydney in December 2016. For the most part, however, he generally made himself available to Compass Global. He worked in its Melbourne offices from 9.00am to 5.00pm, Monday to Friday. He used its systems to perform his work.
[21] According to Mr Capper, it would have been difficult for him to provide his services without access to Compass Global offices. When the Melbourne office closed in July 2015 because of a “hacking incident”, Mr Capper relocated to work out of the Sydney office. He later returned to work in Melbourne and Compass Global took out a new office lease specifically to assist Mr Capper and one other individual provide their services.
[22] Over the course of 2016, it appears that the parties’ satisfaction with their arrangement began to deteriorate. Mr Capper attended the office less frequently (approximately 1-3 days per week). Compass Global sought a greater level of control. This culminated in the signing of an employment contract between Compass Global and Mr Capper on 30 January 2017. The contract changed how Mr Capper was remunerated. According to Mr Capper, “nothing changed with the actual work, the only thing that changed was the requirement to be in the office.”
[23] On the evidence before the Commission, I find that Compass Global had control over Mr Capper’s work in the sense that it controlled the premises and systems Mr Capper needed to provide his services. While in practice, it rarely sought to exercise control, on balance,I findthis factor resolves in favour of Mr Capper being an employee.
Work for others
[24] The right to exclusive services from a person can be characteristic of employment, while working for others or the entitlement to do so can indicate an independent contracting relationship. 8
[25] Both the contract between Compass Global and Mr Capper dated 29 January 2015 and the August 2015 Service Level Agreement including the following term:
“The Contractor must not be engaged, concerned or interest in any other business or render services to any person or entity directly or indirectly in competition with the Company or associated entities without the Company’s prior written consent.”
[26] MsBlock confirmed in her evidence that Mr Capper had no ability to provide services to any other business if doing so would be in competition with Compass Global.
[27] This factor weighs in favour of Mr Capper being an employee.
Whether the worker has a separate place of work and/or advertises his or her services to the world at large.
[28] Therewas no evidence before the Commission that Mr Capper had any separate place of work or that he advertised his services, or those of Goddergib, to the world at large. The evidence clearly points to the reliance of Mr Capper on Compass Global, its premises and systems, to perform his work. There was no evidence about whether Mr Capper performed any work, either on his own behalf or for Compass Global, when he was not physically present in the Compass Global office.
[29] According to Mr Capper, he introduced himself to clients and generally held himself out as a representative of Compass Global. His email signature block and business cards were branded Compass Global. This evidence was not contested.
[30] I find this factor resolves in favour of Mr Capper being an employee.
Tools or equipment
[31] The services provided by Mr Capper were foreign exchange services, which appear to have been provided without any significant capital investment on behalf of either Mr Capper or Goddergib. What Mr Capper brought to the relationship was his knowledge of the industry, gained from previous work in the industry. All tools and equipment he needed to provide the services were supplied by Compass Global, from computers, phones, desks and stationery to business software and systems. In evidence, Mr Capper said “anything I needed, I asked for.” Ms Block agreed that equipment was provided at Mr Capper’s request.
[32] Compass Global paid for flights and accommodation for Mr Capper when he was required to travel interstate for business events. Mr Capper used the CRM system provided by Compass Global to track clients and its trading system to track his sales and calculate commission. He was required to review this system and confirm the information in it so that an invoice could be generated, and he could be paid, on the 20th of each month. On occasion, Mr Capper says he was paid in advance. There was no corroborating or conflicting evidence on this point.
[33] The arrangement is similar to what one might expect to find in an employment relationship. I find that this factor resolves in favour of Mr Capper being an employee.
Delegation or subcontracting
[34] Thecontract between Compass Global and Mr Capper does not expressly permit his work to be delegated or subcontracted to others. It contains terms protecting the Confidential Information of Compass Global and terms limiting assignment, transfer or other dealings without prior written consent of Compass Global. These terms tend against the notion that Mr Capper was free to delegate or subcontract his obligations under contract to another party.
[35] At a hypothetical level, Ms Block expressed the view that Mr Capper could have employed another person to work for him under his contract with Compass Global, “maybe”. Mr Capper said he could not have brought someone in to work for Compass Global without first gaining the approval of the company due to regulatory obligations.
[36] I am satisfied that Mr Capper would have required the approval of Compass Global to delegate or subcontract his work for it to another party. Thisfactor resolves in favour of Mr Capper being an employee.
Rights to suspend or dismiss
[37] If Compass Global had the right to have a particular person do the work under its contract with Mr Capper, or the right to suspend or dismiss Mr Capper, this could suggest that the contract was one of service rather than a contract for services. 9 The analysis furthers a consideration of whether the person is working in the business of another, rather than in the business of their own.10
[38] The contract between Compass Global and Mr Capper was personal to Mr Capper, and gave Compass Global the right to terminate the contract in circumstances of an “Event of Default” or during a “Probation Period”. Once the Probation Period expired, the contract only provided for termination in the Event of Default.
[39] The Service Level Agreement between Compass Global and Goddergib did not require that the contracted services be provided by Mr Capper. Instead, it provided as follows:
“The Contractor shall provide RG146 compliant workers to the Company for the period of the term, who shall be appropriately experienced, educated and trained in the provision of foreign exchange products to retail customers in the Australian financial services market place.”
[40] The one worker provided by Goddergib to Compass Global was Mr Capper. The Service Level Agreementgave Compass Global only limited rights to terminate the contract in the “Event of Default”, or for non-compliance with its policies and procedures, or fraud.
[41] As Compass Global had limited rights to suspend or dismiss Mr Capper directly under the 2015 contract but no right to suspend or dismiss him directly under the Service Level Agreement, I find this to be a neutral consideration.
Whether the worker held out as an emanation of the business
[42] The evidence is that Mr Capper held himself out to the world at large as a representative of Compass Global. His business cards and email signature carried the Compass Global mark. He introduced himself to clients as an employee of Compass Global, and he secured clients for Compass Global, not for Goddergib.
[43] There was no requirement for Mr Capper to wear any uniform or other items carrying the Compass Global brand.
[44] I find that this factor resolves in favour of Mr Capper being an employee.
Income tax
[45] The evidence is that no income tax was deducted from remuneration paid to Mr Capper by Compass Global. Both the 2015 contract with Mr Capper and the Service Level Agreement state that the agreed payments are “inclusive of GST”. The one invoice provided to the Commission as evidence of arrangements between Goddergib and Compass Global makes no reference to GST. In his evidence, Mr Capper said he did his own taxes and arranged his own superannuation.
[46] This factor resolves in favour of Mr Capper being an independent contractor.
Remuneration
[47] It has been said that employees tend to be paid a periodic wage or salary, whereas independent contractors are often paid by reference to the completion of certain tasks, although, “in the modern economy this distinction has reduced relevance”. 11
[48] Mr Capper was engaged on a ‘commission’ basis. The 2015 contract between Mr Capper and Compass Global provided as follows:
“All payments are commissions based. All payments are made monthly on the 20th day of the following month in which the commissions are generated.”
[49] The Service Level Agreement of August 2015 contained a similar term, as follows:
“All payments are made monthly on the 20th day of the following month in which the commissions are generated.”
[50] The morerevenuehe billed for Compass Global, the more Mr Capper earned.He was generally paid on the 20th of each month. His payslip identifies a payment term of “20th Monthly”.
[51] In thiscase, the distinction between periodic payment and payment by reference to the completion of tasks has reduced relevance. Mr Capper was paid both periodically, and by reference to the completion of tasks.
[52] I find this criterion to be a neutral consideration.
Holidays or sick leave
[53] There was no provision for any form of paid leave in either the 2015 contract between Mr Capper and Compass Global or the Service Level Agreement.
[54] Mr Capper gave evidence that he never took any time off while working for Compass Global. The evidence for Compass Global was that it was not aware if Mr Capper took any time off while working for the business.
[55] On the limited evidence available, I find this factor resolves in favour of Mr Capper being an independent contractor.
Distinct profession, trade or calling
[56] As the Full Bench noted inFrench Accent, persons engaged in a distinct profession, trade or calling may tend to be independent contractors rather than employees. 12
[57] There was limited evidence about the nature of the foreign exchange industry and/or Mr Capper’s particular skills or qualifications. The Service Level Agreement defines the “Services” by reference to a particular type of worker, including that they be “RG146 compliant” and “appropriately experienced, educated and trained in the provision of foreign exchange products to retail customers in the Australian financial services market place.”
[58] On the available evidence, I am unable to determine if Mr Capper was engaged in a distinct profession, trade or calling such that he would tend to be a contractor rather than employee. Accordingly this is a neutral factor in my consideration.
Goodwill
[59] Generally speaking, a contractor will have an interest in establishing value in their business, while an employee will contribute to the goodwill of another’s business.
[60] In this case, no goodwill was developed by Mr Capper or Goddergib while providing services to Compass Global. Relationships developed by Mr Capper while working for Compass Global were ultimately relationships between Compass Global and its clients. As for Goddergib, it appears to have had no market presence at all. Mr Capper gave evidence that all of the risk arising from his dealings with clients of Compass Global was borne by Compass Global. Compass Global owned the debt of clients who did not make good on their commitments.
[61] I find that the absence of any goodwill or saleable asset is a factor that weighs in favour of Mr Capper being an employee.
Business expenses
[62] This consideration relates to whether Mr Capper spent a significant portion of his remuneration on business expenses.
[63] There is no evidence that Mr Capper brought any equipment or tools, or any capital investment, to the relationship with Compass Global. Both Mr Capper and Ms Block agreed that anything Mr Capper needed to perform his work was provided and paid for by Compass Global.
[64] This factor resolves in favour of Mr Capper being an employee.
Was Mr Capper a servant of Compass Global, or was he carrying on a business on his own behalf?
[65] As French Accent made clear, parties to a contract cannot alter the true nature of their relationship by simply putting a different label on it. The ultimate question is whether Mr Capper was the servant of Compass Global in its business, or whether Mr Capper carried on a business on his own behalf: that is, whether, viewed as a practical matter, Mr Capper was conducting a business of his own, of which his work for Compass Global formed part.
[66] Despite what the parties may have agreed and understood to be the case, when considered as a whole,the relevant contract terms and each of the factors set out above tend in favour of a conclusion that Mr Capper was not carrying on a business on his own behalf in the period prior to 1 February 2017. He was a servant of Compass Global in its business. I find that the relationship between the parties was one of employment.
The deed of release
[67] A Deed of Release dated 14 February 2017 between Compass Global (referred to in the Deed as “the Company”) and Goddergib (referred to in the Deed as “the Contractor”) was filed in the proceeding as an attachment to the witness statement of Ms Block. The context of the Deed of Release is set out in Recital B to the Deed:
“B. The parties have agreed that the Contractor will cease to perform services for the Company in the capacity of Independent Contractor (the Cessation) and that, on and from 1 February, 2017, he will transition to the role of permanent employee of the Company in the position of Senior Business Manager under a contract of employment in relation to his future engagement as employee of the Company and on the terms and conditions set out in this deed.”
[68] The parties to the Deed of Release are Compass Global and Goddergib. Mr Capper is not a party in his own right. He signed the Deed in his capacity as Director of Goddergib.
[69] On itsterms, there is no limitation in the Deed of Release on the ability of Mr Capper to bring an application against Compass Global under section 394 of the Act and I so find.
Conclusion
[70] Mr Capper was an employee of Compass Global in the 6 month period immediately before 4 April 2017. He has completed the minimum employment period as an employee of Compass Global for the purposes of sections 382-3 of the Act.
[71] I find thatMr Capper is a person protected from unfair dismissal. The matter will now be referred for consideration on the merits.
COMMISSIONER
Appearances:
L Capper for the Applicant
S Block for the Respondent
Hearing details:
2017
Melbourne
June 2
1 Fair Work Act 2009, s.382(a); s.383(a).
2 [2015] FWCFB 3704
3 [2011] FWAFB 8307
4 (2003) 122 IR 215
5 (1986) 160 CLR 16 at p. 37.3 per Wilson and Dawson JJ
6 Hollis v Vabu (2001) 207 CLR 21 at [47] and [58]
7 Exhibit R3, Contract between Mr Capper and Compass Global, 29 January 2015
8 French Accent, [2011] FWAFB 8307, (2011) 215 IR 235, at [30]
9 Stevens v Brodribb Sawmilling, (1986) 160 CLR 16, p.36, per Wilson, Dawson JJ
10 Ace Insurance v Trifunovski (2013) 235 IR 115, at [93]
11 [2011] FWAFB 8307 at [30].
12 [2011] FWAFB 8307 at [30].
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