Mallesh Laxman v Global Wear Solutions Engineering Australia Pty Ltd
[2018] FWC 5700
•5 OCTOBER 2018
| [2018] FWC 5700 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Mallesh Laxman
v
Global Wear Solutions Engineering Australia Pty Ltd
(U2018/2883)
| Deputy President Beaumont | PERTH, 5 OCTOBER 2018 |
Unfair dismissal - jurisdictional objection - whether worker was an independent contractor or an employee - jurisdictional objection upheld - application dismissed.
On 20 March 2018, Mr Mallesh Laxman (Mr Laxman) made an application to the Fair Work Commission (the Commission) for a remedy in respect of his dismissal from Global Wear Solutions Engineering Australia Pty Ltd (Global Wear) (the Application).
A central issue in this matter was whether Mr Laxman was an employee of Global Wear. If he was then the Commission could proceed to determine his Application, if he was not, it would follow that the Application was beyond the jurisdiction of the Commission and would have to be dismissed.
The matter was somewhat complicated by Global Wear’s non-attendance at Hearing. The Commission had communicated to Global Wear all relevant information via telephone, email and express post, but Global Wear did not make an appearance. This in turn meant there was an absence of a contradictor. I have duly considered such absence when arriving at my findings.
Although there was no contradictor and the evidence of Global Wear was unsworn, it remains that I am satisfied the evidence overall supports a conclusion that the arrangement between Mr Laxman’s business Total Global Solutions (Total Global) and it follows Mr Laxman, and Global Wear was one of an independent contracting arrangement. On balance the totality of the evidence concerning the various indicia points to Mr Laxman conducting a business of his own and not being a servant of Global Wear. Therefore the Application is dismissed and my reasons for this decision follow.
Background to the proceedings
On 3 September 2018, the Commission as presently constituted, Mr Laxman and his representative, Mr Patrick Mullally (Mr Mullally), presented for Hearing. Global Wear did not.
There had been a series of events leading up to the Hearing. It is a fair observation to remark that contacting Global Wear with a view to eliciting their response or attendance proved challenging.
Initially, the named respondent in the proceedings was Supply Enterprises Pty Ltd a company that was represented by Mr Maurice Oteri (Mr Oteri) from My Law Firm Pty Ltd. The Form F3 stated ‘[T]he applicant has never worked in any capacity for the Respondent’. It then set out that Mr Laxman had, however, acted as an Independent Sales Consultant within his own business Total Global in an Agency Agreement with a separate entity of the Respondent, namely Global Wear.[1]
The Form F3 continued that Mr Laxman was not dismissed but the Agency Agreement had been terminated on 9 March 2018 due to it having been breached. It was further said that Mr Laxman was not paid a wage or salary, but Global Wear paid a commission to Total Global who engaged Mr Laxman.
Consequently, the respondent, who was later named as Global Wear after an amendment to its name was made,[2] objected to the Application on the grounds that Mr Laxman was not an employee. It was reported that Total Global engaged Mr Laxman, and it was Total Global that had an Agency Agreement with Global Wear. It followed that Mr Laxman was ineligible to bring the Application. It was said that the Agency Agreement was governed by the laws of the United Arab Emirates.
Global Wear was directed to file an outline of submissions, statements and document list. Submissions and some documents were received on 7 May 2018 from Mr Oteri, which included a bare response and a letter from Mr Oteri of 24 April 2018 to Mr Mullally, ( Oteri Letter). Attached to the Oteri Letter were many emails from the email address ‘[email protected]’ (Laxman emails). One Laxman email dated 15 February 2018 to an email address ‘[email protected]’ stated:
…BTW, as you can see my job title is Sales Director for GWS Australia & Africa. I do wear another hat which is Business Consultant for Bosworth…
A further Laxman email dated 23 February 2018 to ‘[email protected]’ stated (similar content of which was set out in further Laxman emails):
I am currently working for GWS…
Most of our products are manufactured in India, Malaysia, China, Germany and Australia.
I also wear another hat which is Business Consultant for Bosworth Pulleys South Africa….
I believe as a group we can save a significant cost on your project if the right opportunity is present…
On 28 May 2018, Mr Laxman filed submissions in response to Global Wear’s objection to the Application on the basis it was not a national system employer.
On 29 May 2018, Mr Oteri wrote to the Commission acknowledging that Mr Laxman was no longer pursuing his claim against Supply Enterprises Pty Ltd but was instead redirecting his Application against Global Wear, who Mr Oteri said he did not act for. However, for the convenience of the parties Mr Oteri attached the ASIC extracts for Global Wear and the business name noting that the date of business registration was 12 February 2018. On this point Mr Oteri remarked in his email of 29 May 2018 that the amended witness statement of Mr Laxman referred to having been employed in the business of Global Wear from 1 July 2017 some seven months prior to the existence as Global Wear being a legal entity.
Noting that Mr Oteri was not representing the Global Wear albeit he had filed documents on behalf of Global Wear previously, on 17 August 2018 my Chambers issued directions for Global Wear to file any further material it wished to rely upon. No material was received.
A Mention was listed for 24 August 2018, and Global Wear did not attend. Its office was contacted after the Mention, having located a telephone number for the business on the internet.
Global Wear, through a person who referred to themselves as ‘Akash’ and identified themselves as a receptionist, informed Chambers that the email attaching the Notice of Listing had not been received notwithstanding the email address being confirmed.
‘Akash’ communicated that the Human Resources Department of Global Wear was reluctant to attend the Mention as they had never heard of Mr Laxman. ‘Akash’ committed to passing on the message to Human Resources (he would not put Chambers through to Human Resources) regarding the directions and the Mention.
An Order was issued on 24 August 2018 requiring the attendance of a Senior HR Representative, Managing Director, General Manager or Manager to attend a Mention on 30 August 2018. There was no attendance. The letter had been delivered by express post to 17 Cutting Way, Yangebup, WA 6164, given that Global Wear, through ‘Akash’ had informed this Commission that emails were not being received. Confirmation of delivery of the express post mail was received from the postal company.
A letter was sent accompanying the Order which set out the Hearing was set down for 10:00am on 3 September 2018. This was in bold. However, it was noted that the Order for a Person to Attend attached to that letter included a typographical concerning the date. It was later amended and Global Wear was notified on the morning of the Hearing on 3 September 2018 that the Order cited an incorrect date.
On 3 September 2018, Global Wear through its worker who now identified as Mr Akash Mair, and had a title now other than that of Receptionist, acknowledged receipt of the Order and stated the following:
…I am not able to attend this meeting due to the short notice.
I have not received any emails or letters from you apart from the emails received today.
I do not know what this hearing is in regards to and I have passed this onto senior management. However, I am not sure when they will be replying as they are all on vacation.
So I humbly request that you allow me more time to gather all this information you have sent and pass it onto management to deal with.
The matter was stood over with consent of Mr Laxman and relisted for 11 September 2018. There was no material filed by the Global Wear in this timeframe and a request for an adjournment was not made.
The object of Part 3-2 of the Fair Work Act 2009 (Cth) (the Act) is to establish a framework for dealing with unfair dismissal, that balances the needs of business (including small business) and the needs of employees. Further, the procedures set down are to be quick, flexible and informal, thus addressing the needs of both employers and employees. A fair go all around is to be accorded to both the employer and employee concerned.[3]
Global Wear did not present for Hearing. Although the Commission is not responsible for ensuring the attendance of parties, nevertheless several attempts were made by Chambers to do just that. For Mr Laxman, the Application concerning the loss of his work is a pressing matter which understandably is a priority.
What was requested from Global Wear was reasonable and not onerous. It is not sufficient for a respondent to simply not respond to any correspondence of this Commission including that which is sent by express post, email, and communicated by phone. It followed that I determined the Hearing would proceed in the absence of the Global Wear.
Background
Mr Laxman’s evidence was that he was employed by Global Wear between 1 July 2017 and 8 March 2018, in the position of Sales Director – Strategic Business.[4] He covered the territories of Australia and Africa.[5] He had known the Chief Executive Officer of Global Wear, a Mr Rahul Thottiyil (Mr Thottiyil), from around 2006 having previously worked with him at another company in sales.[6]
Mr Laxman stated that Mr Thottiyil approached him in March 2017 with regard to a new business that he was setting up (Global Wear) and repeatedly asked that he join him in the new venture.[7] Mr Laxman stated that Mr Thottiyil made promises of being able to earn big money as a Sales Director for him, and asked Mr Laxman to move to Dubai.[8] Mr Laxman declined to move and remained in Western Australia.
According to Mr Laxman, at the time Mr Thottiyil offered him the opportunity to join a new business venture, Mr Thottiyil was the General Manager of Wenco Mining, Western Australia (Wenco).
Mr Laxman stated that when Mr Thottiyil approached him regarding the new business venture, Mr Thottiyil ‘put in train the paperwork for a company for me which became Everon Traders FZE’.[9] Later in his witness statement at Exhibit A3 [35], Mr Laxman denies that Everon Traders was used by him for tax evasion purposes as alleged by Global Wear. Mr Laxman’s denial appears to have been in response to the Submissions of Global Wear filed on 7 May 2018, which attached the Oteri Letter that stated:
Our Client states that Everon Traders FZE is a company set up in Dubai by Mr Mallesh Laxman to receive payments of commissions earnt from the GWS Agency Agreement…
Two proforma invoices were attached to the Oteri Letter. The invoices were titled ‘Everon Traders FZE … Proforma Invoice’ and the client details were stated as ‘Global wear Solutions Equipment Spare Parts Trading LLC’. One invoice (PI-003) was dated 21 December 2017 and the other was 9 January 2018.
On 1 July 2017, Mr Laxman reports that he was appointed as the Sales Director Strategic Business, and commission was agreed at 7-10%. Mr Laxman states that he was working exclusively for Mr Thottiyil’s company.[10] But, Mr Thottiyil’s Dubai business acted as an agent for Global Wear in appointing him to Global Wear’s staff.[11] Mr Laxman said that the sole shareholder and director of Global Wear was one Ms Nithya Ashokan, wife of Mr Thottiyil.
Initially, Mr Laxman went on an assignment to Africa to commence sales and after six weeks Mr Laxman returned to office facilities that Mr Thottiyil had arranged at Wenco’s premises.[12] Mr Laxman said that he would attend the office when in Australia every week to carry out his work and in February 2018 was given a dedicated office in the Wenco premises.
Mr Laxman said that the arrangements for his employment were set out in a one-page document dated 1 July 2017, which was, according to Mr Laxman, produced by Global Wear on 21 September 2017.[13] The document set out on Global Wear letterhead stated:
Subject: Employment as Global Sale Consultant of Mallesh Lazman from 01-July-2017.
We would like to acknowledge that Mallesh Laxman (PP No.: N6155372) currently works as an independent Sales Consultant for Global Wear Solutions Equipment Spare Parts Trading LLC (License No. 778621), address registered as Al Zarouni Business Centre, Office No. 201, Dubai, United Arab Emirates, under the business name Total Global Solutions, address registered as 73 MURRUMBIDGEE DR, Hammond Park WA 6164, Australia, from 01-July 2017.
The mode of payment/remuneration to Mallesh Laman [sic] would be between 07%-10% of the turnover invoicing brought in by direct sales on the efforts taken by Mallesh globally. The payment of 07%-10% will be disbursement to the above business bank account upon payment from the Client into Global Wear Solutions account within 02-03 working business days.
Total Global, as referred to in the aforementioned document was a business name that Mr Laxman registered in September 2017.
Mr Laxman gave evidence that he signed a second document referred to as an Agency Agreement[14] and while it was dated 1 July 2017 he confirmed in his evidence that he signed it on 24 February 2018 with Mr Thottiyil. The Agency Agreement was between Global Wear and Total Global (the ‘Agent’) and set out:
WHEREAS:
1) GWS conducts business in Wear Protection, Corrosion Protection and Conveyor related products to manufacture, distribution and sale of the products. GWS conduct business throughout the world.
2) The Agent has wide experience in marketing similar products which GWS provides.
3) GWS is interested in appointing an agent for selling our Conveyor Solutions & Wear solutions products in the market and the Agent has agreed to act accordingly.
…
1.Agency
GWS hereby constitutes and appoints the Agent as its Sales Consultant for the duration of this Agreement to solicit and execute orders for its Conveyor & Wear products in South Africa & EPCM / OEM’s [sic] in Australia…. Global Wear Solutions agrees that Total Global Solutions has the right to act as the exclusive agent for Conveyor & Wear Solutions product direct into mining application….
Alternatively, despite the agent having territorial rights granted there may be companies or products which GWS will interact directly with and therefore the Agent is excluded from interacting with those companies.
2.Orders
All orders solicited by the Agent shall be for sales to be made to third parties in the name of and the account of the GWS with invoicing to be handled by the GWS and collection to be handled by the Agent..
The Agent is not authorized to conclude contracts or to create any obligation on behalf of GWS except when specifically authorized by GWS to do so…
6. Reports
The Agent shall furnish to GWS monthly/quarterly reports to keep GWS informed of the market and competitive conditions and the position and progress of the Agent with the trade in the Territory…
8. Costs
The Agent shall pay all costs and expenses incurred by him including all rentals, salaries, travelling and conveyance, taxes, licenses, permits, telephone and telegraph expenses and the Agent shall not be entitled to reimbursement therefor from GWS, unless GWS has requested services outside his normal territory.
The Agent shall have the right to employ and discharge such persons as in his judgment may be necessary. Such persons shall be employees of the Agent alone and the Agent shall be liable for the payment of their compensation and any expenses to his or their operations. The Agent shall possess or obtain at his own expense all necessary licenses and permits and shall comply with all laws, ordinances, rules or regulations affecting the sale hereunder of the products in the Territory, and be responsible for any infraction or violation thereof and expenses or damages resulting from any such infraction or violation.
10. Independent Contractor
It is understood and agreed between GWS and the Agent that nothing herein contained shall create a relationship of employer and employee or principal and agent between the parties hereto by the Agent is, and under the terms of the this Agreement, continues t be an independent contractor for himself, acting as a Sales Agent for GWS.
12. Indemnification
The Agent hereby agrees to indemnify and hold harmless the Company at the Company’s request to defend the Company from all claims or demands…
14. Obligations of the Agent
A)The Agent will promote sales and secure orders for the sale of products directly in the name of GWS in the Territory, based on the guidelines supplied by GWS from time to time….
B)The Agent will travel within the Territory to follow up and develop GWS business…
C)…The Agent hereby agrees that during the duration of this Agreement, he shall not promote, whether directly or indirectly, any products, which, in the opinion of GWS, are same or similar to that of its product or adversely affect its interests. The Agent also agrees to furnish information in connection with his agency with any other parties.
At page 8 of the Agency Agreement was an execution clause which Mr Laxman had signed accepting the terms of the Agency Agreement.
During the course of the Hearing Mr Laxman was questioned about how the Agency Agreement came into being:
PN134
You entered into an agency agreement. I think that's in your documents that you have handed to the Commission today and tendered into evidence. Can you step me through how this agency agreement came into being?‑‑‑Okay, Deputy President, that agency agreement, to start with, that agency agreement was signed on 24 February 2018, and I have evidence of signing that and requesting Rahul to write an agency agreement a few days before 24 February.
PN135
The reason behind that agency agreement is two things, one is, first of all, Rahul, during my travel into Africa for Rahul, I met with a company called Bosworth and then I set up an agreement between Bosworth and Global Wear Solutions and Bosworth were selling conveyor pulleys, which is associated to a few - it's not (indistinct) which is part of a conveyor manufacturing company, so Rahul wanted me to sell Bosworth products as his own products, where I refused and I said, "This will become a liability issue if something fails", so I told Rahul with this direction, I said, "I'm going to sell just that one product", which is a complementary product of what we already did, as a Bosworth product, but Rahul, initially he said, "Yes" and then he refused.
PN136
And also other situation is Global Wear Solutions and Total Global Solutions name was very, very similar, so my tax accountant, he asked me, because there was a bit of a confusion in the ATO, Australian Tax Office, so my accountant wanted me to get this clarified and then he basically asked me, "What are you guys doing, because GWS, Bosworth, TGS, it all looks like one big company?" and I was telling him, "No, it's not." It's all submitted in my outline agreement. So, basically, I just wrote an agreement, asked Rahul to write an agreement to differentiate who we are, you know, we're not belonging to the same group.
PN137
I don't know whether it makes sense to you, but, yes, I just wanted to show the ATO that this is three different organisations, it's not part of one company, because ATO are looking at us as one company and we are trying to evade tax or something, so I just made them clear we are three different entities, you know, basically.[15]
…
PN143
Okay?‑‑‑But that was driven by Rahul because he doesn't want to pay wages, he wants to pay commissions into my company account so I can claim on taxes for all my travel expense.
Mr Laxman said that during the course of working for Mr Thottiyil he was under the direct control and direction of Mr Thottiyil.[16] Directions were, according to Mr Laxman, provided by email and telephone. By way of example, Mr Laxman provided an email that he had received from Mr Thottiyil dated 26 November 2017.[17] It stated ‘Mallesh you need to take over this client please’.[18] Mr Laxman said that he was provided with a business card which described him as ‘Sales Director – Strategic Business’ and that Mr Thottiyil referred to him as the Sales Director for Global Wear in front of clients.[19] During the period in which he worked for Global Wear, Mr Laxman said that he worked exclusively for Global Wear.[20]
On or around 31 January 2018, Mr Thottiyil is said to have appointed Mr Laxman as the General Manager of Global Wear for Australia and Africa, and offered Mr Laxman 20% share of the profits of Global Wear as remuneration for this additional work.[21] Mr Laxman stated that Mr Thottiyil provide specific instructions about the reporting formalities of Global Wear and required a weekly report to be generated and sent to him.[22] Mr Thottiyil apparently instructed Mr Laxman to look for commercial properties and to meet with the Wenco Mining staff to motivate them into an enthusiastic team to work for Global Wear in the coming weeks.[23] According to Mr Laxman he understood from what Mr Thottiyil had said to him that Mr Thottiyil intended to take staff away from Wenco Mining.[24]
During the period in which Mr Laxman worked for Global Wear (July to December 2017), he established a relationship with a company called Bosworth based in Africa.[25] Through his work with them, Mr Laxman said that he brought in revenue of USD $4 million a year.[26] The work was done with Mr Thottiyil’s consent and Mr Laxman said that his business card stated that Global Wear was a distributor for Bosworth.[27]
According to Mr Laxman, Bosworth specialised in manufacturing pulleys whereas Global Wear specialised in sourcing rubber wear products. Mr Laxman said that in January 2018 he was approached by Bosworth to take on promotion of their conveyor pulleys in Australia and discussed the proposition with Mr Thottiyil.[28] Mr Thottiyil wanted to rebrand the Bosworth product as Global Wear but Mr Laxman disagreed with this course due to issues regarding liability.[29]
Mr Laxman then proceeded to take direct work from Bosworth through his business Total Global.[30] Mr Laxman said that he denied that there was a conflict of interest in doing this as Bosworth had a different product from his ‘employer’, Global Wear.[31] Attached to the Oteri Letter was an email from ‘Mallesh Laxman [email protected]’ to ‘Gary Howell [email protected]’ dated 28 February 2018 that set out:
Please find attached my business registration details for drafting the contract as discussed.
Please make sure you mention my Australian Business Number ABN on the contract.
If you need any further information please do not hesitate to ask.
While giving his evidence, Mr Laxman made the following comments about the relationship between Bosworth, Total Global and Global Wear:
PN138
THE DEPUTY PRESIDENT: Okay. You said that you had travelled to Africa and you noted that there was a company called Bosworth. Was it the case that Bosworth were seeking products from TGS or GWS?‑‑‑Yes, they were, yes, I set up an exclusive distribution ship for some rubber products, which is part of GWS products, into Bosworth.
PN139
Then part of that was that they wanted conveyor pulleys. Were they part of the rubber products or was this the separate agreement that you did to do a one off?‑‑‑Just one off, it's a separate agreement.
PN140
Who was that agreement with?‑‑‑With Bosworth. That agreement was signed on 1 March 2017.
PN141
That was between Bosworth and who?‑‑‑Between Total Global Solutions.
PN142
Total Global Solutions - you're quite correct, it can be quite confusing with the names - so Total Global Solutions, that's the company you set up?‑‑‑Yes, I did, Deputy President.[32]
It was Mr Laxman’s evidence that right throughout the period of employment he had always held out as part of the Global Wear’s business and that he worked exclusively for Global Wear.[33]
Mr Laxman states that Mr Thottiyil dismissed him because of his relationship with Bosworth. Mr Laxman states that he received a letter of 9 March 2018 that informed him he was dismissed.[34] As such, Mr Laxman states that there was no opportunity to respond to the allegations of misconduct.[35]
Agreed matters
It was not contested that the dismissal was by way of genuine redundancy[36]. Further, I am satisfied on the evidence that the Application was made within the required period as prescribed in s 394(2) and that Mr Laxman’s income was less than the high income threshold.[37]
Matters in dispute
In short, Mr Laxman advanced the argument that he was a ‘national system employee’ as that term is understood in ss 12, and 13 of the Act, and his dismissal was unfair.
Concerning the unfairness of the dismissal, Mr Laxman submitted that Global Wear had not submitted a Form F3 detailing why it had dismissed him and there were no particulars for the basis of the dismissal. Mr Mullally, advanced that the requirements in s 387(b) were breached, in addition to those in s 387(c) and s 387(e), and there was no meeting in which a discussion about the dismissal took place.[38] I note at this point, because it appears timely, that the matters referred to in s 387 are not requirements that are capable of being breached. They are considerations that this Commission is obliged to take into account when determining if a dismissal was harsh, unjust or unreasonable.
As a consequence of Global Wear’s absence at the Hearing, the materials filed on behalf of Global Wear are untested and unsworn. It is therefore the case that the weight to be attributed to untested and unsworn assertions over sworn evidence is less. A representative for Global Wear was unavailable for cross-examination and such absence in turn meant there was the absence of a contradictor at hearing. I have duly considered these matters when arriving at my findings.
Legal principles
Both the initial respondent in these proceedings and Global Wear asserted that Mr Laxman was not its employee. The basis for the jurisdictional objection arises from s 382. Relevantly that section provides:
382 When a person is protected from unfair dismissal
A person is protected from unfair dismissal at a time if, at that time:
(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period;…
To determine whether Mr Laxman was an employee or an independent contractor the Commission applies well established common law principles.[39] However there is an appreciable difficulty in attempting to categorise a relationship as one of employee or independent contractor. This difficulty was acknowledged by the Full Bench when it stated the following in the decision of Jiang Shen Cai T/A French Accent v Michael Anthony Do Rozario[40] (Jiang Shen Cai):
…The nature of the established general law approach to distinguishing between employees and independent contractors may be seen as contributing to the problem precisely because the nature of the general law test is such that it does not admit a clear answer in every case. Once one adopts the position, as the general law has done, that the distinction is rooted in the objective character of the work relationship two things follow. First, the infinite variety of human affairs means that work relationships present as a spectrum, some of which are clearly relationships of employment and others of which are clearly relationships of independent contract but some of which are less clear cut. Secondly, that character of a work relationship is what it is and cannot be changed simply because the parties agree to label it differently (unless, of course, the relationship is sufficiently ambiguous that a clear determination is not possible, the situation addressed by the Massey proposition). That is a matter clearly recognised by the courts and tribunals.
In Kimber v Western Auger Drilling Pty Ltd[41] (Kimber), the Full Bench addressed the factors to consider in assessing whether an applicant was an employee or an independent contractor during the relevant period. [42] It endorsed the general approach to distinguishing employees and independent contractors provided in Jiang Shen Cai,[43] which 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.
The ultimate question to be answered then 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’.[44] To summarise, the determination of the ultimate question will inevitably require a ‘consideration of the nature of the work performed, the terms of the contract, and the so-called indicia must always be directed to the ultimate question’.[45]
Consideration
The material filed by both parties clearly placed the Commission on notice that there was a question of whether Mr Laxman was an employee of Global Wear or an independent contractor.
Global Wear did not attend the Hearing to pursue its jurisdictional objection, but the question remained whether Mr Laxman was the servant of another. As has been acknowledged by the Full Bench of this Commission,[46] a jurisdictional fact is a condition precedent to the exercise of jurisdiction or criterion the satisfaction of which enlivens a statutory power or discretion.[47] Unless the condition is fulfilled or the criterion is satisfied, a decision purportedly made in the exercise of the jurisdiction, the power or the discretion conferred by the statute will have been made without authority.[48] The existence of a jurisdictional fact is to be objectively determined.[49]
Mr Mullally advanced that Mr Laxman was under the direct control of Mr Thottiyil as shown though Mr Thottiyil’s direction of what Mr Laxman would be paid by way of commission, where Mr Laxman would work, and how he would carry out his duties.
With the exception of the Agency Agreement, some emails from Mr Thottiyil directing Mr Laxman to take on a client and a chart setting out Mr Laxman’s responsibilities as ‘complete national Australia/PNG, Develop Business, Managing sales people/admin staff, Managing day to day operations’, and instructions on reporting formalities, there is limited evidence before me to evaluate the control exerted in the relationship.
It appears that there was no set working hours and there appeared to be some flexibility regarding the location of work. When in Australia, Mr Thottiyil had arranged for Mr Laxman to have use of office facilities in Wenco’s premises. Mr Laxman would attend the office when in Australia every week at least to carry out his work.[50] The location of where Mr Laxman undertook work was otherwise unclear, particularly if overseas. Further, it was not entirely evident how Mr Thottiyil otherwise exerted control over the way that Mr Laxman performed his work.
With regards to control exerted, perhaps more telling was Mr Laxman’s evidence that he was presented as the face of the Global Wear business in Australia and Africa. He was referred to as Sales Director – Strategic Business for Global West on both his business card and email,[51] notwithstanding that the Agency Agreement appointed Total Global as its Sales Consultant or exclusive Agent for conveyor and wear solutions in mining applications. Presenting Mr Laxman as an emanation of the business is a factor indicative of a contract of service. However, while it was said that Mr Laxman had authority to sign legally binding documents on behalf of Global Wear, the Agency Agreement stipulated that the Agent was not authorized to conclude contracts or to create any obligation on behalf of Global Wear except when specifically authorized by Global Wear to do so. While Mr Laxman gave evidence that he researched and looked for 10 properties for Global Wear to establish an Australian presence it would not appear that he signed a lease for any property on behalf of Global Wear.[52]
The Agency Agreement itself expressly set out that Mr Laxman was an independent contractor (cl 10 of the Agency Agreement) and it was apparent under the contractual arrangement that Mr Laxman could work for others although subject to the limitation set out at cl 1, which excluded Mr Laxman from interacting with companies that directly interacted with Global Wear.
It was submitted on behalf of Mr Laxman that the practical effect of ‘this employment relationship’ was that Mr Laxman worked full time plus outside hours for Global Wear and it followed there was no entitlement to work for others. Further, it was said that Mr Laxman had no business of his own and did not advertise his skills as a Sales Director to the world at all. Mr Mullally submitted that an argument that Mr Laxman had his own business was illusory.
Mr Laxman’s evidence was that right throughout the period of employment he had always held out as part of the Global Wear’s business and that he worked exclusively for Global Wear.[53] Yet, we know this to be incorrect from the evidence of Mr Laxman himself.
At the relevant time Mr Laxman had registered his own business. It was registered as Total Global Solutions on or around 20 September 2017. In Exhibit A1 Attachment H, a letter terminating the Agency Agreement, reference was made to the termination of the contract with Total Global Solutions (ABN 29970300144).
Mr Mullally directed this Commission’s attention to the decision in ACE Insurances Ltd v Trifunovski[54] (ACE Insurances) to demonstrate that the existence of an ABN had been held not to advance a matter very far. In ACE Insurance it was said that it was
..hardly surprising in that circumstance that income tax was not deducted from their commissions or that they each obtained an ABN. Beyond throwing light on the parties’ understanding, however, I do not think this advances matters very far.[55]
On appeal, the Full Court did disturb that finding but observed:
The importance of the subsequent analysis by the trial judge was, however, that it showed that the agents had no business of their own; they were working only in the business of Combined.[56]
It was Mr Laxman’s own evidence that he was dismissed on 9 March 2018, and yet prior to this date he admits he had formed a commercial relationship with Bosworth through his own business Total Global.[57] The situation is one that is not analogous to ACE Insurance.
To recall, Total Global was the business that Mr Laxman had registered although it was advanced that he had ‘no businesses’. It is manifestly wrong for Mr Laxman to assert that he worked exclusively for Global Wear and that he did not have a business of his own at the relevant time.[58]
Understandably, the weight to be afforded to the Oteri Letter and its attachments must be considered in light of it not being tendered into evidence. However, Mr Laxman concedes that his business, Total Global, had gone, or was about to go, into business with Bosworth, and the attachment to the Oteri Letter simply confirms instructions provided for the purpose of drafting the contract between Total Global and Bosworth.
Mr Laxman’s evidence was:
…so Rahul wanted me to sell Bosworth products as his own products, where I refused and I said, "This will become a liability issue if something fails", so I told Rahul with this direction, I said, "I'm going to sell just that one product", which is a complementary product of what we already did, as a Bosworth product, but Rahul, initially he said, "Yes" and then he refused.[59]
When Mr Laxman referred to ‘I’m’ going to sell just that one product’, it can be taken that he was referring to Total Global:
PN139
Then part of that was that they wanted conveyor pulleys. Were they part of the rubber products or was this the separate agreement that you did to do a one off?‑‑‑Just one off, it's a separate agreement.
PN140
Who was that agreement with?‑‑‑With Bosworth. That agreement was signed on 1 March 2017.
PN141
That was between Bosworth and who?‑‑‑Between Total Global Solutions.
PN142
Total Global Solutions - you're quite correct, it can be quite confusing with the names - so Total Global Solutions, that's the company you set up?‑‑‑Yes, I did, Deputy President.[60]
Mr Laxman continued that Mr Thottiyil set up the business, Everon, for Mr Laxman and that invoices were not generated by him but were rather recipient generated invoices.[61] It is nevertheless the case that amounts of money were directed to Everon by Global Wear and Mr Laxman’s name was at the bottom of those invoices.
With regard to capital investment, it was the case that Mr Laxman provided his own computer and mobile phone. When reviewing the Form F2 filed by Mr Laxman, it would appear that he had spent monies on travelling and the promotion of Global Wear as he sought compensation for this by way of remedy. In the absence of specific tools and substantial capital investment it might be said that there are indications that Mr Laxman was not independent contractor given the lack of capital investment on his behalf. However, I am not persuaded in the circumstances before me that the limited capital investment indicates that the relationship was one of employer and employee. There was no evidence to show that the marketing and sale of the products required specific tools, or substantial investment in capital by either Total Global or Mr Laxman and I find this factor to be neutral.
The skill set of Mr Laxman was however specialised. It is difficult to conceive how a Director or a business or business operator marketing and selling specific products in the mining industry would be unskilled. The marketing and selling of products was occurring across two territories, and such product was technical in nature and readily characterised as being engineering components such as pulleys, conveyors and rubber. Therefore, it is unsurprising that Mr Laxman held a Bachelor of Engineering and a Master of Business Administration. It was submitted that Mr Laxman was selected by Global Wear for his experience and technical knowledge in sales and therefore the work could not be delegated nor could he employ anyone to work for him. However, the Agency Agreement clearly provided to the contrary:
The Agent shall have the right to employ and discharge such persons as in his judgment may be necessary. Such persons shall be employees of the Agent alone and the Agent shall be liable for the payment of their compensation and any expenses to his or their operations. The Agent shall possess or obtain at his own expense all necessary licenses and permits and shall comply with all laws, ordinances, rules or regulations affecting the sale hereunder of the products in the Territory, and be responsible for any infraction or violation thereof and expenses or damages resulting from any such infraction or violation.
Mr Laxman played a significant part in initiating the preparation, and it would seem the preparation of the Agency Agreement. Under its terms Total Global was engaged as the exclusive agent for conveyor and wear solutions in mining applications. There was no evidence before me to suggest that Total Global could not employ persons necessary to fulfil the services it provided as an exclusive agent. I do not consider that Mr Laxman’s experience and technical knowledge meant that sales and other associated work could not have been delegated. This is particularly the case when such delegation would have necessarily arisen under the supervision of a person who possessed both engineering and business management qualifications.
Commissions were paid, and Mr Laxman did not receive annual leave or personal leave. Further, it is submitted that income tax was not deducted from payments made.[62] With regards to income tax it was evident that Mr Laxman had sought advice from a tax accountant regarding Total Global:
PN136
And also other situation is Global Wear Solutions and Total Global Solutions name was very, very similar, so my tax accountant, he asked me, because there was a bit of a confusion in the ATO, Australian Tax Office, so my accountant wanted me to get this clarified and then he basically asked me, "What are you guys doing, because GWS, Bosworth, TGS, it all looks like one big company?" and I was telling him, "No, it's not." It's all submitted in my outline agreement. So, basically, I just wrote an agreement, asked Rahul to write an agreement to differentiate who we are, you know, we're not belonging to the same group.PN137
I don't know whether it makes sense to you, but, yes, I just wanted to show the ATO that this is three different organisations, it's not part of one company, because ATO are looking at us as one company and we are trying to evade tax or something, so I just made them clear we are three different entities, you know, basically.[63]
Mr Laxman clarified that the payment of commissions into the account of Total Global was to driven by Mr Thottiyil to enable Mr Laxman to claim taxes for his travel.[64]
In Jiang Shen Cai the Full Bench adopted an approach of considering the detailed picture painted by the evidence at first instance and the indicia, to then viewing the evidence from a distance, making an informed, considered, qualitative appreciation of the whole.[65] This approach, is apposite to the ‘ultimate question to be answered’, and requires the focus to not centre merely on one indicia but to the whole picture presented – the totality of the relationship.
Mr Laxman made an assertion about the exclusivity of his services that was not supported by his own evidence. His evidence was that his business Total Global had, or was in the process, of entering into a commercial arrangement with Bosworth. In my view this is an incontrovertible fact.
In these proceedings there was an absence of a contradictor and the testimony of Mr Laxman was uncontested. I make no suggestion that Mr Laxman sought to mislead this tribunal but, rather perceived that the business between Bosworth and Total Global was not incompatible with his obligations as an employee of Global Wear or was otherwise suggestive that he was not an employee of Global Wear. However, regarding the later perception, I find that not to be the case. Mr Laxman entered into an independent contracting arrangement with his eyes wide open for it was him that made the request to Mr Thottiyil to write an Agency Agreement.
This Commission is tasked with answering the ‘ultimate question’, while ascertaining the credibility of the witness before it who provided the evidence. There is one such witness in this case and having heard from him concerning his business with Bosworth and the circumstances of the arrangement with Total Global, I am left with the overall impression that at the relevant time Mr Laxman was not an employee for the purpose of s 382 of the Act. While there was some factors that weighed toward a contrary finding they were limited, and as such I am satisfied the evidence overall supports a conclusion that the arrangement entered into was that of an independent contracting arrangement.
DEPUTY PRESIDENT
Appearances:
Mr P Mullally, on behalf of the Applicant
No appearance by the Respondent
Hearing details:
2018.
September 3, 11.
<PR700273>
[1] Form F3 filed 23 March 2018 [1.2].
[2] Mallesh Laxman v Global Wear Solutions Engineering Australia Pty Ltd T/A Global Wear Solutions Australia [PR607990]
[3] s 381 of the Act
[4] Witness Statement Mallesh Laxman (Laxman’s Statement) [2].
[5] Laxman’s Statement [3].
[6] Ibid [4].
[7] Ibid [6].
[8] Ibid [8].
[9] Exhibit A3 [6].
[10] Laxman’s Statement [10].
[11] Ibid.
[12] Ibid [13].
[13] Ibid [16]; Exhibit A1 Attachment A.
[14] Exhibit A1 Attachment B.
[15] Transcript PN [134]-[137].
[16] Laxman’s Statement [19].
[17] Ibid [20].
[18] Ibid.
[19] Ibid [21]; Exhibit A1 Attachment E.
[20] Ibid [36].
[21] Ibid [24].
[22] Ibid[26].
[23] Ibid [28] – [29].
[24] Ibid [29].
[25] Ibid [30].
[26] Ibid.
[27] Ibid.
[28] Ibid [32].
[29] Ibid.
[30] Ibid [33]; Transcript PN [135].
[31] Ibid.
[32] Transcript PN [138] – [142].
[33] Exhibit A3 [37].
[34] Laxman’s Statement [37].
[35] Ibid.
[36] s 385 of the Act.
[37] s 382 of the Act.
[38] Transcript PN [11].
[39] Jiang Shen Cai T/A French Accent v Michael Anthony Do Rozario [2011] FWAFB 8307 [25].
[40] Ibid.
[41] [2015] FWCFB 3704.
[42] [2015] FWC 38 [10].
[43] [2011] FWAFB 8307.
[44] Abdalla v Viewdaze Pty Ltd (2003) 122 IR 215 222; Jiang Shen Cai T/A French Accent v Michael Anthony Do Rozario [2011] FWAFB 8307 [18].
[45] Jiang Shen Cai T/A French Accent v Michael Anthony Do Rozario [2011] FWAFB 8307 [20].
[46] Esso Australia Pty Ltd v “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU); The Australian Workers’ Union and Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia[2018] FWCFB 4120 [42].
[47] R v Connell; Ex parte Hetton Bellbird Collieries Ltd [1944] HCA 42; (1944) 69 CLR 407 at 429–30; Gedeon v Commissioner of the New South Wales Crime Commission [2008] HCA 43; (2008) 236 CLR 120 at [43]; One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77 at [98].
[48] Ibid.
[49] Timbarra Protection Coalition Inc v Ross Mining NL (1999) 46 NSWLR 55 at [40]; One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77 at [101].
[50] Laxman’s Statement [13].
[51] Ibid; Attachment E.
[52] Ibid [29].
[53] Exhibit A3 [37].
[54] [2011] FCA 1204.
[55] Ibid [91].
[56] ACE Insurance Limited v Trifunovski [2013] FCAFC 3 [129].
[57] Laxman’s Statement [33].
[58] Ibid [36].
[59] Transcript PN [135].
[60] Transcript PN [138] – [142].
[61] Exhibit A3 [6].
[62] Exhibit A4 [10.8].
[63] Transcript PN [134]-[137].
[64] Transcript PN[143].
[65] Jiang Shen Cai T/A French Accent v Michael Anthony Do Rozario [2011] FWAFB 8307 [40].
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