Mark Holmes v Vegas Chase Pty Ltd
[2025] FWC 22
•3 JANUARY 2025
| [2025] FWC 22 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Mark Holmes
v
Vegas Chase Pty Ltd
(U2024/6372)
| COMMISSIONER SCHNEIDER | PERTH, 3 JANUARY 2025 |
Application for an unfair dismissal remedy
Mr Mark Holmes (Mr Holmes or the Applicant) alleges that he was unfairly dismissed by Vegas Chase Pty Ltd (Vegas or the Respondent). He seeks an unfair dismissal remedy pursuant to section 394 of the Fair Work Act 2009 (Cth) (the Act).
Vegas has objected to the application on the basis that Mr Holmes was not an employee and by extension was not dismissed.
Background
The parties agree that Mr Holmes was initially engaged as a Mortgage Broker and was an employee of Vegas between January 2010 and June 2015. During this period, Mr Holmes was paid on a commission only structure.
The parties agree that, in June 2015, Mr Holmes signed an independent contractor agreement on behalf of M & J Holmes Pty Ltd a/t for THE MARK HOLMES FAMILY TRUST.
The parties are in dispute as to who initiated the change of engagement type and if the Mr Holmes was indeed a contractor or still an employee of the Vegas after that date.
Relevant Law
Central to the objections in the matter currently before the Commission, sections 382 and 386 of the Act read as follows:
“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; and
(b) one or more of the following apply:
(i) a modern award covers the person;
(ii) an enterprise agreement applies to the person in relation to the employment;
(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.”
“386 Meaning of dismissed
(1) A person has been dismissed if:
(a) the person's employment with his or her employer has been terminated on the employer's initiative; or
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.”
I highlight that the Act, as quoted above, discusses dismissal in the circumstances of an individual’s employer terminating their employment, or forcing one to resign from their employment. It follows that the dismissal contemplated in the Act is that of an employee and not an individual performing work under an arrangement that is not consistent with that of an employment relationship.
Section 382(a) of the Act makes clear that an applicant must be an employee and this requirement acts as a prerequisite to pursue an application under section 394 of the Act.
The term employee as it relates to an unfair dismissal application is defined in section 13 of the Act as a national system employee.
I refer to the Decision of Morrissey v Peninsula Community Physiotherapy Pty Ltd,[1] in which Commissioner Tran concisely outlines the current legislative framework relating to the definition of employee:
“Section 382 of the Act provides that a person who is protected from unfair dismissal must be an employee. In determining whether a person is an employee of another person, two recent decisions of the High Court of Australia are relevant: CFMMEU v Personnel Contracting Pty Ltd and ZG Operations v Jamsek.
I note that the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 inserted s 15AA to the Act, which provides the ordinary meaning of employee and employer is to be determined by ascertaining the real substance, practical reality and true nature of the relationship and was inserted as a response to the High Court decisions in Personnel Contracting and Jamsek. However, this provision does not apply to this matter as it was commenced before 26 August 2024. I must determine the question of whether Peninsula Community Physiotherapy employed Mr Morrissey by considering the parties’ legal rights and obligations, rather than the history of the relationship and the manner of its performance, in accordance with the common law predating the insertion of s 15AA.” (References omitted, emphasis in original).
Given the matter currently before the Commission was lodged on 4 June 2024, the same principles apply (being those in effect prior to the insertion of section 15AA to the Act).
The recent advances in relevant case law and the leading authorities pertaining to the consideration of whether an individual is an employee were comprehensively outlined by Deputy President Easton, in Abdulai Salim v AFA Sheetmetal Components Pty Ltd, Daniel Paragallias,[2] as follows:
“The law after Jamsek and Personnel Contracting
In Waring v Hage Retail Group Pty Ltd[2022] FWC 540 (Waring) Deputy President Anderson provided the following helpful summary of the significance of the High Court decisions in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 312 IR 1, [2022] HCA 1 (Personnel Contracting) and ZG Operations Australia Pty Ltd v Jamsek (2022) 312 IR 74, [2022] HCA 2 (Jamsek):
“[52] In two judgements delivered on 9 February 2022 the High Court of Australia pronounced on the law that applies in determining whether, absent a specific statutory rule, a person is an employee or contractor. In doing so, the Court reviewed past decisions of the Court (and other courts) and set out afresh relevant legal principles.
[53] In important respects the law as expressed by the High Court in Jamsek and Personnel Contracting has modified, if not replaced, former approaches. In particular, the past approach of the Commission (itself based on past court authority) as outlined in the leading full bench case of [Jiang Shen Cai trading as French Accent v Rozario[2011] FWAFB 8307 at [30]] is, with some limited caveats, no longer good law.
[54] The High Court, via the combination of judgements in both Jamsek and Personnel Contracting, has largely rejected an approach whereby the relationship between parties across its life span is examined (including how the relationship operates in practice). The Court has stated that contractual terms and not performance, where those terms can be ascertained and where the contract is not a sham, will determine the true nature of the relationship. However, the Court has observed that the manner in which the relationship is worked in practice may be relevant for certain limited purposes, such as to find contractual terms where they cannot otherwise be ascertained or to determine the nature of any variation to agreed terms.
[55] Indicia (such as those identified in earlier cases in the Court) may be relevant but only insofar as the terms of the contract give voice to them. One approach, to be used as a guide, is to look at whether, under the contract, the worker is engaged to work in the business of another, though this may not necessarily be useful in all cases. The extent of a contractual right to control, as evident from the terms of the contract itself, remains a major signifier of an employment relationship. That an arrangement was brought about by the superior bargaining power of one party has no bearing on the meaning and effect of the contract.
[56] Amongst the caveats expressed by the Court, is that a mere label acting as a subterfuge to the true nature of the contractual relationship will not determine the status of the parties. In this respect at least, the law remains unchanged by these recent decisions.”
The Deputy President’s summary was endorsed by the Full Bench in Azad v Hammond Park Family Practice Pty Ltd T/A Jupiter Health Warnbro[2022] FWCFB 66 at [14].
In Chambers and O’Brien v Broadway Homes Pty Ltd [2022] FWCFB 129 at [74] a subsequent Full Bench provided this summary of the key propositions in Personnel Contracting:
“(1) When characterising a relationship regulated by a wholly written, comprehensive contract which is not a sham or otherwise ineffective, the question is to be determined solely by reference to the rights and obligations under that contract. It is not permissible to examine or review the performance of the contract or the course of dealings between the parties (Personnel Contracting at [40]-[62], [172]-[178] and [203]);
(2) The subsequent conduct of the parties may be considered to ascertain the existence of variation of contractual terms (Personnel Contracting at [42], [45], [177]-[178], [188]-[190] and [203]);
(3) The multifactorial approach only has relevance in respect of the required assessment of the terms of the contract (Personnel Contracting at [33]-[34], [47], [61], [174], [186]-[189] and [203]);
(4) It is necessary to focus on those aspects of the contractual relationship which bear more directly upon whether the worker’s work was so subordinate to the employer’s business that it can be seen to have been performed as an employee of that business rather than as part of an independent enterprise (Personnel Contracting at [39]). The question is: whether, by the terms of the contract, the worker is contracted to work in the business or enterprise of the purported employer (Personnel Contracting at [180]-[186] and [203]);
(5) Existence of a contractual right to control the activities of the worker (including how, where and when the work is done) is a major signifier of an employment relationship (Personnel Contracting at [73]-[74], [113]-[114] and [121]); and
(6) The label or characterisation placed on the relationship by the contract is not relevant even as a “tie breaker” (Personnel Contracting at [58], [63]-[66] and [79]), or at least it is not determinative (Personnel Contracting at [127], [184] and [203]).”
In Deliveroo Australia Pty Ltd v Franco [2022] FWCFB 156 at [34]-[35] (Deliveroo) the Full Bench endorsed the above summary and added a further point:
“… A contractual freedom on the part of the party performing the relevant work to accept or reject any offer of work and to work for others is not necessarily a contraindication of employment and may rather be consistent with casual employment.”
The significance of the High Court’s decisions in Personnel Contracting and Jamsek are most apparent in the Full Bench decision in Deliveroo (at [53]-[54]):
“In the circumstances described, the application of the Personnel Contracting decision has obliged us to ignore certain realities concerning way in which the working relationship between Mr Franco and Deliveroo operated in practice…
…
Had we been permitted to take the above matters into account, as the Commissioner did, we would have reached a different conclusion in this appeal. As a matter of reality, Deliveroo exercised a degree of control over Mr Franco’s performance of the work, Mr Franco presented himself to the world with Deliveroo’s encouragement as part of Deliveroo’s business, his provision of the means of delivery involved no substantial capital outlay, and the relationship was one of personal service. These matters, taken together, would tip the balance in favour of a conclusion that Mr Franco was an employee of Deliveroo. However, as a result of Personnel Contracting, we must close our eyes to these matters.”
Submissions and Evidence
Applicant
Mr Holmes acknowledges and agrees that between January 2010 and June 2015 he was engaged as an employee of the Respondent.
However, the Applicant submits there is no evidence that he resigned or was terminated in June 2015 before being engaged as a contractor on 1 July 2015.
Mr Holmes submits that the employment relationship continued unchanged after June 2015, with the only exception being he issued an invoice for payment rather than receiving a payslip for commissions earned and that the income was paid into a family trust.
Mr Holmes submits that Vegas did not terminate his employment at the time of creating the Services Consultancy Agreement (Service Agreement) in 2015.
Mr Holmes confirmed the following at Hearing:
· During the entire tenure of his employment, he was never provided with any form of verbal or written feedback or performance appraisal.
· He was not directed regarding hours of work, when to attend the office, or required to complete a timesheet or similar.
· Vegas paid for his professional indemnity insurance, public liability insurance, workers compensation insurance, and subscription to the Australian Financial Complaints Authority.
· Mr Holmes states that he had little opportunity to negotiate the terms of the Services Agreement with Vegas.
Respondent
Vegas submits that, from 1 July 2015, Mr Holmes has not been an employee of the Respondent.
Vegas is of the position that Mr Holmes has been engaged as a contractor consistent with the Services Agreement.
Vegas submits that the Services Agreement between the parties outlined the following:
· The Services Agreement was a commercial agreement between two corporate entities and was not an employment agreement between the parties.
· Vegas were not responsible for any employment entitlements, such as personal leave, annual leave, long service leave, or withholding PAYG tax.
· Vegas made payments upon invoice from a corporate entity when specified services were completed, not for an hourly or daily rate for the performance of labour.
Evidence of Mr Todd McVee
Mr McVee is the Owner and Manager of Vegas and has operated the business for nearly 20 years.
Mr McVee confirms that Mr Holmes was originally enagaged as an employee in January 2010. However, following discussions between McVee and Mr Holmes in 2015, Mr Holmes employment ceased with Vegas, and he was then engaged as an independent contractor.
Mr McVee gave evidence that the change in engagement from employee to contractor was designed to be a mutually beneficial arrangement.
Consideration
The contract entered into evidence by Vegas states that the Service Agreement is a service consultancy agreement between Vegas Chase Pty Ltd (ACN 131 854 772) and M&J Holmes Pty Ltd (ACN 606 413 763).
Having considered the evidence of both Mr Holmes and Mr McVee, I am not satisfied by the evidence of Mr Holmes that he was forced to sign the service agreement in 2015.
The evidence of Mr Holmes, that he was handed the Service Agreement and not provided with an opportunity to get advice in relation to the agreement, is not persuasive upon review of the material before the Commission. Mr Holmes had to set up the entity of M&J Holmes Pty Ltd, this is not something that Vegas would have done on behalf of Mr Holmes.
There is no evidence that Mr Holmes was prevented from seeking advice in relation to the Service Agreement.
Rather, it appears that, in all probability, Mr Holmes accepted the Service Agreement willingly, as it suited his situation at that time, and is now unhappy with the way his engagement with Vegas has ended.
It is also evident from Clause 6 of the Service Agreement that the parties intend to formally end the employment relationship existing from 2010 until the change of engagement style on 1 July 2015.
It is not logical that Vegas would seek to enter into a contractor agreement with Mr Holmes and keep the employment relationship on foot and I am not satisfied there is evidence supporting the existence of an employment relationship after that time.
Having considered material before me, I am satisfied that Mr Holmes was not an employee and was instead a contractor providing services to Vegas.
I am not persuaded that the matter currently before the Commission arises in circumstances where a business has sought to avoid providing the required benefits or obligations to an employee by engaging that individual through some other form of questionable contractor arrangement. I am satisfied on the evidence before me that the Service Agreement was entered into by the parties to offer mutual benefit as opposed to that under a continued employment relationship.
Accordingly, I am not satisfied that Mr Holmes was an employee as required to pursue this application and by extension was not dismissed as defined in the Act.
Therefore, I have no alternative but to dismiss the application before the Commission. An Order to that effect is issued.[3]
COMMISSIONER
Appearances:
P Mullally of Workclaims Australia for the Applicant.
T McVee, Respondent.
Hearing details:
2024.
Perth:
August 12.
[1] [2024] FWC 3556, [19] – [20].
[2] [2023] FWC 1834, [8] – [12].
[3] [PR782983].
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