Martie Skorsis v Printcess Pty Ltd

[2015] FWC 20

[2015] FWC 20

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Martie Skorsis
v
Printcess Pty Ltd
(U2014/1311)

VICE PRESIDENT WATSON MELBOURNE, 5 JANUARY 2015

Application for relief from unfair dismissal - Threshold jurisdictional issue to be determined - Whether applicant an employee or independent contractor - Fair Work Act 2009 - ss. 394, 382.

Introduction

[1] This decision concerns an application for an unfair dismissal remedy made under s.394 of the Fair Work Act 2009 (the Act). The application was made by Martie Skorsis. Ms Skorsis contends that she was employed by Printcess Pty Ltd (Printcess) and that her employment was terminated by the company on 4 April 2014. Printcess has objected to the application on the basis that Ms Skorsis was not an employee of the company and that she was engaged as an independent contractor.

[2] The issue for determination in this matter is therefore, whether Ms Skorsis was employed by Printcess as an employee or whether she was engaged as an independent contractor. If she is found to have been engaged as independent contractor, her application must be dismissed.

[3] A jurisdictional hearing to determine this threshold issue was held on 24 October 2014. At the conclusion of the hearing, the parties were directed to file written closing submissions on the threshold issue.

Statutory and legal context

[4] The basis for the company’s jurisdictional objection arises from s.382 of the Act. 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;...”

[5] This section requires the application of common law principles to determine whether Ms Skorsis was an employee or an independent contractor.

[6] There are well established principles of common law that have been developed by courts to determine whether an individual is an employee or an independent contractor. In Jiang Shen Cai trading as French Accent v Do Rozario 1a Full Bench of Fair Work Australia conveniently summarised the common law approach to distinguishing between employees and independent contractors. At [30], the Full Bench said:

“The general law approach to distinguishing between employees and independent contractors may be summarised as follows:

(1) In determining whether a worker is an employee or an independent contractor the ultimate question is whether the worker is the servant of another in that other’s business, or whether the worker carries on a trade or business of his or her own behalf: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own of which the work in question forms part? This question is concerned with the objective character of the relationship. It is answered by considering the terms of the contract and the totality of the relationship.

(2) The nature of the work performed and the manner in which it is performed must always be considered. This will always be relevant to the identification of relevant indicia and the relative weight to be assigned to various indicia and may often be relevant to the construction of ambiguous terms in the contract.

(3) The terms and terminology of the contract are always important. However, the parties cannot alter the true nature of their relationship by putting a different label on it. In particular, an express term that the worker is an independent contractor cannot take effect according to its terms if it contradicts the effect of the terms of the contract as a whole: the parties cannot deem the relationship between themselves to be something it is not. Similarly, subsequent conduct of the parties may demonstrate that relationship has a character contrary to the terms of the contract.

(4) Consideration should then be given to the various indicia identified in Stevens v Brodribb Sawmilling Co Pty Ltd and the other authorities as are relevant in the particular context. For ease of reference the following is a list of indicia identified in the authorities:

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

Control of this sort is indicative of a relationship of employment. The absence of such control or the right to exercise control is indicative of an independent contract. While control of this sort is a significant factor it is not by itself determinative. In particular, the absence of control over the way in which work is performed is not a strong indicator that a worker is an independent contractor where the work involves a high degree of skill and expertise. On the other hand, where there is a high level of control over the way in which work is performed and the worker is presented to the world at large as a representative of the business then this weighs significantly in favour of the worker being an employee.

“The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter’s order and directions.” “[B]ut in some circumstances it may even be a mistake to treat as decisive a reservation of control over the manner in which work is performed for another. That was made clear in Queensland Stations Pty. Ltd v Federal Commissioner of Taxation, a case involving a droving contract in which Dixon J observed that the reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract.”

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

The right to the exclusive services of the person engaged is characteristic of the employment relationship. On the other hand, working for others (or the genuine and practical entitlement to do so) suggests an independent contract.

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



• Whether the worker provides and maintains significant tools or equipment.

Where the worker’s investment in capital equipment is substantial and a substantial degree of skill or training is required to use or operate that equipment the worker will be an independent contractor in the absence of overwhelming indications to the contrary.

• Whether the work can be delegated or subcontracted.

If the worker is contractually entitled to delegate the work to others (without reference to the putative employer) then this is a strong indicator that the worker is an independent contractor. This is because a contract of service (as distinct from a contract for services) is personal in nature: it is a contract for the supply of the services of the worker personally.

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



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

Typically, this will arise because the worker is required to wear the livery of the putative employer.

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



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

Employees tend to be paid a periodic wage or salary. Independent contractors tend to be paid by reference to completion of tasks. Obviously, in the modern economy this distinction has reduced relevance.

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



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

Such persons tend to be engaged as independent contractors rather than as employees.

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



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

It should be borne in mind that no list of indicia is to be regarded as comprehensive or exhaustive and the weight to be given to particular indicia will vary according to the circumstances. Features of the relationship in a particular case which do not appear in this list may nevertheless be relevant to a determination of the ultimate question.

(5) Where a consideration of the indicia (in the context of the nature of the work performed and the terms of the contract) points one way or overwhelmingly one way so as to yield a clear result, the determination should be in accordance with that result. However, a consideration of the indicia is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture of the relationship from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another. The ultimate question remains as stated in (1) above. If, having approached the matter in that way, the relationship remains ambiguous, such that the ultimate question cannot be answered with satisfaction one way or the other, then the parties can remove that ambiguity a term that declares the relationship to have one character or the other.

(6) If the result is still uncertain then the determination should be guided by “matters which are expressive of the fundamental concerns underlying the doctrine of vicarious liability” including the “notions” referred to in paragraphs [41] and [42] of Hollis v Vabu.” (References omitted)

[7] The Full Bench in that case highlighted the difficulty in attempting to categorise all employment relationships as either employee or independent contractor:

“The FW Act imposes obligations on employers in relation to their “employees” and confers benefits and rights on “employees” without defining when a worker is an employee as distinct from an independent contractor. The definition of “employee” leaves it to the general law to supply that distinction. 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.” 2

[8] The circumstances of this case need to be considered against these tests.

Evidence and submissions on Ms Skorsis’ employment status

[9] Printcess is a design company which provides graphic designs based on briefs that it receives from its clients. Ms Skorsis is graphic designer of approximately 15 years experience in the industry. Ms Skorsis was engaged on 2 April 2012 on “a 3 day contract” to commence on 1 July 2012. The engagement specified that an amount of $4600 per month would be payable that included all entitlements.

[10] Evidence was given by Ms Skorsis and Ms Barichello, the owner and sole director of the business. Most of the evidence concerning the circumstances of the engagement of Ms Skorsis by Printcess is not in dispute. The parties emphasise different aspects of the circumstances to support their competing contentions. To some extent they also make contentions about circumstances which are not agreed. I have endeavoured to rely on the agreed facts and make findings on factual matters where there is some dispute in the evidence.

[11] Ms Skorsis submitted that the following points are indicative of an employment relationship between Printcess and herself:

• Ms Skorsis was employed by Printcess as a graphic designer and often undertook additional administrative duties for the company under the direction and supervision of the company director.



• Ms Skorsis was responsible for completing all work assigned to her and was not able to refuse or sub-contract work.



• Ms Skorsis was required to follow set company procedures with Printcess retaining authority over the performance of all work and providing her with ongoing direction and feedback.



• Ms Skorsis exercised limited control regarding where and when assigned tasks were to be completed.



• Ms Skorsis worked set days per week and was required to advise the company director if she was running late or could not attend work.



• Ms Skorsis was not required to provide any computer or software programs to complete the work.



• Ms Skorsis had no control over what materials and which suppliers could be used for jobs assigned to her.



• Ms Skorsis was not responsible for the costs on rectifying any defects in work performed and that the company covered these costs.



• Ms Skorsis was represented as an emanation of the business in that she was provided with Printcess business cards, a Printcess email account and her details were included in the Printcess client brochure.



• Ms Skorsis was economically dependent on Printcess as she worked solely for the company during the relevant period, she was paid a set amount per month plus a daily rate for any additional days worked and received paid annual leave/sick leave.



• Ms Skorsis created goodwill for Printcess and referred graphic design work to it that increased its clientele and sales figures.



• Ms Skorsis has recently been assessed by the Australian Taxation Office as an eligible employee for the purposes of the Superannuation Guarantee legislation.



• Ms Skorsis acknowledges that at times she received “thank you money” for design work completed for friends, which totalled approximately $1500 to $2000 over a two year period, and further submits that she used Facebook only to share invitations that she had designed for friends and family.

[12] Printcess submitted that Ms Skorsis was engaged by Printcess on a contract for graphic design services as an independent contractor. It submitted that the following circumstances support the conclusion that Ms Skorsis was an independent contractor:

• Ms Skorsis exercised a high degree of control over the manner in which she performed work for the company, including how the design services were performed and the location and hours of work.



• Ms Skorsis was free to perform work for others throughout the term of her engagement with the company; and that she did so via her own business.



• Ms Skorsis was free to work from home and she did do so on occasions.



• Ms Skorsis advertised her services via her own business’ Facebook and Instagram accounts.



• Ms Skorsis made use of the company’s computers when working at its premises but utilised her own equipment when working from home.



• Ms Skorsis was able to refuse work offered to her by the company.



• Despite Ms Skorsis being provided with business cards and a company email address in its brochure, the nature of her engagement with the company was made clear to the company’s clients.



• The company did not deduct taxation from Ms Skorsis’ fee.



• Ms Skorsis was paid upon the submission of invoices to the company.



• Ms Skorsis was not entitled to, nor did she receive, paid annual leave or personal/carers leave. However, it is noted that the company did pay Ms Skorsis her usual fee on one occasion when she attended her grandmother’s funeral and that this was done as a gesture of sympathy and goodwill.



• The work performed by Ms Skorsis involved a profession, trade or distinct calling on the part of Ms Skorsis.



• Ms Skorsis also created goodwill for her own business in performing contracted work for Printcess.



• Ms Skorsis spent a significant proportion of her remuneration on business expenses.

[13] I propose to consider the evidence relating to the indicia identified in Stevens v Brodribb Sawmilling and weigh that evidence based on the approach arising from the above authorities. None of the indicia is conclusive in itself. An overall assessment of the circumstances is required.

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

[14] As a professional graphic designer Ms Skorsis had a high degree of control over how the graphic design services were provided. Printcess provided her with a design brief setting out the requirements of the design. She was required to use her creative skills to complete the design work and submit it to Printcess. Clients engaged Printcess to perform the work in question. Ms Skorsis communicated with clients in the course of completing her design work. She was able to perform work from Printcess’ office but also performed work from her home where she maintained a home office and computer. She claimed expenses relating to these private assets as deductions in earning her taxable income from Printcess.

[15] Given the nature of the professional graphic design services performed by Ms Skorsis, she was necessarily given considerable autonomy in the manner in which she performed the services. I do not consider that this factor carries significant weight in the circumstances as autonomy would be consistent with both types of relationship. In the light of work performed away from the employer’s workplace, and expenses claimed for personal expenditure in that regard I consider that this factor is mildly more indicative of an independent contractor relationship than an employment relationship.

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

[16] Ms Skorsis clearly had the right to do work for others and openly maintained promotional information regarding other engagements. It appears that in view of the regular part-time work with Printcess and balancing her work and family responsibilities her actual work for others was limited. It mostly was work for friends and family. The most significant job, invoiced for approximately $5,000, was for work performed for the company for whom her sister worked. The ability to do work for others as part of a separate business is more indicative of an independent contractor relationship, although it should be acknowledged that her engagement with Printcess was part time.

Whether the worker provides and maintains significant tools or equipment

[17] Ms Skorsis maintains a computer and home office and performed some of her work for Printcess from such assets. Printcess software was installed on her private computer to ensure compatibility. Ms Skorsis was permitted to use the Printcess office and computer for her personal business design work. She claimed tax deductions for her home office and computer in relation to the income she primarily received from Printcess. These circumstances are more indicative of an independent contractor relationship than an employment relationship.

Whether the work can be delegated or subcontracted

[18] Ms Skorsis was required to personally perform the design work allocated to her. Although this is more indicative of an employment relationship, a personal engagement can also arise in an independent contractor relationship.

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

[19] There is no express term of the contract in this regard. Printcess terminated the arrangement because of insufficient work. This is not indicative of any particular type of relationship.

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

[20] As noted above, Ms Skorsis mainly performed work at the premises of Printcess or its clients. She occasionally did Printcess work from her home and claimed home office expenses with respect to this work. This was mostly when working additional days beyond the three day engagement. Attendance at a business workplace can be consistent with either type of relationship. The requirement for regular attendance is more indicative of an employment relationship.

[21] Ms Skorsis advertised her work on Facebook and Instragram and in her children’s school newsletter as “Martie Skorsis Designs”. She made an average of three posts per week on her Instagram page over the 12 months to July 2014. This is consistent with operating a separate business but it is not significantly related to the work she performed for Printcess. Even if she ran a vibrant separate business she could have been engaged by Printcess as an employee. It appears that the engagement with Printcess did not arise from the private business advertising.

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

[22] Printcess provided Ms Skorsis with a business card, an email address and included her profile in promotional material for some prospective clients. This might be expected in this line of work for a professional person with an established reputation, regardless of the nature of the relationship, but it is more indicative of an employment relationship.

Whether income tax is deducted from remuneration paid to the worker

[23] No income tax was deducted from the monthly payment made to Ms Skorsis. The payment was made on a tax invoice provided by Ms Skorsis which quoted her ABN number. When additional work was performed in any month the figure invoiced varied accordingly. These circumstances are more indicative of an independent contractor relationship.

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

[24] The remuneration provided to Ms Skorsis was with respect to her work for Printcess on the agreed three days per week plus payment on a time basis for any further work she was asked to perform. The amount was expressed as an all inclusive package amount but it was not specified what other payments are comprehended within the package. The factor is not strongly indicative of any particular type of relationship.

Whether the worker is provided with paid holidays or sick leave

[25] There is some conflict in the evidence in this regard. Ms Skorsis contends that she was paid for leave. Ms Barichello stated that monthly payments were made on full invoiced amounts for periods which included absences such as when public holidays occurred. For example, the full monthly figure was invoiced and paid in December 2013 even though work did not occur on the public holidays in the period. Ms Barichello stated that such payments were paid out of goodwill rather than any entitlement to annual leave or personal leave. No payments for untaken leave were made on termination of the relationship. The circumstances are more consistent with an independent contractor relationship.

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

[26] Graphic design can be described as a profession such that persons may be engaged on an independent contract basis. Other designers engaged by Printcess were engaged on a similar basis. This is not a significant factor in this case.

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

[27] Ms Skorsis clearly added to the goodwill of Printcess by virtue of her engagement. She also added to the goodwill of her own business. This is not a significant factor in this case.

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

[28] Approximately 17.5% of Ms Skorsis’ income was claimed in tax deductions in the 2012-2013 tax year, including computer expenses, home office expenses and travel expenses of $3750 relating to use of her private vehicle. I consider that the nature and extent of these payments is more consistent with an independent contractor relationship.

Conclusions

[29] This case involves a difficult assessment of the nature of the relationship between Printcess and Ms Skorsis. I do not consider that the answer to the question is clear cut. It is a case in the grey area where many of the factors are not strongly indicative of one type of relationship or the other.

[30] Although much of the argument in the case related to the extent of work performed for others, and the actual practices of Ms Skorsis separate from her Printcess engagement, I do not consider that this is a significant factor in this case. The rights under the contractual relationship are more significant than the actual practices. Other factors are either neutral, equivocal or of little weight.

[31] On balance I consider that the better interpretation of the circumstances is that the relationship was one of independent contractor, and not an employment relationship. Ms Barichello was adamant as to the intent to engage contractors, not employees, and to have administrative arrangements that matched that intent. The payment arrangements are clearly indicative of that intent. Requiring an invoice with an ABN number to be provided each month is not something employees are required to do. Ms Skorsis acquiesced in this arrangement and did not contend that the relationship was an employment relationship until after the engagement was terminated. Her personal financial affairs were arranged on this basis. She paid tax in accordance with the gross income received after claiming significant deductions. A part-time employee who performs work primarily at the employer’s business or nearby client premises would be unlikely to be in a position to claim such a level of expenses. Considering the totality of the circumstances, I consider that Ms Skorsis was an independent contractor.

[32] As I have concluded that Ms Skorsis was not an employee of Printcess her unfair dismissal application has been made without jurisdiction and must be dismissed. An order to this effect is issued in conjunction with this decision (PR559652).

VICE PRESIDENT WATSON

Appearances:

Ms S. Semmens, for Ms Skorsis.

Mr A. Galbraith, with Ms M. Vizelman, for Printcess Pty Ltd.

Hearing details:

2014.

Melbourne

24 October.

Final written submissions:

Printcess Pty Ltd on 14 November 2014.

Martie Skorsis on 28 November 2014.

Printcess Pty Ltd on 10 December 2014.

 1   [2011] FWAFB 8307.

 2 Ibid at [25].

Printed by authority of the Commonwealth Government Printer

<Price code C, PR559656>