Master Plumbers' and Mechanical Services Association of Australia, The

[2015] FWC 6295

[2015] FWC 6352 [Note: An appeal pursuant to s.604 (C2015/6320) was lodged against this decision - refer to Full Bench decision dated 28 January 2016 [[2016] FWCFB 140] for result of appeal.]

FAIR WORK COMMISSION

DECISION

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

Mr Tom Tyler
v
JG King Homes
(U2015/993)

COMMISSIONER WILSON MELBOURNE, 18 SEPTEMBER 2015

Application for relief from unfair dismissal.

[1] Tom Tyler has made an application for unfair dismissal by JG King Homes from a position in which he was required to sell new homes for the company, including home and land packages. His application claims that he commenced working for JG King Homes in September 1990 and, having worked for the business continuously since that time, he was called into a meeting on 16 February 2015 and told that his work with the company would end with immediate effect. His unfair dismissal application claims that he asked for reasons and was told that he was not entitled to know why.

[2] JG King Homes resist the application, principally for the reason that it argues Mr Tyler has never been an employee of the company. In the alternative it argues that if Mr Tyler was an employee, he has not been unfairly dismissed.

[3] Section 396 of the Fair Work Act 2009 (the Act) requires the determination of four initial matters to be considered before considering the merits of the application. In relation to three of the elements within the section, I find that Mr Tyler’s application was within the 21 day period for making such applications and that questions of consistency with the Small Business Fair Dismissal Code or genuine redundancy do not arise.

[4] However, it is contested that Mr Tyler is a person protected from unfair dismissal, for the reason that it is argued he was never an employee. In the event that he was an employee, a further consideration arises for determination in relation to whether he is a person protected from unfair dismissal, since it is argued his income was beyond the high income threshold and that he was not covered by an award or agreement, which would allow his protection from unfair dismissal, irrespective of his earnings as an employee.

Whether the Applicant was an employee

[5] The meaning of the word "dismissed" is set out within s.386 of the Act and refers broadly to a person having been dismissed from “employment”. The terms “employee” and “employer” are defined within s.12, The Dictionary, as being further defined in the first Division of each Part of the Act in which the term appears. In that respect, and relevant to the question of whether a person has been unfairly dismissed, s.380 refers to the meanings of the terms being respectively a national system employee and employer, which terms are in turn defined in s.30C and 30D of the Act.

[6] The Full Bench has held that there is no single decisive criterion to determine whether a contractual relationship is one of employment or one subject to a contract for services. Application of the multifactorial tests established through the Courts has been confirmed in the recent matter of Kimber v Western Auger Drilling Pty Ltd 1(Kimber);

“[40] The question of whether a person is an employee for the purposes of an application for an unfair dismissal remedy made under s.394 of the Act is one of jurisdictional fact as is the related question in this case; whether the appellant had completed the minimum employment period at the time of her dismissal. In this appeal we must therefore determine whether the Commissioner reached the right conclusion as to whether the Appellant was an employee or contractor during the relevant period and whether she had completed the minimum employment period, not simply whether the Commissioner’s finding in this respect was reasonably open to her.

[41] The courts have developed a multi-factorial approach, in which there is no single decisive criterion to determine whether a contractual relationship is one of employment or one subject to a contract for services. This approach requires the consideration of the various indicia as summarised in French Accent set out above. It is also clear from the decision of the Full Bench of the Federal Court in ACE Insurance Limited v Trifunovski and others, that no one single criterion will necessarily be determinative and that each matter will turn upon the particular circumstances of the case, with the decision maker weighing all the relevant factors.

[42] French Accent also endorses the following propositions in Abdalla v Viewdaze Pty Ltd t/a Malta Travel that:

“the ultimate question will always be 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 punitive worker could be said to be conducting a business of his or her own. This question is answered by considering the terms of the contract and the totality of the relationship.” 2 (references omitted)

[7] In Kimber, the Full Bench endorsed the approach set out in the earlier matter of French Accent v Do Rozario 3 (French Accent), which in turn followed the principles laid out by the High Court in Stevens v Brodribb Sawmilling Co Pty Ltd,4and the later case of Hollis v Vabu5 (Hollis). An earlier Full Bench analysed Hollis as follows;

“We think it particularly significant that the joint judgment endorsed the proposition that ‘‘the distinction between an employee and an independent contractor is ‘rooted fundamentally in the difference between a person who serves his employer in his, the employer’s, business, and a person who carries on a trade or business of his own’’’. In [47] their Honours dealt with the issue in the case before them by in essence asking whether, ‘‘viewed as a practical matter’’ the workers in question were ‘‘running their own business or enterprise’’ with ‘‘independence in the conduct of their operations’’.” 6

[8] The Full Court of the Federal Court has noted that in Hollis;

“… a real emphasis was authoritatively placed on the notion of working in the business of another, rather than in the business of the individual.” 7

[9] In the same judgment, the Full Court noted, with particular relevance to this matter;

“There have been a number of cases decided at the highest level concerning whether salesmen working on commission were employees. The cases (like the present case) had the feature that they involved contracts stating that the salesmen were not employees. That contention has been frequently disapproved.” 8

[10] After an extensive analysis of the relevant cases, the Full Court found an inconclusive picture that only reinforced the need to consider the full circumstances of each matter;

“The picture which is left by the various cases concerning the work of salesmen, or even of insurance salesmen in particular, is inconclusive. There is no central feature of the work itself that suggests that contracts for doing that work are likely to be found, or not likely to be found, to be contracts of employment. Much depends on the particular features of the contracts and whether those features are matched by the reality. Assertions about the character of the relationship carry weight, but are far from conclusive.” 9

[11] French Accent also had regard to the earlier Full Bench matter of Abdalla v Viewdaze Pty Ltd t/a Malta Travel. 10 The following principles were laid out in French Accent, and I refer to them in detail for the reason that, following their endorsement in Kimber, it is appropriate I analyse Mr Tyler’s circumstances in accordance with this approach;

“[30] 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.” 11 (references omitted)

[12] I will consider the evidence presented in this matter against each of the indicia referred to above.

Control

[13] The circumstances of Mr Tyler’s engagement include that it commenced with he and his father providing services to JG King Homes through their private company, Realty Listing of Australia Pty Ltd (Realty Listing). Mr Tyler’s memory is that his father started providing his services to JG King Homes in about January or February 1990. 12 Realty Listing was a shelf company acquired at about the same time by Mr Tyler’s father for the purpose of providing sales services to JG King Homes,13 however, the evidence of Director appointments would suggest the company vehicle was acquired by the Tylers earlier, perhaps in mid-1989.14

[14] The two men provided sales services to JG King Homes. 15 Mr Tyler’s father stopped work in about 1992 or 1993, however he remained a Director of Realty Listing until 1997.16

[15] These arrangements stand in distinction to the arrangements in recent years.

[16] Of themselves, the parties’ own characterisations of their arrangements carry no particular weight in determination of this matter. In this regard the Full Bench has previously referred to an applicant employee’s assertions as being of “a conclusion of mixed law and fact and are not probative”. In the same case, the Full Bench held that assertions to the effect that the parties had agreed the worker was an employee had little probative value. 17

[17] In recent years Mr Tyler has performed services as the only salesperson supplied by Realty Listing to JG King Homes, although his son performed paid work experience for about six months about 15 years ago, with Mr Tyler having been asked by JG King Junior to put someone on. 18

[18] Realty Listing also arranged and paid for “sales hostesses”. 19 However, detailed evidence was not provided about the engagement of the sales hostesses and the amounts invoiced for their services. Accordingly, there is no evidence about whether they were regularly or intermittently engaged, or whether the costs associated with their engagement were significant or not.

[19] On balance, the overall relationship in the few years prior to 2015 appears markedly different from the early years, when Realty Listings supplied the services of both Mr Tyler and his father to JG King Homes, and the middle years, when Realty Listing provided Mr Tyler’s services and the “work experience” services of his son.

[20] Mr Tyler’s evidence is that he was subject to the supervision of Wayne Jones, Central Area Manager for Regional Victoria, for about the past 18 months. The evidence however does not detail the nature of that supervision.

[21] Mr Tyler’s evidence is that his responsibility at JG King Homes was to receive sales leads from various sources, including JG King Homes’ website, telephone calls and “walk-ins” to its reception. The evidence also supports that Mr Tyler was rostered, which informed him when and where he could work with the expectation that he attend a nominated location on the indicated days. The evidence also supports that Mr Tyler was expected to be in attendance for the full period of hours specified in the roster. The evidence is that the roster specified by name the attendance of Mr Tyler as opposed to merely nominating Realty Listings.

[22] The evidence is also that the roster did not differentiate between persons such as Mr Tyler and those classified by the Respondent as employees.

[23] Rosters prepared by JG King Homes referred to Mr Tyler as attending its premises for work, 20 rather than making a more neutral reference to the attendance of an unspecified person from Realty Listing, or perhaps even “Tom from Realty Listing”.

[24] The evidence of Joanna Brennan, JG King Homes’ Human Resources Manager, is that Mr Tyler and Realty Listing were treated differently from other sales people. Realty Listing could decide when work would be undertaken;

“Realty was required to be in attendance at nominated display centres at nominated hours and days per week. However Realty could decide to work such hours and days each week as it suited it. It could decide who would be in attendance at the display centre and it could decide who was to provide the services and how the services would be provided.” 21

[25] Further, this was said by Ms Brennan to be different from others;

“With Realty Listing, they had far more freedom. So if we - with employees, if we asked them to be in the office from 8.30 till five, they need to be in the office from 8.30 to five. With consultants, they generally - if they weren’t on office duties or if they were running late, they would just bowl in when they needed to bowl in, or they would go straight to display homes, they wouldn’t come in at all.” 22

[26] Mr Tyler’s evidence about attendance included this rebuttal of what Ms Brennan had to say, suggesting the freedoms to which she referred either did not practically exist, or were heavily limited;

“It was also said in the evidence that you might have heard today that you could have just simply worked or not worked as you chose, so why wouldn't you have just simply not worked on one of those days rather than arranged someone else to take your spot?---Because the phone would have started ringing immediately and there would have been serious repercussions if I just hadn't shown up.

So you were required to find someone else?---Absolutely.” 23

[27] The freedoms to which Ms Brennan refers in choosing when to work were not referenced to interactions she had directly with Mr Tyler or Realty Listing, and it is not apparent how she came by the knowledge she relates. Her own witness statement contradicts what she has to say – on the one hand, Realty Listing was required to attend at certain sites on nominated days for nominated hours; on the other, it could decide to work the hours and days that suited. Ms Brennan did not refer to a process by which the two propositions might co-exist, such as through placement of forward roster bids, and Mr Tyler’s evidence that he was told when and where to work is to be preferred.

[28] When it came to personal leave or annual leave, Mr Tyler was expected to conform to the JG King Homes processes for requesting or justifying such leave, including the use of forms that would otherwise be used by employees. However, Mr Tyler would continue to be paid his retainer, even during periods of leave. 24

[29] On the basis of the evidence before the Commission, I find that Mr Tyler was working under the control of JG King Homes as would be expected of an employee. He was subject to supervision and was rostered for the hours and days on which he was expected to work; he was expected to conform to the Respondent’s requirements about notification of absences and leave. Mr Tyler’s case is not featured by an absence of control, but instead appears to be one featured by a relatively high level of control over the way in which work was performed.

Work for others

[30] Whereas the right to exclusive services from a person engaged can be characteristic of employment, working for others or the entitlement to do so is characteristic of an independent contractor. 25

[31] The evidence presented to the Commission does not address Realty Listing’s or Mr Tyler’s ability to undertake work for other businesses.

[32] Accordingly this is a neutral factor in my consideration.

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

[33] The evidence is that Mr Tyler was allocated an office in JG King Homes Ballarat showrooms. While Realty Listing has an address stated on the invoices, which does not appear to be connected with JG King Homes in any way, there is no evidence that would suggest that address as being a separate place of work for the company or Mr Tyler, or that he was advertising such to the world at large.

[34] As a result, I find this factor to resolve in favour of Mr Tyler being an employee.

Tools or equipment

[35] The services provided by Realty Listing to JG King Homes are of a sales nature. This is not an industry or occasion in which one would expect to find significant capital investment from the contractor. The evidence shows that Mr Tyler provided little in the way of what could be called equipment or tools. Instead he used JG King Homes’ telephone system, its photocopier, stationery and business cards. He also used JG King Homes’ computer system, including its hardware in the form of a laptop. 26 The equipment that was used by Mr Tyler was apparently provided on similar terms to people who were employees.27

[36] There is no evidence that Mr Tyler provided any significant equipment or tools to the relationship.

[37] On balance it could perhaps be expected in the case of a sales contractor, that only minimal tools and equipment are provided on the part of the contractor supplying services, and such was the case with Mr Tyler. However, in Mr Tyler’s case, there appears to be no appreciable tools and equipment that he brought to the arrangement, and his arrangement appears indistinguishable from what one might expect of an employee. Accordingly this is a factor which resolves in favour of Mr Tyler being found to be an employee.

Delegation or subcontracting

[38] According to the Respondent’s witnesses, Mr Tyler had the right of delegation or subcontract.

[39] At least at the hypothetical level, one witness, Ms Brennan, the company’s Human Resources Manager, took the view that Mr Tyler was entitled to delegate the work to anyone he chose, although her personal view was that JG King Homes may not like such a prospect without first being told. 28

[40] Ms Brennan did not think it fanciful that a stranger could simply attend and commence work at the JG King Homes premises on behalf of Mr Tyler. 29 Ms Brennan’s evidence is also that Mr Tyler had the right to and did engage sales hostesses who were paid for by Realty Listing.30

[41] Mr Tyler’s evidence about what happened when he was unable to attend for work includes the following in his supplementary written witness statement;

“During my engagement with the Respondent, my ability to delegate my duties was extremely limited. The only form of quasi delegation that occurred was when myself or other employees were required to provide a replacement on days when we were unable to fill our rostered shifts in display homes due to illness, family events etc. On such occasions, we usually had to swap shifts amongst ourselves, or if a replacement could not be found we were required to arrange for other non sales consultants of the Respondent to sit in the display homes. If the replacement was required because we had a social engagement on (i.e. a birthday) we were required to pay these replacements in cash for their time, on other times (i.e. annual leave) this cost was met by the Respondent.” 31

[42] He amplified on the practical limitations in his oral evidence;

“Can I take you to paragraph 30? You say that your ability to delegate was extremely limited?—Non-existent.

Non-existent?—I believe, yes.

But you acknowledge that you had the right that if you were to go on leave you could appoint someone else to take your role and you would pay that person?—Nonsense. If I went on leave, that was organised by JG King Homes.” 32

[43] I consider that Ms Brennan’s evidence on this subject puts forward circumstances about the rights to delegation that appear unlikely on the basis of the other evidence led in this matter, including how the relationship actually played out on a daily basis. I prefer Mr Tyler’s evidence that his ability to send any delegate he chose of Realty Listing to JG King Homes was non-existent. The wider evidence is that significant direction and attention was turned by JG King Homes to how its business was run. This was not a situation of a builder saying to a salesperson “go and maximise our sales in any way you want, using whomsoever you wish”.

[44] Even so, the evidence records occasions on which a second person, Mr Tyler’s son, was brought to the relationship with JG King Homes as an employee of Realty Listing. However on the uncontradicted evidence of Mr Tyler, that was 15 years previously. In addition the evidence records that Mr Tyler from time to time engaged sales hostesses as referred to above. However the evidence does not show how extensive such engagement may have been.

[45] Overall, and particularly on the basis of the relationship in the most recent years, I find that consideration of this criterion would result in favour of Mr Tyler being an employee.

Rights to suspend or dismiss

[46] The consideration of this question relates to whether there is a right to have a particular person do the work, or the right to suspend or dismiss the person engaged. Such rights can suggest a contract of service rather than a contract for services. 33 The analysis furthers a consideration of whether the person is working in the business of another, rather than in the business of their own.34

[47] The evidence discloses that Mr Penna met with Mr Tyler on 16 February 2015 and communicated to him a decision to terminate the contract of services Realty Listing had with JG King Homes. In the course of that discussion, Mr Tyler was invited to receive and sign a “services agreement termination acceptance” couched as the firm writing to him “to confirm your decision to terminate your contract of services with J G King Homes Pty Ltd”. The letter was presented with a Deed of Release, and together the two documents held out to him that in return for the severing of the relationship, JG King Homes would ensure payment to Realty Listing for 100% of the commission otherwise due on 2 sales, and 75% of commission due on another 11 sales. 35 Mr Tyler refused to sign the document. JG King Homes in any event gave notice to Mr Tyler and Realty Listing that it was terminating the arrangement between them.

[48] The evidence is unclear as to whether or not JG King Homes had the right to suspend or dismiss Mr Tyler himself, as the delegate of Realty Listing, when it might otherwise have allowed the relationship with the company itself to continue as a contractor for services, however, it would appear likely in all circumstances that it did. However, because of the uncertainty of the evidence, I find this to be a neutral factor in my consideration.

Whether the worker held out as an emanation of the business

[49] The evidence indicates that Mr Tyler was held out to customers as part of JG King Homes. His business cards were branded as JG King Homes, and on them he was referred to as a “New Homes Consultant” for JG King Homes, with contact details entirely of that company. 36

[50] On some occasions Mr Tyler would wear a uniform, being that of JG King Homes. 37 In contrast the Respondent’s witnesses say that Mr Tyler was never made to wear the uniform; however he would occasionally wear one of the polo shirts provided to him.38 Another of the company’s witnesses, Mr Penna, gave evidence that although he was not aware Mr Tyler was required to wear a uniform from time to time, it was his belief that “a uniform was required of contractors at all times”.39 In contrast, Mr Tyler’s evidence included showing to the Commission a substantial amount of clothing that had been provided to him, which included business shirts and polo shirts