Mei Chan v Advanced Health Invest Pty Ltd T/A Mastery Dental Clinic

[2019] FWC 7824

[2019] FWC 7824

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Mei Chan
v
Advanced Health Invest Pty Ltd T/A Mastery Dental Clinic
(U2018/10383)

DEPUTY PRESIDENT CROSS SYDNEY, 29 NOVEMBER 2019

Application for an unfair dismissal remedy - re-hearing - not a small business employer.

[1] On 8 October 2018, Mei Kuen Chan (the “Applicant”) filed an application for unfair dismissal remedy (the “Application”) pursuant to s.394 of the Fair Work Act 2009 (Cth) (the “Act”), in respect of the termination of her employment by Advanced Health Invest Pty Ltd T/A Mastery Clinic (the “Respondent”).

[2] The Respondent raised a jurisdictional objection to the Application on the basis that it was a Small Business Employer and it had complied with the Small Business Fair Code when terminating the Applicant’s employment.

[3] On 29 January 2019, the matter was listed for Hearing, on both the merits of the Application and the Respondent’s jurisdictional objection, before Senior Deputy President Hamberger in Sydney. The Commission heard oral submissions on 22 March 2019.

[4] On 8 April, 2019, Senior Deputy President Hamberger issued his Decision 1 (the “First Instance Decision”), wherein he determined that the Respondent was not a Small Business Employer and that the Small Business Code did not apply, and further found that the Applicant’s dismissal was unjust and unreasonable. The Senior Deputy President awarded the Applicant compensation of $40,000.00 plus superannuation.

The Appeal

[5] The Respondent appealed the First Instance Decision. On 23 July 2019, a Full Bench of the Commission issued their Decision 2 (the “Appeal Decision”). Regarding the grounds of appeal, the Full Bench observed3:

“We discern from the Appellant’s Notice of Appeal the following three grounds of appeal:

1. The Senior Deputy President erred in his conclusion that the dentists engaged by the Appellant were employees and that as a consequence the Appellant was not a small business employer.

2. By wrongly concluding that the Appellant was not a small business employer the Senior Deputy President consequently fell into error by failing to consider whether the dismissal of the Respondent was consistent with the Code.

3. The Senior Deputy President wrongly concluded that the Respondent had complied with the maternity leave notice requirements under the Act (s.74), that being the requirement to provide prior written notice in respect of her intention to take maternity leave.”

[6] The Full Bench found that it was only necessary to deal with the first ground of appeal. In the Appeal Decision the Full Bench observed 4:

“Thus, for the purposes of determining whether the Respondent was unfairly dismissed, the Senior Deputy President was required to consider the Code by first determining whether it applied. This depended on whether the Appellant was a small business employer at the time of the Respondent’s dismissal.

There is little doubt that the Appellant engaged more than 15 persons in its dental practices at the time of dismissal. However, the controversy that required determination was whether a number of those persons were independent contractors or employees, as only employees are to be counted in assessing whether the Appellant was at the relevant time a small business employer.”

[7] The Full Bench summarised the relevant evidence before the Senior Deputy President relating to whether the Respondent was a small business employer. The Full Bench noted 5:

“Before the Senior Deputy President the Respondent provided a witness statement dated 1 December 2018 in which she listed 22 persons which she claimed were employees and a supporting photograph of persons engaged by the Appellant taken at its annual dinner in 2018. The list of persons said to be employees provided by the Respondent relevantly included 7 dentists and Mr Kelvin Guan who was identified as a “Working Director”.

The Appellant’s Director Mr Kelvin Guan also gave evidence in the proceedings before the Senior Deputy President by way of a witness statement dated 18 December 2018 in which he said there were 14 employees at the time of the Respondent’s dismissal. In a supplementary statement Mr Guan said that of the 22 employees identified by the Respondent:

•  the 7 dentists identified by the Respondent as employees were contractors and in support of that contention included extracts of contracts entered into between some of the dentists and the Appellant;

•  two of the employees in the Respondent’s list named as “Rebecca” and “Natalie” both left the Appellant’s employ to study full-time respectively on 5 August and 14 July 2018;

•  Mr Lawrence Guan was the Appellant’s contracted business consultant and was not an employee; and

•  Dr Silvia was a sub-contractor Doctor and had terminated her contract with the Appellant in June 2018.

The only other apparent evidence before the Senior Deputy President in relation to the contractual status of the dentists was a witness statement dated 22 January 2019 prepared by Ms Jun Zhang who is the wife of the Appellant’s Director Mr Guan. She is also engaged as a dentist in one of the Appellant’s practices. In her statement Ms Zhang described herself as “a dentist employed by Advanced Health Invest Pty Ltd.”

[8] The Full Bench observed that the Senior Deputy President’s conclusion that the seven dentists engaged by the Respondent were not independent contractors as contended by the Respondent, but rather were employees of the Respondent, was critical in the determination that the Respondent was not a small business employer. The Full Bench, however, questioned the sufficiency of the evidence upon which the Senior Deputy President’s conclusion was based. It observed 6:

“It appears to us that the Senior Deputy President reached his conclusion as to the employment status of the Appellant’s dentists on the barest of evidence, to which we have already referred. Acceptance of that evidence, which in our view is not particularly probative, was central to the Senior Deputy President’s finding that the Appellant employed at least 15 employees at the time of the Respondent’s dismissal.

True it is that the Appellant also provided limited probative evidence but that evidence was in a written form by way of extracts of certain dentists’ contracts which on their face supported the Appellant’s contention that the dentists were independent contractors. Certainly there was no evidence adduced by the Respondent to seriously contradict that which was contained in the contractual extracts. Moreover, neither the Appellant nor the Respondent adduced any other evidence directed to the indicia that would ordinarily be considered in assessing whether a person was an employee or an independent contractor, a point made by the Senior Deputy President at [15] of the Decision.

While the Respondent contended that the Appellant bore an onus to establish the contractual status of the dentists in pressing its jurisdictional objection, a failure of the parties to provide probative evidence on what was a contested point does not relieve the Commission of its statutory obligation to reach the requisite satisfaction as to the status of the disputed persons or the basis of relevant and probative evidence. A state of satisfaction on the question whether 7 dentists were employees or independent contractors cannot be safely arrived at on the basis only of an assertion and a dated photograph on the one hand and extracts of a contract said to be a template suggesting engagement as an independent contractor on the other. In circumstances where there is a contest over a key issue and an apparent absence of probative evidence, orders for the production of documents or witnesses may be made in order that the Commission can inform itself. This did not occur in the proceedings before the Senior Deputy President.”

[9] The Full Bench upheld the Respondent’s Appeal and concluded:

“Having reviewed all the evidence before the Senior Deputy President, including the transcript of the proceedings, we do not consider the Senior Deputy President’s conclusion that each of the 7 dentists were employees of the Appellant, was reasonably open on the evidence. Critically, there was almost no evidence and certainly insufficient evidence directed to the indicia that would normally be considered in assessing whether a person or persons were employees or contractors. It is concerning that such a situation has arisen in a matter in which both parties were given permission for representation by lawyers and were represented in the original proceedings. It is unsatisfactory that either permitted the case to be determined on such a paucity of probative evidence on the critical question of the employment status of the 7 dentists. On the other hand, the Senior Deputy President was entitled to order, direct or request the parties to adduce further evidence on the subject and perhaps should have done so. Nonetheless, there was no sound evidentiary basis to support the Senior Deputy President’s conclusion that the Appellant was not a small business employer. By having reached the conclusion we are satisfied that the Senior Deputy President fell into error. The first ground of appeal is made out.”

[10] The matter was remitted for allocation to another Member of the Commission for re-hearing. The matter was subsequently allocated to me for re-hearing.

The Re-Hearing

[11] On 15 August 2019, the matter was listed for Directions Hearing. At that Directions Hearing the parties agreed that the further evidence would relate only to the Small Business Code, and that the other evidence and transcript of the proceedings before Senior Deputy President Hamberger be relied upon. At the Directions Hearing, the matter was listed for Hearing on 25 September 2019, and the following Directions were issued:

1. “The Respondent (Advanced Health Invest Pty Ltd T/A Mastery Dental Clinic) is directed to file with the Fair Work Commission, and serve on the Applicant, an outline of submissions, witness statements and other documentary material relating to employee numbers and the Small Business Code the Respondent intends to rely on in support of their application (the ‘Application’) in this matter by no later than 4.00pm on 30 August 2019.

2. The Applicant (Mei Chan) is directed to file with the Fair Work Commission, and serve on the Respondent, an outline of submissions, witness statements and other documentary material the Applicant intends to rely on in opposition to the Application by no later than 4.00pm on 13 September 2019.

3. The Respondent (Advanced Health Invest Pty Ltd T/A Mastery Dental Clinic) is directed to file with the Fair Work Commission, and serve on the Applicant, any witness statements and other documentary material in reply to the Applicant’s witness statements and documents by no later than 4.00pm on 20 September 2019.”

[12] On 30 August, 2019, the Respondent filed a document titled “Outline of Submissions” which contained one paragraph, which was as follows:

“1. All the dentists working for Advanced Health Invest Pty Ltd T/ A Mastery Dental Clinic are contractors. So they are not the employees of Advanced Health Invest Pty Ltd T/A Mastery Dental Clinic. To confirm this I provide a copy of one dentist’s contractor agreement (full version) hereto marked as Annexure “A”.”

[13] The Contract is referred to in the above submission as Annexure A, that was titled “Contractors Agreement for the Supply of Dental Services” (the “Contractors Agreement”), is also attached to this decision and marked Annexure A. As is apparent, the name of the Dentist in the Contractors Agreement has been redacted.

[14] On 5 September 2019, the Applicant sought and was granted an Order for Production of Documents requiring production of the following documents or records:

1. “All documents relating to Sylvia Liu, Lawrence Guan, Rebecca and Natalie.

2. In the period 30 June to 20 September 2018, all records, calculations and other documents relating to any amounts paid to the above persons by or on behalf of the Respondent between 30 June 2018 and 20 September 2018.”

[15] On 19 September 2019, the Applicant sought and was granted an Order for Production of Documents requiring production of the following documents or records:

“All written contracts relating to the following dentists working for the Respondent during 2018: Max Kim, Ying, Louise, Tian Shu Wang, Mary, Tina, Peter and Jun Zhang.”

[16] On 23 September 2019, the Applicant filed their Outline of Submissions Concerning the Jurisdictional Objection.

[17] On 25 September 2019, at the scheduled Hearing of the matter, it was apparent that the matter could not proceed due to the lack of relevant evidence. A significant matter agitated on that day was the asserted failure by the Respondent to produce documents pursuant to the Orders for Production of Documents. After hearing the parties, I made the following determination on transcript 7:

“As I said, the Appeal Bench was quite clear that they did not want this matter determined on what I think they described as scant evidence. The directions were set to ensure that I had before me the relevant documentation that I need to decide the issue of whether the Small Business Code applies.

The two draft orders sought by the applicant were made by me in chambers because I saw that they adequately reflected a reasonable enquiry, in fact, part of the enquiries that were foreshadowed by the Full Bench. I fully understand that the respondent is representing himself in proceedings now, but the respondent should understand that the orders issued under my signature must be complied with fully. When I say they should be complied with fully, that also means they should be provided in a form that has no redaction unless I order that there can be redaction.

I am certainly not attracted to a course of proceeding where once again, the Commission would not have before it all of the relevant materials it needs to consider whether the Small Business Code applies. I would also certainly be very unattracted to a prospect of proceeding to make an adverse inference against the respondent pursuant to the rule in Jones v Dunkel, particularly - - -

THE INTERPRETER: Sorry, I beg your pardon.

THE DEPUTY PRESIDENT: The case name is Jones against or v Dunkel - in circumstances where the respondent is unrepresented. I understand the respondent’s concern as to the asserted non-compliance by the applicant with the directions that I issued. But I think it’s fairly put that at least part of the reason for that non-compliance resulted from at least the non-compliance with the order for production of 6 September 2019. I therefore order that the order for production dated 6 September and the order for production dated 19 September 2019 should be complied with by 4 pm on 27 September 2019 by forwarding those documents to the Fair Work Commission to my chambers. Thereafter they will be, subject to objections, provided to the applicant for their view.

I reiterate, those documents should not be redacted unless there is an application for redaction and that application is granted. Bearing in mind what I have just said, it is clear that the matter will not conclude on an evidentiary basis today, but I would wish to explore with the parties how this matter might be conveniently and succinctly dealt with in the short term”.

[18] On 27 September 2019, the Respondent produced unredacted copies of Contracts with Dr Max Hyunsoo Kim, Dr Louise Tan, Dr Yanjie Mai, Dental Comprehensive Care Pty Ltd (ABN 76 622 519 500), Dr Mary Wenjia Tang and Dr Ying-Ju Chen. In a covering email to my Chambers enclosing those documents produced, Mr Guan of the Respondent advised:

“Hi,

Please check the attached files for all the documents required.

Dr. Jun Zhang is an employee of Advanced Health Invest Pty Ltd (ABN 99 157 936 073), so she does not have a service contract with Advanced Health Invest Pty Ltd (ABN 99 157 936 073).

Tina should be Dr. Tian Shu Wang, because we usually call her “Tina”.

Peter should be Dr. Yanjie Mai, because we usually call him “Peter”.

Kind regards,

Kelvin Guan
Managing Director”

[19] On 4 October 2019, the Applicant filed an amended Outline of Submissions Concerning the Jurisdictional Objection that replaced the submission filed on 23 September 2019. That submission addressed the contracts produced by the Respondent.

[20] On 8 October 2019, the Respondent filed a reply Submission. That submission essentially relied upon Clause 7 of the Contractor’s Agreement, titled “No Employment or Partnership Relationship” as determining that the six dentists, other than Dr Jun Zhang, were contractors.

Consideration

[21] Considering how significantly the distinction between employees and independent contractors affects such things as the obligations to comply with the National Employment Standards, observe relevant conditions under the appropriate award or enterprise agreement (which will typically include providing penalties rates, allowances and overtime), pay superannuation and provide workers’ compensation insurance coverage, it is unremarkable that this Commission has regularly had to consider whether particular employees are employees or independent contractors.

[22] In Jiang Shen Cai trading as French Accent v Rozario 8 (“French Accent”), a Full Bench summarised the accepted approach to distinguishing between employees and independent contractors as follows (at [29] and [30]):

[29] The nature of the general law approach to distinguishing between employees and independent contractors is such that a summary of that approach that is faithful to the court authorities has a continuing utility in this jurisdiction. The apparent tension in the summary in Abdalla highlighted in this appeal, together with the emphasis on the proper approach to a consideration of the indicia provided by the decision of Full Court of the Federal Court in Roy Morgan, makes it desirable to recast the summary in Abdalla, albeit we do not see that summary as wrong.

[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. [Footnotes omitted]

[23] As noted above, on 27 September 2019, the Respondent produced unredacted copies of contracts with Dr Max Hyunsoo Kim, Dr Louise Tan, Dr Yanjie Mai, Dental Comprehensive Care Pty Ltd (ABN 76 622 519 500) (relating to Tianshu Wang), Dr Mary Wenjia Tang and Dr Ying-Ju Chen.

[24] The Applicant noted that Dr Ying-Ju Chen appeared to have started on 26 November 2018, after the date of the Applicant’s termination, and so his contract was not relevant. There were a remaining five dentists whose employment/engagement status was in dispute, and the contractual terms of each of those five Dentists is largely identical. The Applicant submitted that if the Commission found that two or more of the Dentists were employees then the Respondent will not be a small business employer, and the Small Business Code will not apply.

[25] This consideration is based upon the terms of the Contractors Agreement that is Annexure A to this Decision. The terms of the Contractors Agreement are relevantly identical to the contracts of Dr Max Hyunsoo Kim, Dr Louise Tan, Dr Yanjie Mai and Dr Mary Wenjia Tang (“the Dentists”).

[26] Both the Applicant and the Respondent, in their submissions as to whether the Dentists were Contractors or Employees, confined their analysis to the Terms of the Contractors Agreement. Neither party submitted that the terms of the Contractors Agreement did not reflect the actual terms and condition of the Dentists.

(i) Indicia of Employment

[27] Various provisions of the Contractors Agreement are indicative of it in fact being a contract of employment. In particular:

(a) The Respondent exercises significant control over the time and places at which the Dentist can work during the term of the Contractors Agreement. In Particular:

(i) While all the relevant contracts, with the exception of Dr Mary Wenjia Tang’s contract, provide that “Hours of Work” 9 are “During the Term the Dentist shall provide the Services at the Practice during the times specified in Item 6 of the Schedule or as otherwise agreed between the Parties from time to time”, Item 6 of each schedule provides (also) that “Item 6” means “Or as otherwise agreed in writing between the parties from time to time”. The result of the confused use of definition is that those Dentists other than Dr Tang have no hours of work specified;

(ii) Notwithstanding the above failure to specify hours of work, by Clause 12.3 the Dentists agree, subject to variation with the Respondent’s consent, to exclusively practice with the Respondent and may not be otherwise employed, engaged or hold an interest in a competing business within a ten kilometre radius;

(iii) The Dentists are required to provide two weeks notice if they are unable to attend their scheduled hours, and if their absence is for illness, they must provide medical certificates if they are unable to attend their scheduled hours at the Practice due to illness;

(iv) The Dentists cannot be absent from the Respondent’s Practice during any agreed work hours, except in the event of illness, injury or, death or serious injury to an immediate family member 10;

(b) The Respondent also exercises substantial control over the manner in which the Dentists may carry out their work. In particular:

(i) The Respondent may give the Dentists directions, instruction and information regarding the policy for provision of dental services at the Practice. The Dentists are required to comply with any such Practice Policies 11. Further, the parties meet periodically to “discuss and evaluate the performance, proficiency and efficiency” of the Dentists12;

(ii) The Dentists have no control to remove records or equipment from the Practice without the consent of the Respondent 13, and all Patient Records made by the Dentists are the exclusive property of the Respondent14;

(iii) The Dentists are required to wear a uniform (being scrubs) provided by the Respondent 15;

(iv) Pursuant to the clause titled “Patients are Patients of the Practice”, the Dentists must treat patients referred to them by the Practice, and those patients are to remain patients of the Respondent and not of the Dentists 16. That provision would appear to render it virtually impossible for the Dentists to create goodwill or saleable assets in the course of their work;

(v) The Respondent can present the Dentists to the world at large as an emanation of their business. Clause 3.3 of the Contractors Agreement allows the Respondent to “acknowledge publicly the engagement of the Dentist by the Principal and the provision of the Services by the Dentist at the Practice”;

(vi) The Dentists must perform their services at the Respondent’s Practice Premises 17, not a place of work separate to the Respondent’s, and there would not appear to be any ability for the Dentists to delegate any part of their work without written approval18;

(vii) The Dentists are required to refer all work of a particular kind to a person at the Respondent defined as the Principal Dentist Contractors Agreement Clause 5.3(b) 19; and

(viii)While Laboratory fees are deducted from the Net Collections of the Dentists, the Dentists have no control over the laboratory services that they may use in the course of practice.

(c) The manner of remuneration has some indicia of an employment relationship. While, as noted below, the payments referable to completion of tasks is indicative of an independent contractor relationship, there are elements of the Respondent’s control over the ability of the Dentists to render fees that are more akin to employment. In particular:

(i) The Dentists may not discount any fees or services that they provide at the Practice without authorisation of the Respondent 20; and

(ii) Clause 6.4 of the Contractors Agreement is unequivocal. The Respondent issues, administers and owns all fees charged and collected relating to services rendered by the Dentists.

(d) Expenses of the Dentists is another area which, while pointing to an independent contractor relationship by virtue of the Dentists meeting those expenses, also points to a relationship more akin to employment due to the obvious expenses not met. Clause 6.5 of the Contractors Agreement provides:

“Dentist’s Expenses

Unless otherwise agreed by the Parties, the Dentist shall at all times be responsible for the Dentists expenses which includes, but are not limited to, the following expenses:

(a) professional licensing fees and memberships in professional societies;

(b) any medical, health or disability insurance;

(c) motor vehicle expenses;

(d) the cost of any policies of insurance maintained by the Dentist; and

(e) any periodicals, professional literature, textbooks and reference materials, except those already provided by the Principal for use by all employees of the Practice.”

So, while the Dentists pay their own professional association, insurance, motor vehicle and textbook expenses, the Practice apparently pays all the expenses of actually running the Practice (but for laboratory fees) which are without doubt substantial, thereby possibly explaining the 60% management fee 21. The Respondent is correctly characterised as maintaining significant tools and equipment.

(e) Quite tellingly, any intellectual property developed or created by the Dentist is assigned to the Respondent pursuant to the Contractors Agreement 22. This is a clear indicia of employment.

(f) Finally, the Contractors Agreement contains quite detailed termination provisions, allowing termination for inter alia, failing “to perform the Services regularly or diligently”, failing “to perform the Services in a manner consistent with an experienced and competent dentist”, and failing to comply or unreasonably delay in complying with a written direction given by the Respondent.

(ii) Indicia of Independent Contracting

[28] On the other hand, various provisions of the Contractors Agreement are indicative of it in fact being an actual independent contractors agreement. In particular:

(a) Income tax is not deducted from the Dentists’ remuneration, and the Dentists are explicitly responsible for all their taxation liabilities GST 23.

(b) The Dentists’ remuneration is not by periodic wage or salary, but by remuneration that relates to their professional fees for the services they perform, less expenses and a 60% management fee. The Dentists receive distributions of their remuneration fortnightly.

(c) The Dentists do not receive paid holidays or sick pay. In fact sick leave without two weeks’ notice or a valid medical certificate will result in a Dentist paying a daily fee of $300.00 to cover “costs” 24.

(d) Working as they do in a profession, there can be a general tendency for such professionals to be engaged as independent contractors.

(e) But for a 10 kilometre exclusion area, the Dentists are free to perform work for others 25.

(f) Finally, and certainly not of least importance, the Contractors Agreement clearly states 26:

“7. NO EMPLOYMENT OR PARTNERSHIP RELATIONSHIP

7.1 Independent contractor

The Parties agree that despite any other provision of this Agreement or any other implication which may arise as a result of a course of dealing between them, the Dentist is not an employee of the Principal but an independent contractor.”

(iii) Determination of Employment

[29] Viewed practically, none of the Dentists could be viewed as conducting a business of their own of which the work in question forms a part. While the nature of the work, being the practice of the profession of dentistry, can have a greater tendency for engagement as independent contractors, the significant control exercised by the Respondent over the Dentists’ performance of work, place of work and hours of work negates that tendency.

[30] The Dentists perform work at the Respondent’s premises, using tools and equipment provided by the Respondent. The Respondent presents the Dentists to the world at large as part of the Respondent’s business.

[31] In performing the work pursuant to the Contractors Agreement, the Dentists have no opportunity to grow their business, or create goodwill or saleable assets. Dentists are required to treat patients referred to them by the Practice, and those patients are to remain patients of the Respondent and not of the Dentists. Further significant post engagement restraints apply. Their only ability to work for others or in their own name would occur outside their hours of work and, with the consent of the Respondent, outside a 10 kilometre radius.

[32] While tax is not deducted from the payments made to the Dentists, what is significant is that the Dentists have virtually no control over their billing and the calculation of their remuneration, other than by performing the work allocated to them by the Respondent. In relation to taxation deductions, in French Accent the Full Bench observed:

“There is no doubt that Mr Cai had sought to insist that Mr Do Rozario be a contractor. Indeed, declaring the relationship to be one of independent contract rather than employment seems to have been the primary purpose of the written contract as it was prepared. Care should be taken in not attributing undue weight to the tax arrangements in relation to the worker. In ACE Insurance Ltd v Trifunovski, Perram J noted:

90. There are a number of authorities which suggest that the deduction of income tax instalments is relevant to the question of employment ... Because the deduction of income tax from wages will invariably be a matter of consent between employer and employee (or principal and independent contractor) there is little reason to doubt that the tax treatment of the payments provides an important and contemporaneous insight into what the parties intended and understood about this relationship. And, equally, there is no question but that the parties’ intention is an important, although by no means determinative, matter. I do not grasp as a matter of analysis, however, why it is that the tax treatment of the payments advances matters beyond disclosing the parties’ understanding of the relationship. ...

91. In this case, I accept that each of the sales representatives understood that he or she was an independent contractor at all material times. Their status as independent contractors was one of the attractions of the position. Indeed, none of them denied that understanding. It is 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.”

[33] As with tax arrangements, undue weight should also not be accorded to the very nature of the agreement that the parties make with one another. This consideration is referred to as the “Massey Proposition” after the judgment of the English Court of Appeal in Massey v Crown Life Insurance Co 27 (“Massey”). It is abundantly clear that the Massey Proposition is only applied where there is real ambiguity in the nature of the relationship between the parties, and absent such finding of ambiguity it has no application28. As Lord Denning observed in Massey:

“It seems to me on the Authorities that, when it is a situation which is in doubt or which is ambiguous, so that it can be brought under one relationship or the other, it is open to the parties by agreement to stipulate what the legal situation between them shall be.”

[34] The express term that the Dentists are independent contractors cannot take effect according to its terms if it contradicts the effect of the terms of the Contractors Agreement as a whole 29, as it does. As I have found no ambiguity in the nature of the relationship between the parties I accord no weight to Clause 7.1 of the Contractors Agreement.

[35] I find that each of the Dentists was an employee of the Respondent, and consequently that the Respondent was not a small business employer.

Conclusion

[36] As noted above, the parties agreed that the only matter for further evidence and determination was the question of whether the Respondent was a small business employer.

[37] Consistent with the First Instance Decision, I have found that the Respondent was not a small business employer. There are no grounds to disturb the conclusions of the Senior Deputy President at paragraphs [19] to [75] of the First Instance Decision.

[38] Having found that the Respondent was a small business employer, I adopt the conclusions of the Senior Deputy President at paragraphs [19] to [75] of the First Instance Decision, and order that the Respondent pay the amount of $40,000.00 plus superannuation as compensation to the Applicant. An order to this effect will issue separately.

DEPUTY PRESIDENT

Appearances:

Mr M Swanson, solicitor, appeared for the Applicant

Mr Q Guan appeared for the Respondent

Hearing details:

2019

Sydney

September 25

Final written submissions:

2019

September 27

October 4 and 8

Printed by authority of the Commonwealth Government Printer

<PR714329>

 1   [2019] FWC 2315.

 2   [2019] FWCFB 5104.

 3 At paragraph [13].

 4   At paragraphs [23] and [24].

 5   At paragraphs [34] to [36].

 6   At paragraphs [40], [41] and [42].

 7   PN 80 to PN 85.

 8   [2011] FWAFB 8307

 9   Contractors Agreement Clause 4.2.

 10   Contractors Agreement Clause 5.3(b).

 11   Contractors Agreement Clause 5.2(a).

 12   Contractors Agreement Clause 4.4.

 13   Contractors Agreement Clause 5.3(g).

 14   Contractors Agreement Clause 5.7.

 15   Contractors Agreement Clause 5.3(h).

 16  

 17  

Contractors Agreement Clause 3.1.

 18  

Contractors Agreement Clause 16.1.

 19  

Contractors Agreement Clause 5.6.

 20  

Contractors Agreement Clause 5.3(d).

 21  

Contractors Agreement Clause 6.1(a).

 22  

Contractors Agreement Clause 13.1.

 23  

Contractors Agreement Clause 6.6.

 24  

Contractors Agreement Clause 4.2.

 25  

Contractors Agreement Clauses 12.1 and 12.3.

 26  

Contractors Agreement Clause 7.1.

 27  

[1978] 2 All ER 576.

 28  

French Accent at [28].

 29  

AMP v Chaplin (1978) 18 ALR 385 at p.389.