Merlo v Global Business College of Australia Pty Ltd - [2022] FedCFamC2G 1011

Federal Circuit and Family Court of Australia
(DIVISION 2)
Merlo v Global Business College of Australia Pty Ltd [2022] FedCFamC2G 1011

File number(s): MLG 416 of 2021

Judgment of: JUDGE CAMERON

Date of judgment: 1 December 2022

Catchwords:
INDUSTRIAL LAW – sham contracting – whether applicant a contractor or an employee – status determined by reference to the terms of the parties’ agreement – relevant considerations.

SUPERANNUATION – compulsory employer contributions – whether claimable by employee under Superannuation Guarantee (Administration) Act 1992 (Cth).

CASUAL EMPLOYMENT – Fair Work Act 2009 (Cth) s.15A – whether an express disavowal of permanent employment is required.

FAIR WORK – constructive dismissal – Fair Work Act 2009 (Cth) s.386 – statutory test different from common law test.

Legislation:
Fair Work Act 2009 (Cth) ss. 15A, 323, 340, 342, 357, 386, 545, 550.

National Vocational Education and Training Regulator Act 2011 (Cth)

Superannuation Guarantee (Administration) Act 1992 (Cth)

Superannuation Guarantee Charge Act 1992 (Cth)

Cases cited:
Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 96 ALJR 89

ZG Operations Australia Pty Ltd v Jamsek (2022) 96 ALJR 144

Manchee v BTIG Australia Limited [2022] FedCFamC2G 813

JMC Pty Limited v Commissioner of Taxation [2022] FCA 750

Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16

Roy Morgan Research Pty Ltd v Federal Commissioner of Taxation (2010) 184 FCR 448

BHP Iron Ore Pty Ltd v Australian Workers’ Union (2000) 102 FCR 97

Rowland v Alfred Health [2014] FCA 2

Farac v Pendal Group Limited (2021) 310 IR 365

Fair Work Ombudsman v Austrend International Pty Ltd (2018) 273 IR 439

Koutalis v Pollett (2015) 235 FCR 370

Thomson v Orica Australia Pty Ltd (2002) 116 IR 186

Division: General

Number of paragraphs: 107

Date of hearing: 14 – 16 September 2022

Place: Melbourne

Counsel for the Applicant: Mr White

Solicitor for the Applicant: Jewell Hancock Employment Lawyers

Counsel for the Respondents: Mr Fagir

Solicitor for the Respondents: Ma & Company Solicitors
ORDERS

MLG 416 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:
LUCAS MERLO

Applicant

AND:
GLOBAL BUSINESS COLLEGE OF AUSTRALIA PTY LTD

First Respondent

PING YU

Second Respondent

MOHAMMED YASEEN

Third Respondent

order made by:

JUDGE CAMERON

DATE OF ORDER:

1 December 2022

THE COURT ORDERS THAT:
1.The application be dismissed.

Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE CAMERON
INTRODUCTION

From 13 April 2016 to 23 December 2020 the applicant, Dr Merlo, was engaged by the first respondent, Global Business Australia Pty Ltd (“GBCA”) as a part-time vocational education trainer. His work involved delivering classes to GBCA students and assessing their work. On 11 March 2021 Dr Merlo commenced this proceeding alleging, amongst other things, that he had been engaged by GBCA as a permanent part-time employee in 2016 and constructively dismissed in 2020 by it in contravention of s.340 of the Fair Work Act 2009 (Cth) (“FW Act”). Dr Merlo alleged that his dismissal was in response to an attempted exercise by him of a protected workplace right to be paid in full for his work, in circumstances where GBCA had wanted to cut his pay by a quarter. Dr Merlo also alleged that in further breach of the FW Act, GBCA had failed to honour certain entitlements appurtenant to his alleged employment, namely redundancy pay, notice of termination or pay in lieu, accrual of paid annual leave and commutation of untaken annual leave, paid public holidays and 20 hours’ pay per week during inter-term “stand downs”. He additionally alleged that GCBA had failed to make compulsory superannuation contributions on his behalf and had contravened s.357 of the FW Act by misrepresenting his engagement as independent contracting rather than as employment.
Dr Merlo alleged that the second respondent, Dr Yu, Managing Director of GBCA, and the third respondent, Mr Yaseen, an employee of GBCA, were involved in GBCA’s alleged contraventions, as that term is understood for the purposes of s.550 of the FW Act.
Dr Merlo sought declarations, compensation, orders for the imposition of pecuniary penalties to be paid to him, interest and costs.
The respondents alleged that Dr Merlo had not been dismissed from employment because he had been engaged as an independent contractor, not as an employee, and that his status could be discerned from the facts, in particular that Dr Merlo:
(a)was referred to in the parties’ contract as a contractor;
(b)was engaged on an “as needed basis”;
(c)invoiced for his services and was paid on invoice;
(d)did not work exclusively at GBCA;
(e)had significant flexibility, control, and autonomy in the way he delivered his lessons;
(f)had full control as to when he provided non-teaching services, such as marking; and
(g)used equipment provided by GBCA as well as his own equipment, including a laptop.
For the reasons that follow, the application will be dismissed.
APPLICANT’S CASE
Lucas Merlo
Dr Merlo filed affidavits affirmed on 22 April 2022 and 6 June 2022, although the latter was not dated.
Contract
Dr Merlo deposed that on 2 November 2015 he was offered the role of trainer by GBCA and that on 13 April 2016 he commenced working for GBCA pursuant to a written agreement dated 1 April 2016 (“April 2016 Contract”). His unshaken evidence was that although the document was dated 1 April 2016, he had only signed it on 13 April 2016 when he attended his induction. He said that he was provided with, read and signed the contract on 13 April 2013.
The April 2016 Contract read in part:
…
This Agreement is made on 1 April 2016 between Global Business College of Australia Pty. Ltd. A.C.N. 600 373 859 of Level 2, 337 La Trobe Street, Melbourne VIC 3000 (hereinafter referred to as “GBCA”) and Lucas Merlo ABN 59553616741 (hereinafter referred to as “the Contractor”).
…
Recitals
1. (a) The Contractor shall provide training services to GCBA.
(b)Agreement shall commence on 1st April 2016 and the term of this agreement shall be on need basis.
Services
2. The contractor will provide the services as follows:
(a)To provide training, assessment and marking of assessment papers in compliance with the requirements of the SRTO 2015 and GBCA Training and Assessment Strategy.
(b)To adhere to the assessment guidelines of the relevant national training package.
(c)To assist in the development of curriculum, training methods & resources.
(d)To prepare lesson plans, subject outlines, handouts, assignments and assessments for each subject taught. All prepared material is required to be submitted to the Training Manager at the conclusion of each subject.
(e)To attend each scheduled training/ assessment sessions fully prepared and punctually, at least 15 minutes before session commences.
(f)To record attendance in the class using Wisenet on a daily basis and provide attendance sheets to Administration Officer at the conclusion of each day.
(g)To ensure that all students are provided with the subject outlines and handouts for every subject and to make all students aware of the date of assessments.
(h)The training roster will be discussed and agreed by both parties for every term of ten weeks.
(i)To note any behaviour by a student considered to be in breach of appropriate behaviour by notifying the Training Manager.
(j)To maintain organisational version control for all training and assessment materials produced.
(k)To maintain the highest educational and training standards of GBCA Training & Assessment Services
(I)To read all manuals and legislative documents and to familiarise themselves with all GBCA, SRTO 2015 and ESOS Act requirements.
(m)To participate in the student complaints and appeal process as required.
(n)To participate in GBCA continuous improvement processes e.g. meetings, workshops, conferences and others.
(o)To participate in scheduled validation meetings.
(p)To initiate self-professional development and to maintain own knowledge and skills at a level consistent with modern developments in education generally, and within their own areas of technical expertise.
(q)To perform the role in an effective, professional manner.
(r)To have a high standard of dress, conduct and attitude from all students, and be exemplary in their own presentation.
(s)Further administrative tasks as assigned by GBCA.
…
Remuneration
(a)The Contractor shall be paid for the service monthly in arrears at $60 per hour.
(b)The Contractor is responsible for paying his own superannuation and acknowledges that GBCA has no responsibility to contribute any superannuation.
(c)The contractor must issue a proper tax invoice to GBCA, stating ABN, service provided and date of service.
…
7.Either party may terminate this agreement by giving 1 month's advance notice, or the initiating party may reduce the length of the required notice by paying the other party the notice amount calculated based on scheduled hours mentioned in training roster.
…
Dr Merlo said that classes were scheduled up to two years ahead and were shown in an Excel spreadsheet which also identified suggested breaks for reassessments and make-up classes. He also deposed that he had been given business cards but agreed that they had been printed for a trip he had made to China in 2016. He also said that before working at GBCA he had not worked in the training sector, which he said “is very strict”, and initially he had been under “strict guidance” as to what he taught.
Remuneration
Dr Merlo deposed that:
(a)between 13 April 2016 and 29 April 2019, he consistently worked 20 hours per week and received $60 per hour; and
(b)from 30 April 2019 he was paid for an additional two hours to take account of time spent marking and assessing students’ work.
In cross-examination he was taken to invoices he had issued which indicated that on occasion he had worked and been paid for a greater number of hours.
Dr Merlo’s affidavit in chief also set out details of how he and GBCA had conducted themselves under the contract as well as other evidence concerning his separate engagements with GBCA by which he also worked as a sessional academic.
Other work
Dr Merlo agreed that during his time with GBCA he had also worked at various other places in different capacities and had not sought GBCA’s permission to do so because he had not needed to. He said that taking other work was not a breach of his contract with GBCA.
Unpaid periods during employment
Dr Merlo’s evidence was that during his time with GBCA he had been stood down from work without pay on the following dates “in accordance with GBCA’s semester dates and teaching timetables”:
(a)for two weeks from 22 June 2016;
(b)for two weeks from 14 September 2016;
(c)for three weeks from 11 January 2017;
(d)for six weeks from 27 February 2017;
(e)for two weeks from 1 May 2017;
(f)for two weeks from 31 July 2017;
(g)for two weeks from 23 October 2017;
(h)for two weeks from 25 December 2017;
(i)for four weeks from 29 January 2018;
(j)for two weeks from 7 May 2018;
(k)for two weeks from 30 July 2018;
(l)for two weeks from 22 October 2018;
(m)for two weeks from 24 December 2018;
(n)for four weeks from 28 January 2019;
(o)for two weeks from 6 May 2019;
(p)for two weeks from 29 July 2019;
(q)for two weeks from 21 October 2019;
(r)for two weeks from 23 December 2019;
(s)for two weeks from 17 February 2020;
(t)for two weeks from 13 April 2020;
(u)for two weeks from 6 July 2020; and
(v)for two weeks from 27 September 2020.
He said:
As I was stood down in accordance with GBCA’s semester dates and teaching timetables, I was not notified by GBCA about the stand down at the commencement of each period. I returned to work in accordance with GBCA’s semester dates and teaching timetables.
Events leading to separation
Dr Merlo deposed that on 11 December 2020 he attended a Zoom meeting with Mr Yaseen who told him that:
(a)GBCA was going to reduce his pay to $45.00 per hour and would no longer pay him for the marking and assessment components of his role;
(b)all trainers would be placed on the same terms; and
(c)if he did not agree to the pay reduction, Mr Yaseen would be forced to replace him.
Dr Merlo’s evidence was that he worked as usual between 12 and 20 December 2020 but on 21 December 2020 he and Mr Yaseen exchanged text messages in which they said:
Mr Yaseen: Hi Lucas. Reference to our discussion, I have been waiting. I have got only 4 days to find a trainer if you decline to work on the new terms and conditions. Please respond by today 21st Dec 2020
Dr Merlo: Mohammed can I request some more time. My partner Kelsie wants to understand more the reasons for cut to my salary.
Mr Yaseen: Hi Lucas. I have got only 4 days left to find substitute. Please let me know by tomorrow. According to my knowledge Some staff is may be working on job seekers. It is known fact in Australia/ Victoria the business are going through difficult times
Dr Merlo’s evidence was that on 22 December 2020 he sent an email to Mr Yaseen saying:
I have discussed with my partner and she I and I both feel taking an hourly pay cut next semester, as you have proposed is unreasonable and impossible for us to justify.
Dr Merlo deposed that he had not worked for GBCA since 23 December 2020 and GBCA had not contacted him in relation to his absence or asked that he return to work. His evidence was that he assumed, based on the conversation with Mr Yaseen on 11 December 2020 and Mr Yaseen’s text messages of 21 December 2020, that his employment had been terminated. However, he agreed in cross-examination that, ordinarily, no one would have contacted him before the new term and he would just have arrived at work in the new academic year in accordance with the pre-prepared schedule. He also agreed that on 12 January 2021, before the new academic year started, he had commenced in the Fair Work Commission (“FWC”) the proceeding that preceded this matter.
Impact of termination
Dr Merlo deposed that he received Jobseeker payments between 12 July 2021 and 10 August 2021 and commenced full-time employment again on 11 April 2022.
RESPONDENTS’ CASE
The respondents argued that Dr Merlo’s evidence did not support a finding that he had been employed by GBCA as a trainer, with the consequence that the dependent claims for relief could not be made out. They adduced no evidence apart from:
(a)Dr Merlo’s curriculum vitae;
(b)Dr Merlo’s LinkedIn profile;
(c)Dr Merlo’s Australian Business Number details;
(d)a notice to produce addressed to Dr Merlo regarding his contracts for services with Victoria University, the Royal Melbourne Institute of Technology and Enable Funding together with documents produced in response; and
(e)Dr Merlo’s tax return details for the years 2014-2015 to 2020-2021.
SUBMISSIONS
Applicant
Contractor or employee
Background
Dr Merlo acknowledged that the question whether he had been an employee or a contractor was the first and primary matter to be resolved and he accepted that each of his claims in this proceeding was dependent upon a finding that he had been an employee. He also accepted that the principles relevant to the determination of that question were recently clarified by the High Court in cognate cases Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 96 ALJR 89 and ZG Operations Australia Pty Ltd v Jamsek (2022) 96 ALJR 144.
Dr Merlo submitted that little if any weight should be ascribed to the use of the descriptor “Contractor” in the April 2016 Contract, on the basis that the parties’ opinions of their own status were not relevant to the Court’s task of characterising that status, and that it was to be noted that he had signed the contract as an individual, not as the officer of a company or as a member of a partnership.
Degree of GBCA’s control over Dr Merlo
Dr Merlo submitted that the April 2016 Contract gave GBCA “an overarching right to control” him and his work, including how he delivered it. He referred in that connection to the contract’s cls.2(a), (b), (e) and also (d), (h), and (r), submitting that they demonstrated the point. As recorded earlier, those clauses provided:
2. The contractor will provide the services as follows:
(a)To provide training, assessment and marking of assessment papers in compliance with the requirements of the SRTO 2015 and GBCA Training and Assessment Strategy.
(b)To adhere to the assessment guidelines of the relevant national training package.
…
(d)To prepare lesson plans, subject outlines, handouts, assignments and assessments for each subject taught. All prepared material is required to be submitted to the Training Manager at the conclusion of each subject.
(e)To attend each scheduled training/ assessment sessions fully prepared and punctually, at least 15 minutes before session commences.
…
(h)The training roster will be discussed and agreed by both parties for every term of ten weeks.
…
(r)To have a high standard of dress, conduct and attitude from all students, and be exemplary in their own presentation.
…
Dr Merlo submitted that cl.2(a) of the contract obliged him to perform his work in compliance with both the Standards for Registered Training Organisations (RTOs) 2015 (“2015 Standards”), made under the National Vocational Education and Training Regulator Act 2011 (Cth) (“NVETR Act”), and GBCA’s Training and Assessment Strategy (“GBCA’s Strategy”), which was part of exhibit A1. He argued that the latter was prescriptive and covered all aspects of a training course’s delivery. Dr Merlo referred particularly to cls.2.4 and 4.2 of GBCA’s Strategy which provided:
Dr Merlo submitted that those provisions showed that GBCA could control the content of his work.
In relation to other aspects of GBCA’s control over his work, Dr Merlo submitted that cl.2(e) of the contract was, in substance, a command that he attend and conduct his classes at a particular time according to the roster, either at GBCA’s campus or somewhere it directed, and that he be in place 15 minutes before a class started. He submitted that cl.2(d) controlled how he designed, presented and assessed his courses and that cl.2(r) even controlled how he dressed. References were additionally made to other parts of cl.2 which, Dr Merlo contended, provided GBCA with even more control over his work and indicated that he had worked within GBCA’s business and not on his own account as a contractor. He submitted that this was necessarily so given the regulatory compliance burden that the 2015 Standards placed on GBCA and its business.
Mode of remuneration
Dr Merlo referred to the fact that he had been paid by the hour, rather than by reference to the completion or presentation of a product, and that this pointed to his engagement having been more in the nature of employment than of independent contracting.
Equipment

Dr Merlo conceded that the April 2016 Contract was silent on the question of equipment, apart from implying the availability of GBCA’s IT services and devices.
Independence of Dr Merlo’s business
Dr Merlo submitted that under the April 2016 Contract he had not been conducting an independent business. He argued that the contract’s terms suggested that he had been engaged to work as part of GBCA’s business, in that the core of that business was the delivery of training and assessment within the VET (i.e. Vocational Education and Training) Quality Framework and that he, as one of the “body of labourers delivering that training and assessment”, was integral to, and integrated into, that business. This, it was argued, was to be contrasted with the absence from the contract of anything, apart possibly from the need to issue invoices for payment, suggestive of Dr Merlo having been conducting his own business.
In support of his argument that he had not been conducting an independent business, Dr Merlo contended that:
(a)he had had no right to delegate work;
(b)there was no entrepreneurial or risk aspect to his relationship with GBCA;
(c)he was not required to provide his own equipment to perform his work;
(d)the work was the essence of GBCA’s business, the company holding itself out to the public as a provider of education to students; and
(e)there was no suggestion that Dr Merlo was registered to provide those courses separately.
He further contended that it was irrelevant that he worked elsewhere as this was conduct that occurred after the contract was formed and could not bear on its characterisation.
Misrepresentation
The FW Act provides:
357     Misrepresenting employment as independent contracting arrangement
(1)A person (the employer) that employs, or proposes to employ, an individual must not represent to the individual that the contract of employment under which the individual is, or would be, employed by the employer is a contract for services under which the individual performs, or would perform, work as an independent contractor.
(2)Subsection (1) does not apply if the employer proves that, when the representation was made, the employer:
(a)       did not know; and
(b)       was not reckless as to whether;
the contract was a contract of employment rather than a contract for services.
In his statement of claim, Dr Merlo alleged that GBCA had, contrary to s.357 of the FW Act, misrepresented his relationship with it as being one of independent contracting rather than as one of employment, and particularised that alleged misrepresentation by reference to conduct during the life of the agreement, namely being treated by GBCA as a contractor from 2016 to 2020. When opening and in addresses Dr Merlo also submitted that GBCA’s provision to him of the April 2016 Contract amounted to misrepresentation. He argued that any one of the following provisions of the contract would be sufficient to amount to a misrepresentation that their relationship was one in which he was an independent contractor:
(a)the description of him as a contractor;
(b)the requirement that he maintain an Australian Business Number;
(c)the requirement that he issue invoices; and
(d)the contract’s failure to provide for superannuation contributions.
He also observed that as the respondents had not called any witnesses they would not be able to make out the defences to the allegation found in s.357(2).
Casual employee?
Dr Merlo accepted that in order to make out his claim to annual leave, redundancy pay, notice of termination or pay in lieu and paid public holidays entitlements under the FW Act, he had to demonstrate that he had not been a casual employee. In that connection he referred to the FW Act’s definition of “casual employee” which, despite the date of its introduction, can apply to his case: item 46 of sch.1 to the FW Act. Relevantly, s.15A states:
15A Meaning of casual employee
(1)       A person is a casual employee of an employer if:
(a) an offer of employment made by the employer to the person is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person; and
(b)       the person accepts the offer on that basis; and
(c)       the person is an employee as a result of that acceptance.
(2)For the purposes of subsection (1), in determining whether, at the time the offer is made, the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person, regard must be had only to the following considerations:
(a) whether the employer can elect to offer work and whether the person can elect to accept or reject work;
(b) whether the person will work as required according to the needs of the employer;
(c) whether the employment is described as casual employment;
(d) whether the person will be entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer or a fair work instrument
…
Dr Merlo submitted in opening that s.15A(1)(a) would apply if the terms of engagement disavowed the existence of a firm advance commitment, and that if his alleged employment did not satisfy that test it had not been casual employment under the FW Act. In closing he went on to say that the April 2016 Contract had in fact provided him a “firm advance commitment as to work” and so had not involved casual employment, notwithstanding that it had recited that:
… the term of this agreement shall be on a need basis.
He argued that that expression in the recitals was brief to the point of meaninglessness and that, in any event, a recital would not usually be considered one of a contract’s operative provisions.
Dr Merlo referred to evidence to the effect that GBCA’s teaching rosters were prepared many months in advance and argued that cl.2(e), (h) and cl.7 of the April 2016 Contract, which depended on the existence and observance of those rosters, implied a continuing and regular relationship of a sort inconsistent with him having been employed as a casual. He submitted that under the April 2016 Contract, at least for so long as the roster was in place, he did not have a right to accept or reject work, and GBCA did not have a right to elect to offer or not to offer work.
Underpayments
The statement of claim alleged that the alleged misrepresentation of the relationship between Dr Merlo and GBCA had caused Dr Merlo loss of $139,221.60, particularised as follows:
(a)       annual leave in the sum of $22,560.00;
(b)       public holidays in the sum of $12,000.00;
(c)       notice in lieu in the sum of $3,600.00;
(d)       redundancy pay in the sum of $9,600.00;
(e)       underpayments in the sum of $63,600.00; and
(f)       superannuation in the sum of $27,861.60.
The Court was provided with Dr Merlo’s calculations of alleged underpayments of his annual leave and public holiday entitlements which had been prepared by reference to his invoices and his days and hours worked. He submitted that when he had had no work to do between terms and was stood down, he had been entitled to be paid his usual salary as a permanent part-time worker based on the 20 hours that he ordinarily worked each week during term. He alleged that he had been entitled to an additional 53 weeks’ pay on that basis.
Superannuation
Referring to the Superannuation Guarantee (Administration) Act 1992 (Cth), Dr Merlo alleged in his statement of claim that pursuant to s.545(1) of the FW Act he was entitled to be paid compensation for what he said was GBCA’s failure to make superannuation contributions on his behalf. In opening he asserted an entitlement to:
… unpaid superannuation in connection with each contravention of the Fair Work Act that is found by the court
while conceding that whatever compensation might be ordered under the FW Act had to be based on an entitlement provided by that Act. In that regard he submitted that to reflect his loss of superannuation contributions, he was entitled to a 9.5% uplift on all compensation awarded under the FW Act on the basis that the loss of those contributions was caused by his employment having been misrepresented as independent contracting.
Dismissal
In his statement of claim Dr Merlo alleged that he had been dismissed on 23 December 2020 “at the First Respondent’s initiative”. He particularised that allegation as follows:
The Dismissal was implied by:
(a)       all the facts and circumstances including:
i.        the verbal conversation on 11 December 2020; and
ii.        the text message conversation on 21 December 2020; and
(b)      the operation of the law.
Dr Merlo went on to submit that he had been constructively dismissed, arguing that GBCA’s conduct in seeking to cut his rate of pay had been a repudiation of his contract and that Mr Yaseen’s 21 December 2020 text message, which indicated that Dr Merlo would be replaced if he did not agree to the reduction in pay, was also repudiatory. He submitted that his 21 December 2020 text to Mr Yaseen, in which he declined the request for a pay cut, implicitly accepted GBCA’s repudiation. Dr Merlo contended that he had been dismissed for having objected to his pay being cut in circumstances where he had had a workplace right under s.323 of the FW Act to be paid in full at the rate that had been agreed. He submitted that his dismissal had therefore contravened s.340 of the FW Act.
In reliance on the allegation that he had been dismissed, Dr Merlo alleged that he had not received notice of termination and had been entitled under the FW Act to $3,600 as 3 weeks’ pay in lieu, or under the contract to $5,200 as 4 weeks’ pay in lieu, neither of which he had received.
Redundancy
As an alternative to his allegation of dismissal, Dr Merlo argued that he had been made redundant because GBCA no longer required anyone to do his job at the rate of $60 per hour. He alleged that he had therefore been entitled to redundancy pay of 8 weeks’ salary at the time of his alleged dismissal, namely $9,600.
Accessories
Dr Merlo alleged against Dr Yu:
41. The Second Respondent:
(a) is and has been from at least 13 April 2016 the Managing Director of the First Respondent;
(b) was directly involved in engaging the Applicant on 13 April 2016;
(c) is and was at all relevant times ultimately responsible for authorising payment of the Applicant; and
(d) was responsible for authorising the payment of statutory entitlements to employees when terminated.
42. The Second Respondent:
(a) was aware that the Applicant was an employee of the First Respondent and not a contractor for services;
(b) knew the reasons for the decision to effect the Dismissal; and
(c) was aware of the statutory entitlements owing to the Applicant as at the Dismissal.
It was submitted that Dr Yu had had personal knowledge of and involvement in Dr Merlo’s recruitment and work for GBCA.
It was said in relation to Dr Yu that:
(a)the amended defence admitted that Dr Yu was managing director of GBCA;
(b)the amended defence admitted that Dr Yu signed the April 2016 contract on behalf of GBCA;
(c)had been involved in Dr Merlo’s recruitment to GBCA, including by interviewing him; and
(d)if could be inferred from her being managing director of an Australian business, that Dr Yu knew of employee entitlements in Australia and that GBCA was not paying Dr Merlo employment entitlements.
It was alleged against Mr Yaseen:
44. The Third Respondent:
(a) is and has been from 23 September 2020 a Training Manager with the First Respondent;
(b) is and was at all relevant times one of the ultimate decision makers in respect of the termination of Trainers within the First Respondent;
(c) is and was at all relevant times experienced in employing and terminating Trainers; and
(d) is and was at all relevant times ultimately responsible for the management of Trainers of the First Respondent.
45. The Third Respondent:
(a) had knowledge of the exercise of workplace rights pleaded in paragraph 12;
(b) made the Reduction in Pay Proposal;
(c) made the decision to effect the Dismissal; and
(d) knew the reasons for the decision to effect the Dismissal.
It was submitted in relation to Mr Yaseen that:
(a)he had been Dr Merlo’s direct supervisor with direct knowledge and experience of the level of control GBCA had over him;
(b)he had been directly involved in the repudiatory conduct of reducing Dr Merlo’s pay rate that gave rise to the dismissal; and
(c)he knew that Dr Merlo was, unless he agreed otherwise, entitled to be paid at the $60 per hour rate previously agreed and also that the dismissal was motivated by that entitlement.
Respondents
Contractor or employee
Background
The respondents submitted that the terms of Dr Merlo’s April 2016 Contract decided the character of the relationship. They said in that connection that objective facts known to the parties at the time of contracting that might aid in the construction of the contract had been:
(a)Dr Merlo was a highly qualified and apparently experienced businessman with a diversity of business and other interests. He was engaged in a variety of roles in different capacity as employee, contractor principal, and could be taken to understand the pros and cons of the different work structures;
(b)prior to joining GBCA Dr Merlo had at least seven years’ experience as a lecturer and course co-ordinator at RMIT, Victoria University and Andrews University, and had developed and delivered business courses; and
(c)the hourly rate provided for in the contract was considerably higher than the award hourly rate applying to employees.
It was also submitted that Dr Merlo would not work unless there was work to be done, referring to his evidence that he did not starting teaching with GBCA until enrolments were sufficiently numerous.
The respondents continued in relation to the contract’s terms:
…
(e)The characterisation of the relationship often involves two considerations of first whether the putative employer has the right to control how, where and when the putative employee performs the work; and second the extent to which the putative employee can be seen to work in their own business, as distinct from the business of the putative employer. However neither of those considerations are determinative and both involve questions of degree.
(f)The “own business/employer’s business” dichotomy “usefully focusses attention upon those aspects of the relationship generally defined by the contract which bear more directly upon whether the putative employee’s work was so subordinate to the employer’s business that it can be seen to have been performed as an employee of that business rather than as part of an independent enterprise”.
… (references omitted)
The respondents submitted that, subject to teaching classes in compliance with the statutory regime, Dr Merlo had been free to do whatever he wanted.
Degree of GBCA’s control over Dr Merlo
The respondents submitted that Dr Merlo had not adduced any evidence showing that GBCA had given him a direction about anything or, more particularly, had directed him as to the content of his lessons, lesson delivery, assessment, or any other of the specifics of his training work, or had supervised or monitored his performance. They argued in that regard that although some level of control is involved in all independent contracting arrangements, the “control” test for employment requires that a person be directed not only as to what he or she does in the course of the employment but also how he or she does it. They argued that a performance standard did not amount to control.
It was submitted that the terms of the April 2016 Contract fell short of establishing the level of control characteristic of an employment relationship in that Dr Merlo was engaged to provide teaching services, including the preparation and delivery of course content, as he saw fit and the contract did not specify how, when or where he was to do that. They argued that that was hardly surprising as Dr Merlo was the relevant business studies expert, and that this was reflected in the fact that the contract required him to prepare lesson materials rather than to accept direction on them from GBCA.
The respondents argued that although the April 2016 Contract required that Dr Merlo maintain high educational standards, act professionally and deliver services consistently with the 2015 Standards, those standards were an indication of what Dr Merlo was to do, not how he was to do it, and did not provide for a right to control. They submitted that the 2015 Standards did not require GBCA to dictate to Dr Merlo the way in which he performed his work but were high level requirements met by ensuring that appropriate personnel were hired, courses were structured appropriately and the required content delivered.
Independence of Dr Merlo’s business
The respondents submitted in relation to the “own business” question that the question was whether a given contract subordinated the worker in such a way that they were properly viewed as nothing more than an emanation of the principal’s business. They argued that the April 2016 Contract did not subordinate Dr Merlo, make him an emanation of GBCA’s business or require him to seek its permission to engage in his other work activities.
Misrepresentation
In response to Dr Merlo’s contention that s.357 of the FW Act had been contravened, the respondents submitted that what was required for such a contravention was a misrepresentation of his relationship with GBCA, not just entry into a contract which misdescribed the relationship. They noted that the misrepresentation that had been pleaded had been that GBCA treated him during his engagement as a contractor whereas he had really been an employee. They submitted that allowing Dr Merlo to contend additionally, as he did in submissions, that the April 2016 Contract was or contained a misrepresentation, would prejudice them because they had not had the opportunity to lead evidence on the question. The respondents argued that Dr Merlo should be held to his pleading.
The respondents also submitted that it was clear from the evidence that GBCA had genuinely considered Dr Merlo to have been a contractor and so the statutory defence to the allegation, found in s.357(2) of the FW Act, was made out.
Casual employee?
The respondents observed that, were Dr Merlo to be found to have been an employee, his classification as casual or permanent part-time was important because the benefits he claimed attached to the latter status and not to the former. They submitted that Dr Merlo’s status fell to be determined by reference to the April 2016 Contract which, they said, created no obligations to provide or accept work, did not commit to continuing and indefinite work according to an agreed pattern of work as contemplated by s.15A of the FW Act, and did not canvass the casual/permanent issue at all. They argued that the test of casual employment in s.15A of the FW Act did not require an employer to state that no firm advance commitment to continuing and indefinite work according to an agreed pattern of work was being given. They said that it was sufficient that such a commitment is not provided, and that that was consonant with the purpose of the section having regard to the mischief it was introduced to address, partly manifested by its retrospective operation.
Sessional employee?
The respondents argued that if Dr Merlo were found to have been employed, but not as a casual employee, it had to be determined whether he was instead a permanent or sessional employee. In furtherance of this contention, they referred to the Educational Services (Post-Secondary Education) Award 2020 (“Award”), the implication being that it would apply to Dr Merlo if he had been an employee of GBCA. They referred specifically to the following provision:
12. Sessional employment
12.1 Clause 12 applies only to teaching staff members.
(a)A sessional employee is an employee engaged to work on a full-time or part-time basis for a specified period or periods of not less than 4 weeks or not more than 40 weeks in any calendar year.
(b)A sessional employee receives, on a pro rata basis, pay and conditions equivalent to those of a full-time or part-time teacher with the same qualifications, experience and teaching load.
(c) On termination of a sessional engagement, an employee may elect to be paid out accrued annual leave entitlements or have the employer preserve them for use during a subsequent sessional engagement. Where the accrued leave is not taken within 12 months of it accruing, or the employee is not re-engaged within 8 weeks, the entitlement will be paid out. See also clause 23—Annual leave.
(d) Subject to the employee’s satisfactory conduct and performance, where an equivalent position exists at the expiry of the employee’s period of engagement, the employer will offer a further engagement to the employee.
(e) Where practicable, notice of re-engagement will be given at least 2 weeks prior to the expiry of the current engagement and the employee will give one week’s notice of acceptance to the employer.
That sub-clause was only introduced in July last and until then the Award had, over the time Dr Merlo worked at GBCA, included the same or similar provisions as, variously, cl.10.5, cl.11.6, and then cl.11.7 of the Award and its predecessor, the Educational Services (Post-Secondary Education) Award 2010.

The argument was that Dr Merlo had been engaged to work only as needed and, if the Court were to find that he had been engaged with a firm commitment to employment, that commitment could only have been to work during term time and thus as a sessional employee.
Underpayments
The respondents addressed Dr Merlo’s claims to “stand down pay” between terms and to annual leave, and these argument will be considered later in these reasons.
More generally, the respondents submitted that, unusually for a sham contracting case, there was no basis for finding that Dr Merlo had been worse off for having been treated as a contractor, rather than as an employee, as he had been paid at a rate considerably higher than the one legally required. It was submitted in that regard that:
It is rather more likely that the combination of Dr Merlo’s higher hourly rate, tax status, and freedom from direction (allowing him to conduct his many other ventures) left him considerably better off as a contractor than employee.
However, it was not suggested that the contractual payments could be set off against any award entitlements and no reference was made to authorities such as those I cited in Manchee v BTIG Australia Limited [2022] FedCFamC2G 813 at [44]ff.
Superannuation
The respondents submitted that it was unclear what alleged contravention was said to have led to the contended loss of superannuation contributions. It was also posited that Dr Merlo had been paid at such a high hourly rate that, had he been an employee, GBCA would never have paid additional amounts by way superannuation contributions.
Dismissal
The respondents disputed the contention that Dr Merlo had actually been dismissed. They submitted in that connection that it was impossible to discern an act of dismissal from the relevant events, namely:
(a)GBCA’s 11 December 2020 request of Dr Merlo that he accept a reduction in his pay;
(b)the exchange of text messages between Dr Merlo and Mr Yaseen on 21 December 2020 in which Mr Yaseen pressed Dr Merlo for a response to GBCA’s request, saying that he had only 4 days to find a replacement for him if he declined the request;
(c)Dr Merlo’s 22 December 2020 email refusing to accept the reduction; and
(d)Dr Merlo’s commencement of the FWC proceeding on 12 January 2021 in which he alleged that he had been dismissed on 23 December 2020.
The respondents submitted there had been no other contact between the parties (in that period) and so no 23 December 2020 dismissal was discernible on the evidence.
Turning to Dr Merlo’s allegation that the alleged dismissal had been effected because he had insisted on being paid in full for work performed, the respondents submitted that s.323 of the FW Act protects the right to payment in full for work that has already been done and is not concerned with payment for work that may be done in the future. They argued that Dr Merlo had had no right to payment for work that had not been performed and so had had no extant workplace right under s.323.
Redundancy
The respondents contested Dr Merlo’s argument that he was entitled to redundancy pay on the basis that GBCA no longer wanted his job done by anyone, saying that no evidence had been led to suggest that his position had been abolished or that GBCA had no longer wanted to employ a trainer.
Accessories
The respondents submitted that Dr Merlo had not pleaded that Dr Yu had had knowledge of any of the essential elements of the contraventions or had adduced any evidence that she had had such knowledge. It was similarly submitted in relation to Mr Yaseen that the central allegations against him had not been made out.
Pleading
In addition to the submissions referred to earlier to the effect that the pleading of the misrepresentation allegation was deficient and ought not be allowed to be expanded on, the respondents also submitted that Dr Merlo’s case concerning when he had entered into the April 2016 Contract had changed from first stating that it had been 1 April 2016 to later stating that it had occurred on 13 April 2016. The respondents referred in that connection to the allegation in para.2 of the Statement of Claim that:
2.On or around 13 April 2016 the Applicant was engaged with the First Respondent in the role of Trainer pursuant to an untitled written agreement dated 1 April 2016 and signed by the Applicant and Dr. Celina Ping Yu (the Second Respondent) – Managing Director on behalf of the First Respondent (the Agreement).
They submitted that if it was accepted that the April 2016 Contract had been made on 1 April 2016 then the evidence as to what had happened on 13 April 2016 was irrelevant.
CONSIDERATION
Credibility
The only witness was Dr Merlo. I was impressed by his candour and willingness to concede errors in his evidence when they were pointed out to him, although I think at times he conceded more than was necessary. Cross examination did not shake him on matters of substance and I accept his evidence.
Contractor or employee
The law relevant to this case was, with respect, recently summarised by Wigney J in JMC Pty Limited v Commissioner of Taxation [2022] FCA 750 as follows:
17First, where the rights and duties of the parties are comprehensively committed to a written contract, the legal rights and obligations established by the contract are decisive of the character of the relationship provided that the validity of the contract has not been challenged as a sham, or that the terms of the contract have not been varied, waived or are subject to an estoppel: … The task is to construe and characterise the contract made between the parties at the time it was entered into: …
18Second, in order to ascertain the relevant legal rights and obligations, the contract of employment must be construed in accordance with the established principles of contractual interpretation: … In that respect, regard may be had to the circumstances surrounding the making of the contract, as well as to events and circumstances external to the contract which are objective, known to the parties at the time of contracting and which assist in identifying the purpose or object of the contract: … The nature of the specific job that the putative employee applied for and the nature and extent of any tools or equipment they have to supply for that job may also be relevant: … It is, however, generally not legitimate to use in aid of the construction of a contract anything which the parties said or did after it was made: …
19Third, and flowing from the first two principles, the characterisation of the relationship between the parties is not affected by circumstances, facts or occurrences arising between the parties that have no bearing on their legal rights: … For a “matter to bear upon the ultimate characterisation of a relationship, it must be concerned with the rights and duties established by the parties’ contract, and not simply an aspect of how the parties’ relationship has come to play out in practice but bearing no necessary connection to the contractual obligations of the parties”: …
20It follows that the fact that the parties’ subsequent conduct may not have precisely aligned with their contractual rights and obligations, or the fact that a particular contractual right may have never been exercised or utilised, will generally be irrelevant when it comes to characterising the relationship. That is so unless the manner in which the parties conducted themselves after entering into the contract was such as to establish that the contract was a sham, or that the contract had been varied, or that certain rights under the contract were subject to an estoppel.
21Fourth, the contractual provisions that may be relevant in determining the nature of the relationship include, but are not limited to, those that deal with the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work, the provision for holidays, the deduction of income tax, the delegation of work and the right to exercise direction and control: …
22In [Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16], Wilson and Dawson JJ said … that the indicia which suggested an employment relationship included “the right to have a particular person do the work, the right to suspend or dismiss the person engaged, the right to the exclusive services of the person engaged and the right to dictate the place of work, hours of work and the like”, whereas those that suggested a contract for services included “work involving a profession, trade or distinct calling on the part of the person engaged, the provision by him of his own place of work or of his own equipment, the creation by him of goodwill or saleable assets in the course of his work, the payment by him from his remuneration of business expenses of any significant proportion and the payment to him of remuneration without deduction for income tax”. Their Honours were, however, careful to note … that “any attempt to list the relevant matters, however incompletely, may mislead because they can be no more than a guide to the existence of the relationship of master and servant”. It should also be emphasised that the list of possible indicia must now be approached on the basis that the focus is on the parties’ contractual rights and obligations relevant to those matters, at least where the contract is wholly in writing, not on the way in which the work was actually carried out.
23Fifth, the characterisation of the relationship as one of service or employment involving an employer and employee, as opposed to a relationship involving an independent contractor providing services to a principal, often hinges on two considerations. The first consideration is the extent to which the putative employer has the right to control how, where and when the putative employee performs the work: … The second is the extent to which the putative employee can be seen to work in his or her own business, as distinct from the business of the putative employer – the so-called “own business/employer’s business” dichotomy: … Neither of those considerations are determinative and both involve questions of degree.
24As for the element of control, “the existence of a right of control by a putative employer over the activities of a putative employee serves to sensitise one to the subservient and dependent nature of the work of an employee, so as to assist in an assessment of whether a relationship is properly to be regarded as a contract of service rather than a contract for services”: …
25As for the “own business/employer’s business” dichotomy, it also “usefully focusses attention upon those aspects of the relationship generally defined by the contract which bear more directly upon whether the putative employee’s work was so subordinate to the employer’s business that it can be seen to have been performed as an employee of that business rather than as part of an independent enterprise”: … Another way of framing the question, which focusses more directly on the terms of the contract, is whether the person “is contracted to work in the business or enterprise of the purported employer”: … One consequence of answering that question in the negative may be that the person is not an employee.
26Sixth, a “label” which the parties may have chosen to describe their relationship is not determinative of the nature of the relationship and will rarely assist the court in characterising the relationship by reference to the contractual rights and duties of the parties: …
27The characterisation of a relationship as being either one of employer and employee, or one involving the engagement of an independent contractor, is ultimately an evaluative judgment that takes into account the totality of the parties’ contractual rights and obligations. The exercise may not necessarily be straightforward because, in some cases at least, the parties’ contractual rights and obligations may point in different directions. The evaluative exercise also should not be approached on the basis that there is some checklist against which ticks and crosses may be placed so as to produce the right answer. Some degree of uncertainty is unavoidable, particularly in the case of many modern-day work or service contracts. (references omitted)
Parties to contract
The parties to the April 2016 Contract were Dr Merlo and GBCA. If Dr Merlo had contracted through a corporate entity or as a member of a partnership, that might have pointed to the relationship being one of independent contracting: JMC v Commission of Taxation at [88]. However, he contracted in his own name which is not suggestive of any particular relationship.
Degree of GBCA’s control over Dr Merlo
When considering whether in a working relationship one party is subservient to another in a manner consistent with the one being employed by the other, the question is whether, having regard to the terms of the contract, the “engagement subjects the person engaged to the command of the person engaging him, not only as to what he shall do in the course of his employment but as to how he shall do it”: JMC v Commissioner of Taxation at [95], quoting Wilson and Dawson JJ in Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 35.
The background to Dr Merlo’s work for GBCA was the NVETR Act, and the 2015 Standards made under it, with which GBCA had to comply. The 2015 Standards relevantly provide:
Standard 1. The RTO’s training and assessment strategies and practices are responsive to industry and learner needs and meet the requirements of training packages and VET accredited courses
…
Trainers and assessors
1.13.In addition to the requirements specified in Clause 1.14 and Clause1.15, the RTO’s training and assessment is delivered only by persons who have:
a)vocational competencies at least to the level being delivered and assessed;
b)current industry skills directly relevant to the training and assessment being provided; and
c)current knowledge and skills in vocational training and learning that informs their training and assessment.
Industry experts may also be involved in the assessment judgement, working alongside the trainer and/or assessor to conduct the assessment
1.14.The RTO’s training and assessment is delivered only by persons who have the training and assessment credential specified in Item 2 or Item 3 of Schedule 1.
…
1.16.The RTO ensures that all trainers and assessors undertake professional development in the fields of the knowledge and practice of vocational training, learning and assessment including competency based training and assessment.
…
Standard 2.The operations of the RTO are quality assured.
…
2.3.The RTO ensures that where services are provided on its behalf by a third party the provision of those services is the subject of a written agreement.
2.4.The RTO has sufficient strategies and resources to systematically monitor any services delivered on its behalf, and uses these to ensure that the services delivered comply with these Standards at all times
…
It is not apparent that the 2015 Standards required GBCA to exercise any particular degree of supervision over its trainers.
It is not apparent that the April 2016 Contract provided for any real power of that sort either. It did set general standards and expectations but did not provide a mechanism for GBCA to direct how they were to be met or even a way for it to ensure they were met. The main undertakings given by Dr Merlo under the contract were expressed in broad terms which provided him with a considerable degree of discretion as to how they were discharged. They were to:
·provide training, assessment and marking in compliance with the 2015 Standards and GBCA’s Strategy;
·adhere to the assessment guidelines of the relevant national training package;
·design and present the courses he taught;
·assist in the development of curriculum, training methods and resources;
·provide students with necessary learning materials;
·maintain the highest educational and training standards; and
·be effective and professional.
His other obligations, such as:
(i)being punctual;
(ii)maintaining a high standard of dress, conduct, attitude and presentation;
(iii)reading relevant manuals;
(iv)undertaking continuous professional development; and
(v)performing administrative tasks including dealing with student complaints and participating in appeal processes,
were incidental to the main undertakings he gave.
GBCA’s Strategy, quoted earlier, to the extent that it was expressed in the document included in ex.A1 was no more prescriptive or specific. The implication in one of the sections quoted earlier, that Dr Merlo’s teaching duties were to be performed at GBCA premises, was of no particular significance in that regard. Given that Dr Merlo’s services were to be provided to GBCA’s students, it is unremarkable, particularly in the period before the COVID-19 pandemic, that it was an expectation that they be delivered at its premises.
Overall, the terms of the April 2016 Contract point in opposing directions. For instance, the contract did not require Dr Merlo to seek GBCA’s approval of his lesson plans, subject outlines, handouts or assignments. Clause 2(d) simply stated that that material was to be “submitted to the Training Manager at the conclusion of each subject” which would, presumably, give GBCA the information necessary for it to meet its compliance obligations under the 2015 Standards. The contract made no reference to Dr Merlo possibly delegating his duties to someone else and appears not to have contemplated the possibility that anyone other than Dr Merlo would be providing the relevant training services. However, it is also to be noted that the scheduling of classes was a matter for discussion and agreement and that the contract did not empower GBCA to impose a timetable on Dr Merlo. The contract also did not make express provision for Dr Merlo to provide his own equipment but, given the nature of the role and the work it involved, it might be anticipated that, in addition to whatever IT facilities might have been available at GBCA’s premises, he would use his own computer and research materials to design and present his courses and to, at least from time to time, do so at home. Apart from the implied pre-pandemic expectation found in cl.2(e) that lessons would be delivered at GBCA’s premises, the terms of the April 2016 Contract did not require Dr Merlo to do any work at GBCA’s premises and did not say when his tasks ancillary to the presentation of lessons ought to be undertaken.
Although the evidence is not all one way on the question of control, the terms of the April 2016 Contract do not depict Dr Merlo as having been in a subservient and dependent relationship with GBCA. It is not apparent from the April 2016 Contract that GBCA, apart from expecting training to be delivered on campus, was generally seeking to supervise how, when or where Dr Merlo did his job or had any right or power of that sort over him.
Own business
Dr Merlo submitted that the nature of his work under the April 2016 Contract was such that he had been an employee of GBCA notwithstanding that the contract had not required him to work exclusively with it and that in fact he had worked elsewhere during the time he had been one of GBCA’s trainers. His argument was that his work had been so integrated into GBCA’s operation that it could not be said that he had been operating an independent business.
The nature of the parties’ arrangement under the April 2016 Contract was that GBCA’s service to its business studies students was, relevantly, provided by Dr Merlo and to that extent his business was its business. Nevertheless, the contract did not provide for the subordination of Dr Merlo’s teaching service to GBCA’s business needs apart from unremarkable requirements concerning statutory compliance; course preparation, presentation and assessment; professional development; punctuality; and personal presentation and conduct. It is plain that the April 2016 Contract required Dr Merlo’s services to be provided at a high level and indicated aspects that GBCA considered were of particular significance, but left it up to Dr Merlo as to how performance of the contract would be achieved.

Further, the April 2016 Contract did not provide for Dr Merlo’s involvement in GBCA’s business in a way that suggested that his services were so integrated into it that they ceased to have a separate identity. Clause 4 of the contract permitted images of Dr Merlo to be included in promotional materials and in publications on social media, but that was as far as it went. That Dr Merlo’s courses were originally delayed in their commencement and were later entirely removed and presumably replaced, demonstrates how little integrated into GBCA’s operations those courses in fact were.
I have not been persuaded that the training services Dr Merlo provided to GBCA and its students were so integrated into GBCA’s operation that they ceased to be a separate business.
Calculation of remuneration
Dr Merlo argued that his remuneration by reference to hours worked rather than by reference to work product weighed in favour of him being characterised as an employee. That is correct as far as it goes but does not tell the whole story. If Dr Merlo had been required simply to prepare and present a series of lectures then an agreed fee would seem to have been the appropriate approach to remuneration. However, in this case the contract required not only preparation and presentation of training courses and assessment of students’ achievements, which might have been costed in advance and charged by way of an agreed fee, but also other tasks not so easily costed in advance, such as unidentified administrative tasks assigned by GBCA; involvement in the development of curriculum, training methods and resources; participation in the student complaints and appeal process; and attendance at in-house meetings, workshops and conferences. As observed earlier, most of those rather unspecific obligations were incidental to the principal teaching obligations provided for by the April 2016 Contract and they can perhaps be understood to have been necessary for the efficient and effective delivery of the principal services, but they were not easily susceptible of fair remuneration by fixed fee. Consequently, the fact that Dr Merlo was paid an hourly rate rather than by a different method does not assist in the characterisation of his role at GBCA.
Finding on Dr Merlo’s status
Dr Merlo’s relationship with GBCA was not subservient or subject to any particular right of control by that company and the service he provided was not shown to have been so integrated into GBCA’s operation that it was not properly characterised as a discrete business. In those circumstances and given that the other aspects of his relationship with GBCA did not require a different conclusion, I am not persuaded that Dr Merlo was an employee of GBCA.
OTHER ISSUES
As I have found that Dr Merlo was not employed by GBCA, the other issues raised in the proceeding lose their relevance. Nevertheless, I make the following comments.
Misrepresentation
The respondents argued that Dr Merlo should not be allowed to argue that the April 2016 Contract itself amounted to a misrepresentation of his relationship with GBCA. The complaint was not that the allegation of misrepresentation was new, or that the substance of the misrepresentation had been altered, but that Dr Merlo sought to particularise the allegation by reference to an aspect of GBCA’s conduct that he had not pleaded. The respondents’ submission that they would be prejudiced if the Court allowed Dr Merlo to rely on this late argument overlooked the fact that it had been raised in Dr Merlo’s written outline of opening submissions and in his opening address and that, although in their opening the respondents did object to the argument not having been pleaded, a contention that Dr Merlo contested, they did not suggest that allowing it to proceed would materially prejudice them or indicate what evidence additional to that already served they might wish to lead. In fact, in their opening they addressed the Court at some length on the content of the contract and how it was said to manifest an independent contracting relationship.
It is true, as the respondents argued, that it is especially important in civil penalty cases that contravening conduct is alleged clearly and that a respondent knows the case it has to meet, but I discern in connection with the proposed further particularisation no confusion nor any prejudice worth the name. I would not prevent Dr Merlo from arguing that the April 2016 Contract misrepresented his relationship with GBCA.
The respondents’ submission that a contravention of s.357(1) of the FW Act required a misrepresentation of the relationship between him and GBCA, not just the entry into a contract which misdescribed their relationship, is not incorrect. However, it is difficult to conceive of many circumstances where the proffering by an employer of a contract of adhesion, which the present contract appears to have been, that incorrectly represents the proposed relationship as independent contracting rather than as employment would not breach s.357(1), although it is a question of fact in each case. In this case, there was no evidence to suggest that whatever discussions might have preceded the entry into the April 2016 Contract tended to contradict or modify its express terms. Consequently, the terms proffered by GBCA to Dr Merlo must be considered to have been a representation to him as to the nature of his engagement with GBCA and so, if the question of Dr Merlo’s employment had been decided differently, a misrepresentation made in contravention of the FW Act.
Although the respondents submitted that GBCA had a defence to the allegation on the basis that it had believed Dr Merlo to have been a contractor, the defence provided in s.357(2) of the FW Act has two criteria and not knowing that an employee is in fact an employee is only one of them. The second criterion requires the employer not to have been reckless in not knowing that the contract was a contract of employment rather than a contract for services. No evidence was led or arguments of any substance advanced in relation to that criterion and I find that it has not been shown to have been satisfied.
Casual employee?
Contrary to the arguments advanced by Dr Merlo, I do not agree that the test in s.15A(1) of the FW Act is satisfied only when an employer has disavowed the existence of a firm advance commitment of the sort referred to in the sub-section. Paragraph (a) of s.15A(1) speaks of an employment offer “made on the basis” that the employer makes no firm advance commitment to continuing and indefinite work. There is more than one way for such a basis to be manifested. Dr Merlo has referred to one. Another is for the employer’s offer to be silent on that issue; for instance, it might simply offer to provide work as and when the proposed employee is needed.
In this case the April 2016 Contract makes no mention of casual employment but its cl.2(h) implies continuing and indefinite work because it speaks of each term’s training roster being discussed and agreed. The implication is of continuity and there is no end date. Further, the contract is a commitment to the availability of such work, subject to termination provisions. I acknowledge that recital 1(b) of the contract recites that “the term of this agreement shall be on need basis” but a recital is not an operative, contractual provision and, even to the extent that recitals may possibly assist in the interpretation of a contract, no such assistance is needed in this case.
Had the relationship been one of employment, I would have concluded that it was not casual employment and was instead permanent employment.
Permanent part-time employee?
Although they disagreed as to the basis of the arrangement, the parties appear to have agreed that Dr Merlo did not work full-time, even during terms, and also that if he were found to have been an employee, the facts could support a conclusion that he had been a permanent part-time one. However, the terms of any such permanent part-time engagement have not been proved. Although Dr Merlo alleged that he had been a permanent part-time employee and worked 20 hours a week during terms, the April 2016 Contract makes no reference to that arrangement and his affidavits did not advance the issue materially.
The Award relevantly provided:
10. Part-time employees
10.1 A part-time employee is an employee employed:
(a) for less than the normal ordinary hours specified for a full-time employee; or
(b)in the case of a teaching staff member for less than the face-to-face teaching load of a full-time teaching staff member at that workplace; and
(c) for which all award entitlements are paid or calculated on a pro rata basis by reference to the time worked.
10.2Before engagement the employer and the part-time employee will agree in writing on a regular pattern of work, including:
(a) the number of hours to be worked each week;
(b) the days of the week the employee will work;
(c) the starting and finishing times each day where hours are not averaged; and
(d) any periods during a year when work by the employee will not be required.
10.3 Changes in hours may only be made by agreement in writing between the employer and the employee.
…
The 2010 version of the Award, which was in force at the commencement of Dr Merlo’s engagement, provided similarly.
Given that, in broad terms, the Award prescribes a 38 hour working week as the ordinary full-time working week, it ought to be inferred that anything less than that is, unless casual work, part-time work. But the Award also requires that the details of any such arrangement be agreed and the agreement reduced to writing and there is no evidence of that having happened in this case. Quite apart from that making it impossible for the Court to determine what the terms of any part-time arrangement might have been, those circumstances are a further indication that Dr Merlo had been engaged as a contractor and not as an employee.
Underpayments
The next question concerns the allegations of alleged underpayment.
Term breaks – sessional employee?
The first issue presented by the underpayment question is whether Dr Merlo would have been entitled as a permanent employee to be paid not only during terms but also during the breaks between terms. The respondents presented an argument that seemed willing to accept Dr Merlo’s pleaded characterisation of those breaks as stand downs but they argued that, given the nature of GBCA’s business, it had been entitled to stand him down during term breaks because he had been a sessional employee. The respondents’ argument was based on s.524 of the FW Act, which relevantly provides:
524 Employer may stand down employees in certain circumstances
(1)An employer may, under this subsection, stand down an employee during a period in which the employee cannot usefully be employed because of one of the following circumstances:
(a)industrial action (other than industrial action organised or engaged in by the employer);
(b)a breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown;
(c)a stoppage of work for any cause for which the employer cannot reasonably be held responsible.
…
However, that section has no relevance in the present case because the conditions for its application are not satisfied.
Annual leave
In documents provided to the Court, Dr Merlo particularised his allegation that he had accrued certain annual leave entitlements. He specified a total amount owing in that connection which, it can be accepted, was not paid to him when he ceased working with GBCA. If he had been an employee of GBCA, Dr Merlo would have been entitled to paid annual leave and, upon the conclusion of his employment, to commute any untaken leave and receive it as a money sum. However, any such entitlement depends on, at least, a calculation based on the days when he was meant to be at work or for which he would be otherwise paid, which for the reasons already given cannot be undertaken.
Public holidays
In those documents provided to the Court, Dr Merlo also particularised the various occasions on which he said he should have been paid for public holidays. As the evidence does not permit a conclusion as to when it had been agreed that Dr Merlo would perform work under the April 2016 Contract, it is not possible to determine whether, had he been an employee, he should have enjoyed any particular public holiday as a paid public holiday.
Superannuation
The arguments advanced by Dr Merlo in support of his claims for superannuation were misconceived. First, the Superannuation Guarantee (Administration) Act 1992 (Cth) (“SGA Act”), in combination with the Superannuation Guarantee Charge Act 1992 (Cth), does not, in terms, impose an obligation to pay superannuation, although that is its practical effect. Relevantly, unless an employer makes superannuation contributions on behalf of an employee, the employer becomes liable to pay the superannuation guarantee charge to the Commonwealth which then receives it for the ultimate benefit of the employee in question. In broad terms, a charge will accrue unless superannuation contributions are paid. Consequently, there is no “breach” of the SGA Act, in the sense pleaded by Dr Merlo which sounds in compensation which this Court can order be paid: see Roy Morgan Research Pty Ltd v Federal Commissioner of Taxation (2010) 184 FCR 448 at 452-454 [3]-[14].
Secondly, the FW Act imposes no such obligation and Dr Merlo’s reference to s.545 was misplaced. That section is concerned with the recognition of rights, not with their creation. To the extent that Dr Merlo might have had a right to superannuation contributions, it was probably to be found in the Award but he did not seek to rely on it.
Dismissal
Dr Merlo’s case on dismissal was not clear. In his statement of claim he alleged that he had been dismissed on 23 December 2020 by the communications he had had with Mr Yaseen on 11 and 21 December 2020 and yet nothing is identified as having happened on 23 December that would have amounted to a termination by GBCA of his alleged employment. Dr Merlo’s alternative case, made in submissions, was that his dismissal had been a constructive one, effected by his acceptance of what he characterised as GBCA’s repudiation of his contract by suggesting that his pay should be cut. Again, the identification of the relevant adverse action is not plain and clear as, although GBCA’s conduct might have been repudiatory, the termination of the parties’ arrangement was, according to Dr Merlo’s case, the result of his acceptance of the repudiation and it appears that he did nothing relevant to that on 23 December 2020.
The FW Act provides:
340      Protection
(1)       A person must not take adverse action against another person:
(a)       because the other person:
(i)        has a workplace right; or
(Ii)      has, or has not, exercised a workplace right; or
(iii) proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or
(b)to prevent the exercise of a workplace right by the other person.
…
342     Meaning of adverse action
(1)The following table sets out circumstances in which a person takes adverse action against another person.

Meaning of adverse action

Item
Column 1

Adverse action is taken by ...

Column 2

if ...

1 an employer against an employee
the employer:

(a) dismisses the employee; or

…

*Meaning of adverse action*
1	an employer against an employee	the employer: (a) dismisses the employee; or …

…

In this case, the adverse action alleged is dismissal but that is a problematical allegation where the alleged employment has been terminated by the employee, not the employer. Although it was not expressly argued in this case that repudiation alone amounted to dismissal or would be a dismissal if it were to be accepted, that contention seems to underlie Dr Merlo’s allegation.
Although s.340 of the FW Act, in combination with s.342(1)(a), appears to require a positive act by the employer which amounts, without more, to a dismissal, that is not necessarily so. While such provisions are concerned to proscribe certain intentional acts of an employer directed to an individual employee or prospective employee: BHP Iron Ore Pty Ltd v Australian Workers’ Union (2000) 102 FCR 97, adverse action under the FW Act is, principally, the consequence suffered by the particular employee, the action or inaction which brings that consequence about being of secondary importance: Rowland v Alfred Health [2014] FCA 2, Farac v Pendal Group Limited (2021) 310 IR 365 at 371 [24]. Thus adverse action can, for instance, be the product of inaction.
The statutory version of constructive dismissal is found in s.386 of the FW Act, which appears to replace the common law for the purposes of the FW Act, including those of s.342(1), even though s.342(1) speaks of “dismisses” and s.386 defines “dismissed”: Fair Work Ombudsman v Austrend International Pty Ltd (2018) 273 IR 439 at 444 [22]ff; Koutalis v Pollett (2015) 235 FCR 370 at 380 [45]. Section 386 relevantly states:
386 Meaning of dismissed
(1) A person has been dismissed if:
…
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.
…
The employer conduct with which that paragraph is concerned is force. It therefore requires a degree of egregiousness beyond what would be sufficient to amount at common law to a contractual repudiation that could support a finding of constructive dismissal: cf Thomson v Orica Australia Pty Ltd (2002) 116 IR 186 at 224 [141]. Should such conduct have occurred in a particular case and an employee resigns in response to it, it would be positive conduct sufficient to amount to action that engages ss.340 and 342(1)(a).
However, it is questionable whether GBCA’s conduct in this case amounted to force sufficient to engage s.386. But, even if it were, it would not be sufficient on its own to demonstrate breach of s.340. Dr Merlo would also have to prove that the motivation for the conduct which allegedly forced him to resign was prohibited for the purposes of s.340. Dr Merlo alleged that GBCA forced him to resign because he had a workplace right to be paid in full for his work and in that regard, s.323 of the FW Act relevantly provides:
323      Method and frequency of payment
(1)An employer must pay an employee amounts payable to the employee in relation to the performance of work:
(a)       in full (except as provided by section 324); and
(b)in money by one, or a combination, of the methods referred to in subsection (2); and
(c)      at least monthly.
…
Contrary to Dr Merlo’s contention, however, that section protects an employee’s right to be paid for work done. It does not attempt to protect against a breach of contract of the sort alleged in this case. It therefore did not provide a relevant workplace right and so it is not necessary to enquire into why GBCA sought to cut Dr Merlo’s pay or whether that action amounted to force which engaged s.386 of the FW Act.
Redundancy
It was contended by Dr Merlo that GBCA had decided in or about December 2020 that it no longer had a business studies trainer’s job paid at the rate of $60 per hour and implicitly, thereafter had only a business studies trainer’s job paid at the rate of $45 per hour. In the absence of evidence from the respondents it is difficult to reach a contrary conclusion and I do not. That redundancy of his position would entitle Dr Merlo to a redundancy payment if it caused him to lose his employment.
Pleading
The argument that the April 2016 Contract had been entered into on the date it bore rather than on the date it was signed seemed to me to be an arid one in the absence of evidence shedding light on its supposed significance. The respondents did not demonstrate that the contract had been executed earlier than 13 April 2016 and I do not accept that it was. I accept Dr Merlo’s evidence that he signed the contract when he attended his induction on 13 April 2016.
Accessories

In the circumstances it is not necessary to consider in relation to Dr Yu and Mr Yaseen the question of accessorial liability.
CONCLUSION
As Dr Merlo has not demonstrated that he was employed by GBCA, rather than retained as a contractor, the application will be dismissed.

I certify that the preceding one hundred and seven (107) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Cameron.
Associate:
Dated: 1 December 2022

File number(s):	MLG 416 of 2021
Judgment of:	JUDGE CAMERON
Date of judgment:	1 December 2022
Catchwords:	INDUSTRIAL LAW – sham contracting – whether applicant a contractor or an employee – status determined by reference to the terms of the parties’ agreement – relevant considerations. SUPERANNUATION – compulsory employer contributions – whether claimable by employee under Superannuation Guarantee (Administration) Act 1992 (Cth). CASUAL EMPLOYMENT – Fair Work Act 2009 (Cth) s.15A – whether an express disavowal of permanent employment is required. FAIR WORK – constructive dismissal – Fair Work Act 2009 (Cth) s.386 – statutory test different from common law test.
Legislation:	Fair Work Act 2009 (Cth) ss. 15A, 323, 340, 342, 357, 386, 545, 550. National Vocational Education and Training Regulator Act 2011 (Cth) Superannuation Guarantee (Administration) Act 1992 (Cth) Superannuation Guarantee Charge Act 1992 (Cth)
Cases cited:	Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 96 ALJR 89 ZG Operations Australia Pty Ltd v Jamsek (2022) 96 ALJR 144 Manchee v BTIG Australia Limited [2022] FedCFamC2G 813 JMC Pty Limited v Commissioner of Taxation [2022] FCA 750 Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 Roy Morgan Research Pty Ltd v Federal Commissioner of Taxation (2010) 184 FCR 448 BHP Iron Ore Pty Ltd v Australian Workers’ Union (2000) 102 FCR 97 Rowland v Alfred Health [2014] FCA 2 Farac v Pendal Group Limited (2021) 310 IR 365 Fair Work Ombudsman v Austrend International Pty Ltd (2018) 273 IR 439 Koutalis v Pollett (2015) 235 FCR 370 Thomson v Orica Australia Pty Ltd (2002) 116 IR 186
Division:	General
Number of paragraphs:	107
Date of hearing:	14 – 16 September 2022
Place:	Melbourne
Counsel for the Applicant:	Mr White
Solicitor for the Applicant:	Jewell Hancock Employment Lawyers
Counsel for the Respondents:	Mr Fagir
Solicitor for the Respondents:	Ma & Company Solicitors

MLG 416 of 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:	LUCAS MERLO Applicant
AND:	GLOBAL BUSINESS COLLEGE OF AUSTRALIA PTY LTD First Respondent PING YU Second Respondent MOHAMMED YASEEN Third Respondent

order made by:	JUDGE CAMERON
DATE OF ORDER:	1 December 2022