Mr Abhishek Kumar v Link Realty International Pty Limited
[2024] FWC 2596
•23 SEPTEMBER 2024
| [2024] FWC 2596 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.365 - Application to deal with contraventions involving dismissal
Mr Abhishek Kumar
v
Link Realty International Pty Limited
(C2024/4045)
| DEPUTY PRESIDENT ROBERTS | SYDNEY, 23 SEPTEMBER 2024 |
Application to deal with contraventions involving dismissal – employee or independent contractor – whether applicant dismissed
The Applicant in this matter, Mr. Abhishek Kumar, has filed an application alleging that he was dismissed by his former employer, Link Realty International Pty Ltd (Respondent) in contravention of Part 3-1, General Protections, of the Fair Work Act 2009 (Cth) (Act). Mr. Kumar alleges that his dismissal occurred on 6 June 2024.
The Respondent disputes that the Applicant was dismissed in contravention of Part 3-1, or at all. They say the Applicant was, at the relevant time, engaged by them as an independent contractor and not an employee. Accordingly, they say The Applicant was not dismissed within the meaning of s.386 of the Act because there was no relationship of employment between the parties. Further and in the alternative, the Respondent submitted that its actions on 6 June 2024 did not amount to a dismissal.
For the Commission to be able to deal with an application of this kind, it must be established that an applicant has been dismissed. It is not sufficient that a dismissal is merely alleged to have occurred. A dispute as to whether a dismissal has occurred has been described as an antecedent dispute going to the question of whether an application has been made. It is, in the words of the Full Court of the Federal Court of Australia, “a dispute that must be resolved before the powers conferred by s.368 can be exercised at all.”[1]
Background and Contentions
The Applicant commenced employment in the Respondent’s real estate business on or about 3 October 2023. He was at that time engaged as a casual employee. He signed a written contract of employment with the Respondent. He was paid an agreed hourly rate, including a casual loading. He was paid fortnightly. His duties primarily involved the inspection of residential rental properties, the preparation of incoming and outgoing inspection reports relating to those properties, routine inspections and providing access to rental properties by third parties. He was allocated work by the Respondent’s scheduling team.
The Applicant alleges that at some point in late 2023 he raised complaints with his manager, Mr. Knight, about what he said was the non-payment of penalty rates and overtime. He said that after his complaints, he was treated differently by the Respondent. He said he was subjected to racial abuse. He said his hours were reduced and another person was engaged to perform the work he was performing. He said his complaints about his treatment were ignored.
The Applicant said that Mr. Knight offered him another contract in or about March 2024. The contract refers to the Applicant working as an independent contractor and opening properties, conducting inspections and preparing reports for $50 per property. The Applicant said he was told he should sign the contract or he would not receive any further work from the Respondent. He did not sign. He complained again to Respondent’s management. Another contract was offered to the Applicant in April 2024. It provided for the Applicant to work as an independent contractor at inspection rates of $150 per property. The Applicant said he was told if he did not sign the contract he would be dismissed. He signed the contract. The contract is dated 9 April 2024 (April contract).
The Applicant continued to work for the Respondent. He submitted an invoice dated 31 May 2024 to the Respondent for his work. It covered work performed by him for the month of May 2024 and included the Applicant’s Australian Business Number (ABN).
A dispute arose over the payment of the May invoice. On 6 June 2024 Mr. Knight wrote to the Applicant and said that the invoice would be paid on that day but that he did not “believe that the ongoing relationship is tenable and (he) would remove (the Applicant) from systems today.” The Applicant replied by email shortly after saying “I also don't feel comfortable working with you guys anymore. Please make sure that my invoice is paid in full. I will send the invoice for the work done till yesterday. Please make efforts to pay it asap. Thanks.”
The Respondent said that the change to contracting arrangements was driven by a shortage of capacity for the services required. They said they wanted to create relationships with external parties who could provide the inspection services to meet the growing demand. The Respondent said the Applicant did not object to working as a contractor but merely asked to be paid at a higher rate. They said the Applicant in fact volunteered to contract to provide all of the inspection services they needed and said he would employ others himself to do the work. According to the Respondent, they declined this offer as they did not think it would meet their needs.
The Respondent said that there were no changes to the tasks performed by the Applicant as a contractor from those he performed as a casual employee and no change to the system of work allocation or the oversight of the Applicant’s work by the Respondent. However, for reasons set out below, it is not necessary or appropriate to take into account the history of how the parties’ relationship developed in practice. The Respondent submitted that the change from an hourly rate as a casual employee to a task-based payment system as an independent contractor meant that the Applicant earned more for the work he undertook than he would have earned performing that work as a casual employee.
The Applicant advanced two arguments in response to the Respondent’s contention that he was not dismissed. First, he said that even though he had signed the April contract which provided for him to work for the Respondent as an independent contractor, his casual employment arrangements continued to subsist alongside the arrangement that had been entered into through the April contract. Second, the Applicant said that the April contract did not create a relationship of principal and independent contractor between the parties and that the relationship under the terms of the contract was that of employer and employee.
The first of these arguments can be quickly dispensed with. Clause 17, General Provisions, of the April contract provides, relevantly, as follows:
17.1 This contract supersedes any prior discussion, agreement or understanding on anything connected with the subject matter of this Contract, including but not limited to any prior employment agreement you had with us.
In my view, having regard to the balance of the terms of the April contract which regulated the terms on which the Applicant was to work for the Respondent after the contract was entered into, the Applicant was no longer engaged by the Respondent as a casual employee under the original contract of employment but was to provide his services in accordance with the terms of the April contract.
The second argument necessitates a closer analysis of the rights and obligations of the parties created by the terms of the contract that had been entered into by them in April 2024. That analysis is to be conducted in accordance with the principles described by the High Court of Australia in the matters of Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd[2] (Personnel) and ZG Operations Australia Pty Ltd v. Jamsek & Ors[3].
The principles set out by the Court in those decisions have been conveniently summarised[4] by Wigney J in the matter of JMC Pty Limited v Commissioner of Taxation [2022] FCA 750 as follows:
First, 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.
Second, 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.
Third, 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. A “wide-ranging review of the entire history of the parties’ dealings” is neither necessary nor appropriate. 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.
It 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.
Fourth, 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.
Fifth, 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.
Sixth, 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. The parties’ “legitimate freedom to agree upon the rights and duties which constitute their relationship” does not “extend to attaching a ‘label’ to describe their relationship which is inconsistent with the rights and duties otherwise set forth” – to permit otherwise would elevate the freedom to “a power to alter the operation of statute law to suit … the interests of the party with the greater bargaining power.
The 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)
Terms of the Contract
The parties in this case committed the terms of their relationship to writing in the April contract. The terms are reasonably comprehensive. I have considered the terms of that contract in their totality. The contract, titled ‘Service Retainer Agreement’, describes the Applicant as ‘Contractor’, and provides that under the terms of the contract he is ‘to provide the service set out in Schedule 1 and perform the job set out in Schedule 2.’ Schedule 1 describes the service to be provided as ‘entry inspections, exit inspections, successfully lease properties, new properties under management.’ There was no schedule 2 in evidence.
Clause 2, Responsibilities, of the April contract provides as follows:
Responsibilities
2.1 Your duties are set out in this Contract;
2.2 During the Contract period you must:
(1) promote our interests and those of our Related Bodies Corporate;
(2) use your best endeavours to protect and promote our reputation and that of our Related Bodies Corporate;
(3) not act in conflict with our interests and those of our Related Bodies Corporate;
(4) be honest and diligent and perform the duties assigned to you to the best of your knowledge and abilities; and
(5) devote the whole of your time, attention and skill during normal business hours, and at other times as reasonably necessary, to your duties.
2.3 We may direct you to perform or not to perform any part of your duties at any time.
The April contract is for a fixed term of one year commencing on 9 March 2024[5].
The amounts payable by the Respondent to the Applicant are described in clause 4 as follows:
4 Retainer Fee
4.1 Your Retainer Fee is payable on Entry Inspections and Exit Inspections, Open Homes and new properties under management.
4.2 Your Retainer Fee includes all amounts due to you for work performed by you for this Contract
4.3 You will receive Retainer Fee of:
Entry Inspection and Exit Inspection $150 ex GST
Open Inspection $150 ex GST
New Management Agreement $100 ex GST of the leasing fee for 2 years
4.4 You will invoice us on every first of month for the jobs completed in the previous month.
Clause 5 obliges the Applicant to return the Respondent’s property on request or on termination of the contract, whichever occurs first. Such property is said to include ‘documents, equipment, telephones, personal digital assistants, software, computer information (wherever it is stored), keys and access cards.’ The clause also obliges the Applicant to keep such property in good working order and to ensure the security of such property in his possession, power or control.
Clause 6, Information technology, provides, amongst other things, that ‘(A)ll electronic communication systems provided by (the Respondent) are (the Respondent’s) property and may only be used for authorised purposes in accordance with this Agreement and our policies. This includes but is not limited to mobile phones, internet, tablet devices and computers.’ It also provides that the Respondent may monitor, access and record the Applicant’s use of communications systems, including emails and internet sites, prevent the delivery of emails that are in breach of company policies or the contract and prohibits the use of such communication systems by the Applicant for ‘personal commercial purposes.[6]’
Clause 7 contains the termination provisions and allows for termination on one month’s notice or with immediate effect in the case of serious misconduct by the Applicant. Where notice is given, the clause provides that the Respondent may require the Applicant to:
(1) not attend our premises for the purpose of performing your duties, and instead predominantly remain at your home during your standard hours of work, being available on call to attend work and perform any duties required by us;
(2) perform duties other than your normal duties, including less senior or significant duties;
Clause 10 provides:
10 Restraint during the course of the Contract
10.1 During the course of the Contract, you must not, without our prior written consent:
(1) act as an officer or employee of, or as a consultant or adviser to any other corporation, firm, organisation or person;
(2) take up any other position with any other corporation, firm, or organisation (whether paid or unpaid);
(3) hold any shares or securities which create or may create a conflict of interest.
Clause 14, Policies, provides, inter alia, that the Applicant agrees to comply with any policies and procedures that the Respondent may implement, as varied from time to time by the Respondent in their discretion.
Clause 16 provides that the Applicant warrants to the Respondent that he has not entered into, and will not enter into, any agreement in conflict with the contract.
Consideration
A number of the terms referred to above point strongly to the existence of an employment relationship. First, clause 2.3 expressly confers on the Respondent the contractual right to direct the performance or non-performance of any part of the duties the Applicant is required to perform, at any time. By this clause the Respondent has reserved to itself the right to control and determine what duties that are required under the contract are to be performed and how and to what extent they are to be performed by the Applicant. Under this clause, such a right can be exercised by the Respondent at any time. As the scope of the direction is unconstrained by the term itself, it also permits the Respondent to direct where it is that the Applicant is to perform his duties.
Mr. Knight gave evidence that there were discussions between himself and the Applicant at the time of the change from casual employee to the ‘contractor’ arrangement and that it was understood and accepted from those discussions that the allocation of work by the Respondent to the Applicant would be done by the Respondent’s scheduling team in the same way as work was allocated when the Applicant was engaged as a casual employee. From this evidence I conclude that there was an oral term of the contract that the Respondent would control the flow and allocation of work to the Applicant in the same way it did when the Applicant was working as a casual employee.
Should there be any room for doubt as to the extent to which the Applicant is subject to the direction and control of the Respondent, clause 14 provides that the Applicant is also obliged to comply with any policies and procedures promulgated by the Respondent. Those policies and procedures may be varied by the Respondent from time to time in their absolute discretion.
Clause 2.2(5) obliges the Applicant to devote the whole of his time, attention and skill during normal business hours, and at other times as reasonably necessary, to his duties. The Respondent has the capacity to call on the Applicant to perform his duties at any time during normal business hours and even outside those hours, subject to the reasonableness requirement. In combination with clause 2.3, the Respondent therefore has very substantial control over when the Applicant performs his work. These are the kinds of obligations that commonly flow from a contract of service between an employer and an employee.
Second, the Respondent has limited the possibility that the Applicant could work elsewhere for some other entity whilst discharging his obligations under the contract. Clause 10.1(2) provides that the Applicant must not take up any other position with any other firm, whether paid or unpaid, during the term of the contract without the Respondent’s prior written consent. This is reinforced by clause 16 under which the Applicant has warranted not to enter into any agreement in conflict with the contract. This type of restriction, particularly in combination with the requirement for the Applicant to devote himself to the Respondent during ordinary business hours and beyond, runs counter to the idea that the Applicant is able to operate independently of the Respondent by working for, or even offering his services to, other entities whilst ever he is bound by the terms of the contract.
Third, the April contract requires the personal performance by the Applicant of the work referred to in the contract. There is no provision permitting the delegation of the performance of that work[7]. The right to delegate, which has been said to be an important indication of an independent contractor relationship,[8] is not present here.
Fourth, clause 7 specifically authorises the Respondent to direct where, when and what type of duties the Applicant may perform in circumstances where notice of termination of the contract has been given by the Respondent.
Fifth, the contract provides that the Applicant must promote the interests of the Respondent and its related bodies corporate, protect and promote the reputation of those entities and not to act in a way that is in conflict with the interests of those entities. The Applicant is plainly not at liberty to engage in commercial activities that conflicts with those of the Respondent and in fact has a positive duty to promote the interests of the Respondent. He is also prevented by clauses 6.1 and 6.4 from using the Respondent’s communications systems for ‘personal commercial purposes.’ These requirements indicate that the Applicant interests are subordinate to those of the Respondent’s business interests and that he would lack the common commercial independence of a separately functioning business entity. They indicate that the Applicant is working in the service of the Respondent’s business rather than his own.
Clause 5 imposes certain obligations on the Applicant in relation to the Respondent’s property which is in his possession or control without actually obliging the Respondent to provide such property to the Applicant. Clause 6 refers to information technology resources of the Respondent which might be supplied to the Applicant, including mobile phones, tablets and computers. To the extent that these resources are provided, the Respondent has a contractual right, subject to relevant statutory provisions, to monitor their use, use them for surveillance purposes and even prevent delivery of emails or access to certain internet sites by the Applicant. The Applicant is not obliged by these or other clauses to provide equipment of this kind on his own account as might be expected of someone working as a bona fide independent contractor.
The mode of remuneration provided for by clause 4 is task-based rather than by hourly rate. Of course, employees do not necessarily have to be paid by a time-based method of payment. Piecework rates have a long history in industries such as horticulture[9] and commission-based payment systems for example, are not uncommon,[10] including in the real estate sector. The rate set out in the contract for each task is exclusive of GST. Beyond this there is no mention of the taxation arrangements to apply under the terms of the contract. The Applicant is required to invoice monthly for his work. These provisions may more closely align with a relationship of principal and independent contractor than with that of a contract of service. They are operative terms regulating the rights of the parties, but they are not determinative.
Mr. Knight gave evidence that it was the Applicant who offered to perform work on an independent contractor basis using his ABN and even offering to employ other people to provide the services. The Applicant denied that this was the case. I prefer the evidence of the Applicant on this point and conclude that the arrangement was entered into at the initiative of the Respondent. The Applicant accepted that he had an ABN. He said that he had obtained that ABN some years ago. There was no basis in the evidence to conclude that the taxation arrangements were ‘foundational’ as was the case in EFEX Group Pty Ltd v. Bennett[11] where the Court concluded that a trust arrangement had been set up by a contracting party for the very purpose of the impending commencement of work and the attendant tax benefits of the structure that had been created[12]. I do not regard the taxation and remuneration arrangements as being a sufficient basis to displace the many rights and obligations in the contract that are indicative of an employment relationship.
Nor does the fact that the April contract describes the Applicant as the ‘contractor’ carry much weight in the overall analysis. The plurality in Personnel[13] said that generally speaking, the opinion of the parties on a matter of law is irrelevant and that it is erroneous in point of principle to use the parties’ description of their relationship to resolve uncertainty.
Personnel also stands for the proposition that whilst not determinative, it can be useful to consider whether someone is conducting their own independent business as opposed to serving in the business of another as a guide in assessing the true legal character of the relationship. Here there was very little if any scope for entrepreneurship on the part of the Applicant. He was thoroughly integrated into the business of the respondent by the terms of the contract in the same way he was as a casual employee. He could not place his own commercial interests above those of the Respondent. He was not operating an independent business.
The level of control retained by the Respondent over the Applicant’s work through the contract was extensive if not complete. They could direct what type of duties were to be performed and how, when and where they were to be performed. The Applicant was at the Respondent’s disposal for all ordinary business hours and potentially beyond those hours. He could not work for anyone else. The Applicant was, in my view, an employee of the Respondent because of the rights and obligations created by the April contract.
The Respondent contended that the Applicant was not dismissed because he was not employed. They also argued that in any event, viewed in its proper context, the email of 6 June 2024 did not constitute a dismissal. I have already dealt with the first of these objections and decided it in the Applicant’s favour. The second objection is also without substance. The correspondence of 6 June 2024 where the Respondent said that they did not believe the relationship with the Applicant was tenable and that he would be removed from their systems, was, on any view, a termination on the initiative of the employer within the meaning of s.386(1)(a) of the Act. I do not accept as the Respondent contended, that the Applicant was simply being removed from certain channels of internal communication because of other difficulties that had arisen in the relationship. The termination was in clear and unequivocal terms. It ended the employment relationship. It was brought about by the Respondent. The Respondent’s actions resulted directly and consequentially in the termination of Mr. Kumar’s employment. It was intended to do so or had that probable result.[14]
The Applicant was dismissed by the Respondent on 6 June 2024. The Respondent’s jurisdictional objection to the application is dismissed. The matter will be relisted for conference on a date to be determined.
DEPUTY PRESIDENT
Appearances:
Mr Abhishek Kumar on his own behalf.
Mr Cameron Knight for the Respondent.
Hearing details:
10:00am AEST on Tuesday, 27 August 2024 via Microsoft Teams Video.
[1] Coles Supply Chain Pty Ltd v. Milford [2020] FCAFC 152 at [76].
[2] [2022] HCA 1.
[3] [2022] HCA 2.
[4] See also Chambers and O’Brien v Broadway Homes Pty Ltd [2022] FWCFB 129 at [74].
[5] Clause 3 and Schedule 1 item 2.
[6] Clauses 6.1 and 6.4.
[7] See Chambers and O’Brien op cit at [75].
[8] JMC Pty Ltd v. Commissioner of Taxation [2023] FCAFC 76 at [73].
[9] Application by the Australian Workers’ Union [2021] FWCFB 5554.
[10] See Chambers and O’Brien op cit at [84].
[11] [2024] FCAFC 35.
[12] Ibid at [45] and [46].
[13] At [66] and [79].
[14] See Mohazab v. Dick Smith Electronics Pty Ltd [1995] IRCA 625, 62 IR 200; Khayam v. Navitas English Pty Ltd[2017] FWCFB 5162; O’Meara v. Stanley Works Pty Ltd PR973462.
Printed by authority of the Commonwealth Government Printer
<PR779465>
0