Mr Aidin Teymouri Moghadam Sharafkhaneh v One Vendor Payroll Pty Ltd, Edison Talent Pty Ltd, ABB Power Grids Australia Pty Limited T/A Hitachi ABB Power Grids, Hitachi ABB Pty Ltd, Tom McGruther, Delon Leung

[2021] FWC 6484

[2021] FWC 6484

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.365 - Application to deal with contraventions involving dismissal

Mr Aidin Teymouri Moghadam Sharafkhaneh
v
One Vendor Payroll Pty Ltd, Edison Talent Pty Ltd, ABB Power Grids Australia Pty Limited T/A Hitachi ABB Power Grids, Hitachi ABB Pty Ltd, Tom McGruther, Delon Leung
(C2021/4329)

COMMISSIONER SPENCER BRISBANE, 7 DECEMBER 2021

Application to deal with contraventions involving dismissal – multiple Respondents – jurisdictional objection by two Respondents – employee not dismissed – independent contractor – jurisdictional objection upheld – application dismissed against two Respondents.

[1] Aiden Teymouri Moghadam Sharafkhaneh (the Applicant) lodged an application pursuant to s.365 of the Fair Work Act 2009 (the Act) to deal with a general protections dispute in relation to the termination of his employment. The Applicant named six Respondents in his application, set out below:

A. One Vendor Payroll Pty Ltd (First Respondent);
B. Edison Talent Pty Ltd Ltd (Second Respondent);
C. ABB Power Grids Australia Pty Limited (Third Respondent);
D. Hitachi ABB Pty Ltd (Fourth Respondent/ABB);
E. Tom McGruther (Fifth Respondent); and
F. Delon Leung (Sixth Respondent).

[2] The matter was subject to a conference where a range of matters were discussed. Conciliation was explored, but the matter was unable to be resolved. Following the conference, the representatives for the first, third, fourth and sixth Respondent’s sent correspondence to chambers seeking a certificate be issued indicating that conciliation had been exhausted.

[3] The legal representative for the second and fifth Respondents raised the jurisdictional objection that they were not the Applicant’s employer, and as such, that no dismissal had occurred. The second and fifth Respondents sought that the jurisdictional matter be determined. Directions were subsequently set for the filing of submissions in relation to this jurisdictional objection.

[4] The Full Court of the Federal Court of Australia decision of the in Coles Supply Chain Pty Ltd v Milford 1 requires the Commission to determine a dispute about the fact of a dismissal under section 365 of the Act, before the Commission can exercise powers conferred by section 368.2 It is thus necessary to determine the jurisdictional objection in order for the Applicant’s application to proceed further.

LEGISLATION

[5] Section 365 of the FW Act provides:

“365 Application for the FWC to deal with a dismissal dispute

If:

(a) a person has been dismissed; and

(b) the person, or an industrial association that is entitled to represent the industrial interests of the person, alleges that the person was dismissed in contravention of this Part;

the person, or the industrial association, may apply to the FWC for the FWC to deal with the dispute.”

[6] Section 365 requires a dismissal to have occurred as a jurisdictional fact. A mere allegation that a person has been dismissed will not establish this as fact. “Dismissal” for these purposes (and other purposes of the FW Act) is defined in section 386(1), which provides:

“386 Meaning of dismissed.

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(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.”

[7] Section 357(1) of the Act states:

“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.”

[8] Section 358 of the Act states;

“An employer must not dismiss, or threaten to dismiss, an individual who:

(a) is an employee of the employer; and

(b) performs particular work for the employer;

in order to engage the individual as an independent contractor to perform the same, or substantially the same, work under a contract for services.”

SUMMARY OF THE RESPONDENT’S SUBMISSIONS

Submissions of the Respondent

[9] In Coles Supply Chain Pty Ltd v Milford, 3 the Full Federal Court found that the Commission could determine jurisdictional disputes arising out of a Section 365 Application.

[10] Section 368 provides that the Commission must deal with the dispute if an Application is made pursuant to Section 365 and if it is satisfied that all attempts to resolve the dispute have been unsuccessful it can issue a certificate to that effect pursuant to Section 368(3).

[11] Pursuant to s 370, an Applicant cannot make a General Protections Court application in relation to the dispute unless they have been issued a certificate pursuant to s 368(3)(a). Accordingly, whether or not there is a valid application currently before the Commission pursuant to Section 365 as against the Second and Fifth Respondents is a matter which goes to the Commission’s jurisdiction.

[12] The Respondent submitted that as the parties were not in an employment relationship, there could be no dismissal within the meaning of Section 368 and accordingly, as a matter of jurisdiction, there is no valid application before the Commission pursuant to Section 365.

[13] On that basis, the Respondent submitted that the Application as against the Second and Fifth Respondents should be dismissed for want of jurisdiction.

[14] The lawyer on behalf of the second and fifth Respondents submitted in support of their submissions that there was no employment relationship and noted that the parties entered into a written contract entitled contractor agreement with the Applicant (a copy of this agreement was provided to the Commission). Clause 3 of the Contract specifically provided that the parties were not in a relationship of employment. The Contract provides that the Applicant was engaged as an independent contractor and not an employee.

[15] The Respondent set out that the Contract provides for a triparty relationship which operated with the Applicant being engaged as an independent contractor of the Second Respondent and then provided services to its customer, ABB (fourth Respondent). The Applicant would then submit his timesheets and invoices to One Vendor Payroll Pty Ltd (first Respondent) who would then pay him his rate for the days he worked in accordance with his Contract. The second Respondent would invoice ABB (fourth Respondent) for the work performed by the Applicant.

[16] The Respondent submitted that other indicia establishing an independent contract relationship included that the Applicant was highly skilled providing IT professional services; he was paid at a high daily rate of $680 per day; and that the Applicant was under minimal or no direction, control or supervision by the Second Respondent in relation to the manner in which he performed work, the times he performed the work and the place he would perform the work.

Witness statement of Tom McGruther

[17]  Mr Tom McGruther provided a witness statement negating that there was an employment relationship between the two Respondent companies and the Applicant. Mr McGruther is the Director of the fifth Respondent. Mr McGruther confirmed in his statement that the main business activity of the fifth Respondent is the operation of a recruitment agency. Mr McGruther stated that this involved the introduction of candidates to their customers who are looking to fill job vacancies.

[18] Mr McGruther stated that the fifth Respondent specialises in recruiting IT and A&F Professionals. He also stated that the fifth Respondent also, from time to time, provided the services of contractors to its customers. The contractors act as a resource for the fifth Respondent’s customers when they have projects for fixed period of time.

[19] Mr McGruther stated that the Applicant was engaged by the fifth Respondent for a fixed period of time between 6 October 2020 to 6 October 2021 to provide IT services to ABB (fourth Respondent). A copy of this contract was tendered by the Respondent.

[20] In relation to the Applicant’s engagement to provide services to ABB (fourth Respondent), Mr McGruther stated that the fifth Respondent had no involvement in setting the hours of work for the Applicant and this was a matter completely left to the negotiation between the Applicant and ABB (fourth Respondent). Mr McGruther further stated that where the work was to be performed (i.e. at ABB’s offices or the Applicant’s home) were matters which were negotiated directly between the Applicant and ABB (fourth Respondent).

[21] Mr McGruther also confirmed that the tasks that the Applicant was required to complete were exclusively assigned to him by ABB (fourth Respondent) with no involvement from the fifth Respondent. Mr McGruther stated that the fifth Respondent supplied no plant or equipment to the Applicant that was necessary to complete any tasks. Further, if the Applicant wished to take any day off or leave of absence then he would deal with the taking of such leave directly with ABB (fourth Respondent).

[22] Mr McGruther also stated that the Applicant would report directly to the supervisors and managers of ABB (fourth Respondent) and not the fifth Respondent. Mr McGruther further stated that all work was performed in the manner and to the standards as directed by ABB (fourth Respondent) with no involvement from the fifth Respondent.

[23] In relation to the Applicant’s renumeration, Mr McGruther stated that in order for the Applicant to be paid for his services, he would input his weekly time into an eTimesheet which then approved by his Line Manager at ABB (fourth Respondent). The eTimesheet is a system operated by the payroll company One Vendor Payroll Pty Ltd (first Respondent). That system would then produce an invoice on the Applicant’s behalf for the contractor services he had provided.

[24] Mr McGruther stated that payment in relation to those days would then be made by One Vendor Pty Ltd (first Respondent) to the Applicant; and an invoice on the fifth Respondent’s behalf which would then be sent to ABB (fourth Respondent) for payment.

SUMMARY OF THE APPLICANT’S SUBMISSIONS

[25] The Applicant referred to the High Court decision of Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd. 4 The decision confirmed that the prohibition contained in s.357(1) of the Act will not be confined to a misrepresentation made in the context of an employment relationship, but will extend to situations where an employer engages ‘independent contractors’ from a labour hire company to perform work.

[26] In its ruling, the High Court had specific regard for the purpose of the general protections in the Act and associated legislation governing independent contractor arrangements. The bench agreed that employees in ‘disguised employment relationships should have appropriate remedies available to them’. 5

[27] The High Court also referred to previous cases where it was found that the parties ‘cannot create something which has every feature of a rooster, but call it a duck and insist that everybody recognise it as a duck’. 6

[28] The Applicant submitted that the High Court’s finding has broad implications for employers who seek to use a third-party provider to ‘cloak a work relationship to falsely appear as an independent contracting arrangement in order to avoid legal entitlements due to employees’. 7

[29] The Applicant further submitted that he was a national system employee pursuant to section 13 of the Fair Work Act (Cth) 2009, section 7 of the Work Health and Safety Act 2011 (QLD) 2011 (hereafter the WHSA); section 11 Worker’s Compensation and Rehabilitation Act 2003 (QLD) (hereafter the LHLA) and section 8 Labour Hire Licensing Act 2017 (QLD) (hereafter the LHLA).

[30] In response to the second and fifth Respondents submissions, the Applicant argued that he made an agreement with the second Respondent, while to the best of his knowledge he wasn’t given proper information before signing the employment agreement. No further information was provided in relation to what ‘proper information’ the Applicant stated was lacking.

[31] The Applicant submitted that from 12th of October 2020 until 29th of April 2021 he had been completely under control of third, fourth and sixth Respondent and he considered that he was to be treated as a Hitachi Energy (fourth Respondent) employee.

[32] The Applicant further submitted that from midday 29th of April 2021, he considered that the second Respondent was completely acting as the Applicant’s employer.

[33] The Applicant considered that from 5th of May 2021 until midday 2nd of June 2021, the first Respondent was the employer of the Applicant. The Applicant stated that from midday on the 2nd of July 2021, the second Respondent informed the Applicant that he was an independent contractor.

[34] The Applicant stated that on 5th of July 2021, the sixth Respondent informed the Applicant to discuss issues with the second Respondent. The Applicant further submitted that on the 5th of July 2021 at 5pm the fifth Respondent became the Applicant’s employer and terminated his employment.

[35] No further information was provided by the Applicant indicating why he considered the fifth Respondent became the Applicant’s employer on 5 July 2021, or to substantiate the above claims. The Applicant did not respond directly to submissions on behalf of the second and fifth Respondents.

CONSIDERATION

[36] The Applicant has brought an Application pursuant to Section 365 of the Act. Section 365 only entitles a person to bring an application if that person has been “dismissed” (see Section 365(a)).

[37] Section 386 of the Act states that a person has been dismissed if:

“4.1 The person’s employment with his or her employer has been terminated at the employer’s initiative; or

4.2 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.”

[38] Accordingly, a person can only be dismissed for the purposes of Section 386 if there is an employment relationship.

[39] The Respondent submitted that the principles to be applied as to whether a worker is an employee or an independent contractor, were recently summarised in the decision of Grindal v CGA Accounting Pty Ltd t/as Accounting. 8

[40] In considering the various indicia identified in Stevens v Brodridb Sawmilling Co Pty Ltd 9 and other authorities, the Commission addressed the list of indicia in the following manner.

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

[41] The Respondents exercised no control (over what work was performed, the place of work or the hours of work). These were all matters subject to negotiation between the Applicant and ABB (fourth Respondent).

Whether the worker performs work for others.

[42] The Respondent gave evidence that there was no prohibition on the Applicant for working for others.

If the worker provides and maintains significant tools or equipment.

[43] The Respondents provided no tools or equipment to the Applicant to perform the services. These were matters which were subject to the arrangements between the Applicant and ABB (fourth Respondent).

Whether the work can be delegated or subcontracted

[44] The Respondent submitted that there was no prohibition on the Applicant being able to delegate or subcontract the work and this was a matter for negotiation between the Applicant and ABB (fourth Respondent).

Whether income tax is deducted from remuneration paid to the worker

[45] No income tax was deducted from the Applicant’s remuneration.

Whether the worker was provided with paid holidays or sick leave

[46] The Applicant was not entitled to paid holidays or sick leave. Any period of leave was a matter to be negotiated between the Applicant and ABB (fourth Respondent).

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

[47] The Applicant is a highly skilled IT professional.

[48] In the recent decision of Construction, Forestry, Maritime, Mining & Energy Union v Personel Contracting Pty Ltd, 10 the Full Federal Court confirmed the importance of the express contractual arrangements between the parties in determining in whether there was relationship of employment or independent contractor.

[49] The decision of Personal Contracting Pty Ltd involved a worker who was a young backpacker working as a builder’s labourer. In that case, although the Full Federal Court acknowledged that there were indicia which went either way in ascertaining whether the worker was an employee or an independent contractor and decided that ultimately it was the terms of the independent contractor agreement that was determinative of the issue.

[50] Accordingly, having regards to the express terms of the Contract and the indicia of the relationship, the Applicant was at all times an independent contractor.

[51] The Applicant did not provide persuasive submissions contrary to the evidence and submissions set out by the Respondent. The Applicant did not negate the indicia of the contractor relationship that were identified by the Respondents representative. The evidence supported a contract with the Applicant as a contractor and not an employment relationship.

CONCLUSION

[52] On assessment of the caselaw and legislation, it is considered that the Applicant was engaged as an independent contractor and was not an employee of the second and fifth Respondents,

[53] Accordingly, for the reasons set out, no section 365 application can be brought by the Applicant against the second and fifth Respondents. There being no requisite employment relationship on foot, no section 365 application certificate is provided to pursue an application against the second and fifth Respondents. The remaining respondents will be set out on the section 365 certificate.

[54] On this basis the Applicant’s s.365 application against the second and fifth Respondents is dismissed.

[55] I Order accordingly.

COMMISSIONER

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<PR736290>

 1 [2020] FCAFC 152.

 2   See Yi Zhang v Medlab Clinical Ltd [2021] FWCFB 2453 [1].

 3 [2020] FCAFC 152.

 4 [2015] HCA 45.

 5 Ibid, at [21].

 6 Ibid, at [21].

 7 Ibid, at [21].

 8   [2021] FWC 1002.

 9 160 CLR 16.

 10 [2020] FCAFC 122.