Mr Christopher Cole v Endless Solar Operations Pty Ltd

[2016] FWC 6663

[2016] FWC 6663 [Note: An appeal pursuant to s.604 (C2016/6155) was lodged against this decision.]

FAIR WORK COMMISSION

DECISION

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

Mr Christopher Cole
v
Endless Solar Operations Pty Ltd
(U2016/2875)

DEPUTY PRESIDENT GOSTENCNIK MELBOURNE, 3 OCTOBER 2016

Application for relief from unfair dismissal; jurisdictional objection raised; minimum period of employment; casual employee or independent contractor; regular and systematic basis; reasonable expectation of continuing employment; jurisdictional objection dismissed.

[1] Mr Christopher Cole (Applicant) has applied for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (Act).

[2] It is not in contest that the Applicant’s employment was terminated by Endless Solar Operations Pty Ltd (Respondent) with effect on 27 May 2016. The Applicant was notified that his employment would end with effect on 27 May 2016 by correspondence to him dated 29 April 2016 in which four weeks’ notice of termination was given. 1

[3] The Applicant was employed in the position of IT and Operations Manager with the Respondent and appears to have commenced that position on 13 July 2015. The details of that position and the terms of that employment are set out in a letter of offer of employment dated 9 July 2015 and signed by the Applicant and Mr David Craig, a Director of the Respondent, on 13 July 2015. 2

[4] There is no dispute that the Respondent is a small business employer within the meaning of the Act.

[5] Before commencing employment in the position of IT and Operations Manager, the Applicant performed work for the Respondent between the period 30 March 2015 and the date he commenced the position he occupied immediately before the termination of his employment. I will refer to this period as the “relevant period”.

[6] The Respondent maintains that throughout the relevant period, the Applicant performed work for the Respondent as an independent contractor. Therefore, immediately prior to the termination of the Applicant’s employment on 27 May 2016, the Respondent maintains that the Applicant had not completed the qualifying period of employment and therefore cannot pursue his application.

[7] The Applicant says that during the relevant period he performed work for the Respondent, he was a casual employee. The Applicant relied on several reasons including the following:

• he worked regularly;  3



• he was provided with a desk;



• he was provided with a desk phone;



• he responded to emails using a work email address, which he said he created at the direction of Ms Cathy Lin, a Director of the Respondent;  4



• he was introduced as the “IT person” for the Respondent;  5



• he provided IT support to the Respondent’s employees;  6



• there was no differentiation between the way he was paid during his casual and full time employment; 7 and



• he attended regular staff meetings.  8

[8] Section 382 of the Act provides that a person is protected from unfair dismissal if, at the time of his or her dismissal, the person is an employee who has completed a period of employment with his or her employer of at least the minimum period of employment.

[9] Section 383 of the Act provides that in the case of a small business employer, the minimum period of employment is one year ending at the date of the dismissal.

[10] Section 384 of the Act sets out how an employee’s period of employment with the employer is to be determined. Relevantly, the period of employment is the period of continuous service that the employee has completed with the employer at the time of the employee’s dismissal. Continuous service has the meaning ascribed to it in s.22 of the Act.

[11] Section 384 of the Act also provides that a period of service as a casual employee does not count towards an employee’s period of employment unless the employment as a casual employee was on a regular and systematic basis, and, during the period of service as a casual employee, the employee has a reasonable expectation of continuing employment by the employer on a regular and systematic basis.

[12] Thus, service in casual employment is counted if the employment was regular and systematic and the employee had a reasonable expectation of that regular and systematic employment continuing.

[13] The two issues arise for consideration. First, whether the relationship between the Applicant and the Respondent during the period between 30 March 2015 and the commencement of his employment as IT and Operations Manager was one of principal and contractor or employment on a casual basis. If employment was on a casual basis then the second issue requiring determination is whether the employment as a casual employee, was on a regular and systematic basis and whether during the relevant period the Applicant had a reasonable expectation of continuing employment with the Respondent on a regular and systematic basis.

[14] During the relevant period, the Applicant was also employed as a part-time employee with the Australian Bureau of Statistics (ABS).

[15] The Applicant’s evidence was that on or about 12 March 2015 he performed an IT service for the Respondent as an independent contractor for which he rendered an invoice. 9 His evidence was that shortly thereafter he had a conversation with Ms Lin about full-time employment, however given his part-time employment with ABS at the time, it was not possible and so there was an agreement that he would commence casual work for the Respondent until such time as he was able to commit to full-time employment.10

[16] It is not in contest that the Applicant and the Respondent agreed that he would be paid $28.00 per hour for work performed by him during the relevant period. Ms Lin said that when the Applicant had, in early March 2015, performed work as an independent contractor he charged $120.00 an hour, but given that there was a lot of work to be done he agreed to a discounted rate of $28.00 per hour. 11 This evidence is with respect, simply not credible. The rate of pay of $28.00 per hour seems to me, to be consistent with employment as a casual employee and the rate of $120.00 an hour seems to me, to be consistent with an independent contractor performing IT contract work. The discount alleged amounts to a discount of over 400%. I do not accept Ms Lin’s evidence.

[17] On or about 10 April 2015, the Applicant rendered an invoice to the Respondent under the business name “Cover 4 IT” in the amount of $784.00. 12 A further invoice in the amount of $2168.00 in the same form was rendered on or about 17 April 2015.13 The Respondent relies on these invoices as evidence that during the relevant period, the Applicant was engaged as an independent contractor. The Applicant says that these invoices were rendered by his business, because he was asked by the Respondent to source and supply the equipment and he was in a very good position to provide that which was requested.14

[18] A review of the invoices shows clearly, in my view, that they were rendered for purposes of supplying and installing certain hardware and software. There is no labour cost component in either invoice. The detail contained in the invoices is consistent with the explanation given by the Applicant and I accept that explanation. That these two invoices were rendered in the circumstances as explained by the Applicant does not speak to the relationship between the Applicant and the Respondent during the relevant period.

[19] It is also apparent, on the material, that the Applicant attended the premises of the Respondent to perform work on a regular basis between 30 March 2015 and 10 July 2015. During the period between 30 March 2015 and 14 April 2015, the Applicant attended on seven occasions and performed a total of 34 hours of work. During the period between 16 April 2015 and 13 May 2015, the Applicant attended on 14 occasions and performed a total of 97 hours of work. For the period between 18 May 2015 and 15 June 2015, the Applicant attended on 14 occasions and performed a total of 88 hours of work and for the period 16 June 2015 to 10 July 2015, the Applicant attended on 11 occasions and performed a total of 73 hours of work.

[20] It is also evident from the material before me that during this period the payment for the work performed was deposited by electronic funds transfer into the Applicant’s bank account and described by the Respondent as “deposit endless solar wages – Chris C”. 15 It is also apparent from the amounts deposited, that these amounts are less than a gross figure earned for the hours worked when multiplied by $28.00 per hour. It would appear that tax was withheld by the Respondent.

[1] This is consistent with the notations that are to be found in the timesheets completed by Ms Ellise He, 16 a former Bookkeeper of the Respondent, from emails sent by the Applicant to Ms He which record the number of hours worked, the agreed rate of $28.00, and a deduction for tax.17

[2] Even more telling is the existence of payslips prepared by the Respondent for the relevant period at issue which set out the hours worked, the hourly rate of pay, the gross wages, the tax deducted and the superannuation contributions that were made.

[3] Ms He’s evidence about the deduction of tax and superannuation contributions and the generation of payslips was less than satisfactory and evasive. Relevantly her evidence, recorded in transcript appears below:

“Yes, but how did he get paid?  What did you receive from him?---He send me his working hours.

Timesheets?---No timesheet, email.

Can I show you the document?  Is that what he sent you?---No, that's fill it in basic on his email.

You filled that in?---Yes.

Okay.  So that's your document?---Yes.

All right, and you deducted income tax?  Withhold income tax?---That's automatic by the software.

It's automatic.  You don't deduct income tax from everything, do you?---No.

Did you forward that to the Tax Office?  The taxation that you deducted?---No.

You didn't forward it to the Tax Office?  What did you do with it?---I only - how do you say - because we've got the summary form, the MYOB, I basic on that.

Well, you deducted income tax from money that was due to Mr Cole, yes?---Yes.

And isn't that money supposed to go to the Australian Tax Office?---Not sure.

You're not sure?---Yes.

Did you prepare payslips?---That's generated auto by the software as well.

It's generated by the software?---Yes.

I see.  Were there other - do you have a payroll system?---It's in the accounting software MYOB.

Yes, which is the payroll software, yes?---Yes.

You entered Mr Cole's details on that system?---Yes because in that time Cathy was always there and Mr Cole, he send me an email about his hour and asked me to pay him without any invoice, so I enter it.

Yes.  Well, you did that in March and then April and then you continued to do that in May and in June, yes?---Yes.

Did you have a discussion with Ms Lin about Mr Cole and the arrangement?---I couldn't remember.

And you made deductions for superannuation as well, yes?  Or you made provision for superannuation?---No.

You didn't?  Can I show you a document?---This is also automatic by the software as well.  They automatic calculate it.

So you take no responsibility for it, anything?---No, when I enter all those hours in, it will automatic the tax and the superannuation, yes.

That applies to employees?---Not sure.

Not sure.  All right.  Can I have that document back.  You see that document has superannuation deductions, yes?---Yes.

And you provided that document to Mr Cole?---I click the button and I think it goes to his email address.

So you don't recall having any discussions with Ms Lin about Mr Cole?---No.

He just showed up one day?  Yes, is that your evidence?---Sorry?

He just showed up?---Yes.

And you didn't question why he was there?---I got a question for - because I asking Mr Cole for an invoice.

Yes?---But he always say I will give it to you later on.  After discuss with Cathy, and then still didn't receive any invoice from him.  So for the security, so I enter into the software.

…

THE DEPUTY PRESIDENT:  So the evidence that Ms He gave - that you gave earlier that they're automatically generated and sent to him is not true?---Because the earlier, I'm not sure what to do, but Mr Cole asked me to get his pay.

No, remember when I asked you whether you sent him the payslips, and you said it just happens automatically?---Yes.

That's not true?---No, when I make the payment.

It happens automatically?---Yes.

Right, so is it your evidence that - - -?---I can go back to the software to like print out a payslip.

So you subsequently printed out payslips and sent them to Mr Cole?---When he asked me, yes.

But they had earlier been sent to Mr Cole, is that right?---

MS LIN:  Deputy President - - -

THE DEPUTY PRESIDENT:  Just - - -

MS LIN:  Yes.

THE DEPUTY PRESIDENT:  They'd been earlier sent to Mr Cole or not?---I don't know, because it's automatic.

You don't know.  Well, can I suggest Ms He, if you don't know the answer to something, you should say I don't know, rather than trying to guess what happened?---Okay.

Yes, Ms Lin.” 18

[4] Moreover, the suggestion by Ms He that the MYOB accounting software performed all of the relevant calculations as though Ms He had nothing to do with the process is difficult to accept given that Ms He entered relevant details into the system and then made notations about the gross amount earned, the tax that was deducted, the net amount that was to be paid and the date on which it was made. 19

[5] The Applicant also gave evidence that he did not provide invoices for the work performed during the period at issue, and it is clear on the documents, that he sent his worked hours in the form of a timesheet to the bookkeeper. 20

[6] Ms Lin agreed that it appears that the amount for taxation was deducted from the payments made to the Applicant for work performed during the period at issue. She said that she was not involved in the payments and that the bookkeeper at the time, Ms He, was responsible for processing and making payments. 21 This is contrary to the evidence that Ms He gave. Ms He’s evidence was that the payments made to the Applicant were done automatically using the MYOB software and that the amount of tax withheld was also calculated automatically.22 Ms He also said that she entered the Applicant’s details on the payroll system after discussions with Ms Lin.23 Ms He said that Ms Lin made payments to the ATO and that she purely did the data entries.24 Ms Lin’s evidence was that the former bookkeeper was an “experienced” bookkeeper25 but when Ms Lin examined Ms He, Ms Lin asked questions regarding Ms He’s experience, qualifications and training to which Ms He indicated that she has qualifications in graphic design and that she has not had any formal training for bookkeeping outside that learnt at the Respondent.26 Neither Ms Lin nor Ms He impressed as witnesses. Their evidence about material matters was inconsistent and on the whole, I find their evidence unreliable.

[7] The Applicant’s evidence was that during the period at issue he was introduced to other employees of the Respondent as the “IT person” 27 and that he performed work through a combination of being asked to do so by Ms Lin and also by knowing what needed to be done and scheduling his time in order to perform the work.28 He said that other employees of the Respondent would also ask for his assistance with IT matters.29 This included normal IT tasks such as setting up email addresses, checking up backups, resetting passwords and other day-to-day IT activities.30

[8] During this period, the Applicant was given a desk with a phone and was given an email account which he created he says at that the direction of Ms Lin. 31 The emails dated 13 May 2015, 15 June 2015 and 13 July 2015 sent from the Applicant to Ms He regarding the hours he worked, had the Applicant’s signature details appear at the bottom of the email wherein he is described as the ”Manager of IT and Operations” together with a landline telephone number and an email address ChrisCole@endless – solar.com.au.

[9] The Applicant put to Ms Lin that he participated in Skype communications with all staff on Monday mornings. 32 During cross examination, Ms Lin initially said in answer to a proposition by the Applicant that he participated in regular staff meetings by Skype, that he did not, but when further pressed admitted that he did and again when further pressed admitted that those meetings were held on a regular basis.33

[10] Again under cross examination Ms Lin conceded that although other contractors were engaged from time to time, no other contractor had been given a desk phone. 34

[11] On the whole I found Ms Lin’s evidence evasive, argumentative and unreliable. For example, Ms Lin often answered questions that were put to her by the Applicant with the refrain “where is the evidence”. She suggested in her evidence that she had requested the Applicant to provide invoices for the work undertaken by him during the period of issue but did not produce any written request of that effect, she suggested that she might have kept “some notes in my [her] notebook”, 35 but did not produce any notebook to that effect. Moreover, the evidence that she had requested invoices is inconsistent with her assertion that she was not involved with payments and that the bookkeeper was responsible for and dealt with payments to the Applicant.

[12] On the whole, the evidence given by both the Applicant and Ms Lin, with respect, was largely inconsistent. Both the Applicant and Ms Lin gave contradictory evidence which conflicted with the evidence they had earlier provided. I am unable to rely on much of the evidence given by either witness. I found both accounts oftentimes to be self-serving. 36 Moreover, the Applicant’s admission that he had requested two of the Respondent’s employees to tell a bank, from which he had applied for a home loan refinancing arrangement, that he was employed on a full time basis, when he knew his employment would end in a few weeks, does little for his credibility or for my assessment of his honesty.37 That said, some of the Applicant’s evidence is supported by documents and where that is the case, I have preferred the evidence given by the Applicant. On the whole, the documentary trail provides the best evidence.

[13] The evidence viewed as a whole shows that:

● there was a degree of control exercised over the work performed so far as it was in the scope of the Respondent to control the work;

● The Applicant appears to have been integrated into the Respondent’s organisation;

● the Applicant’s hourly rate appears to be consistent with the rate of pay for casual employment and it appears in the documentary material that the payment was for wages and tax was deducted from those wages;

● the documents also show that superannuation contributions were made on the Applicant’s behalf or at least recorded as such;

● time sheets were completed for times recorded and outlined in an email sent by the Applicant to the bookkeeper at the time;

● the Applicant received payslips from the Respondent;

● deposits were made into the Applicant’s bank account and described by the Respondent as wages;

● given the sensitive nature of the work that was being performed, that is IT work, there is no evidence that the Applicant was required to be responsible for any risk or any loss that would have occurred as a consequence of the work that he performed and he was not paid for the completion of a task but rather paid on an hourly basis pursuant to the timesheets completed by the bookkeeper; and

● in internal email correspondence from the applicant to the bookkeeper the Applicant appeared to hold the title " Manager of IT and Operations”. Coincidentally this title carried over into his full-time role.

[14] All of these matters point to an employment relationship. There is little by way of credible evidence pointing the other way. In my view, the Applicant was during the relevant period a casual employee of the Respondent and he was not an independent contractor.

[15] Turning then to the second issue, on the evidence it seems clear that the work that the Applicant performed during the period at issue was employment as a casual employee undertaken on a regular and systematic basis. So much is clear from the timesheets that were rendered by the Applicant to the bookkeeper. During the relevant period, the hours of work and employment were both regular and systematic.

[16] The question then arises whether during this period of service of casual employment, the Applicant had a reasonable expectation of continuing employment by the employer on a regular and systematic basis. I accept the Applicant’s evidence to the effect that the arrangement into which he entered was that he would continue the casual employment with the Respondent until such time as he was ready to commence full-time employment with the Respondent. It seems therefore that during the relevant period the Applicant had an expectation that his employment would continue on a regular and systematic basis at least until such time as he indicated that he was willing and able to commence full-time employment. The Applicant’s evidence was that if he was unable to become a full-time employee, he would have been a casual employee on an on-going basis. 38 In those circumstances, the expectation was a reasonable one.

[17] I am therefore satisfied that the period of service rendered by the Applicant as a casual employee from 30 March 2015 to 10 July 2015 is a period of service that counts towards a period of continuous service that the Applicant had completed with the Respondent. This period combined with the period of continuous service between 13 July 2015 and the date of his dismissal results in the period being more than one year.

[18] In these circumstances, I am satisfied that the Applicant is a person protected from unfair dismissal.

[19] The jurisdictional objection raised by the Respondent founded upon the minimum period of employment, is dismissed. The matter will be allocated to the Unfair Dismissal Team for allocation in the usual way.

Conclusion

[20] The Applicant is protected from unfair dismissal.

Order

[21] For the foregoing reasons, I order that the jurisdictional objection raised by the Respondent related to the minimum employment period of employment is dismissed.

DEPUTY PRESIDENT

Appearances:

Mr C Cole, on his own behalf.

Ms C Lin, with Mr D Craig on behalf of the Respondent.

Hearing details:

2016.

Melbourne:

29 July.

15 September.

 1   Exhibit 3, Attachment I.

 2   Exhibit 5, Attachment A.

 3   Applicant’s Outline of Submissions dated 22 July 2016.

 4   Transcript PN236, PN241 – PN244.

 5   Transcript PN155.

 6   Transcript PN187 – PN188.

 7   Applicant’s Outline of Arguments - Objections at question 2g dated 22 July 2016.

 8   Transcript PN495.

 9   Transcript PN135.

 10   Transcript PN129 – PN134, PN138.

 11   Transcript PN460.

 12   Exhibit 5, Attachment B.

 13   Attachment 5 to correspondence from Ms Lin dated 1 August 2016.

 14   Transcript PN994 – PN996.

 15   Exhibit 2.

 16   Transcript PN661– PN665.

 17   Attachment 1 to correspondence from Ms Lin dated 1 August 2016.

 18   Transcript PN661 – PN690, PN722 – PN734.

 19   Attachment 1 to correspondence from Ms Lin dated 1 August 2016.

 20   Transcript PN994; see also for example Attachment 1/3, 1/5 and 1/7 to correspondence from Ms Lin dated 1 August 2016.

 21   Transcript PN451.

 22   Transcript PN669 – PN676.

 23   Transcript PN690.

 24   Transcript PN710.

 25   Transcript PN464.

 26   Transcript PN692 – PN696.

 27   Transcript PN155.

 28   Transcript PN186.

 29   Transcript PN187.

 30   Transcript PN188.

 31   Transcript PN243.

 32   Transcript PN495.

 33   Transcript PN502 – PN506.

 34   Transcript PN513.

 35   Transcript PN553.

 36   See for example Transcript PN1139 – PN1141 (Cole) and PN495 – PN502.

 37   Transcript PN1004 – PN1017.

 38   Transcript PN1155.

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