Mr Damian Andrew Wright v Runge ICT Group Pty Ltd T/A Runge Networks

[2010] FWA 3148

[2010] FWA 3148

FAIR WORK AUSTRALIA

DECISION

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

Mr Damian Andrew Wright
v
Runge ICT Group Pty Ltd T/A Runge Networks
(U2009/13932)

COMMISSIONER ASBURY BRISBANE, 16 APRIL 2010

Termination of employment - jurisdiction.

Overview

[1] On 20 November 2009 Mr Damien Andrew Wright made an application to Fair Work Australia (FWA) under s.394 of the Fair Work Act (the Act) for an unfair dismissal remedy in respect of the termination of his employment by the Runge ICT Group Pty Ltd (Runge ICT). On 26 November 2009, an objection to the application was filed by Runge ICT seeking that the application be dismissed on the ground that the Mr Wright is not covered by the unfair dismissal laws or is not eligible to make an application.

[2] In relation to the objection, it is contended that Runge ICT is a small business employer and Mr Wright had not completed the minimum employment period of one year. This is said to be because Mr Wright was engaged as an independent contractor by Runge ICT between 30 June 2008 and 16 June 2009, and performed work under a contract for service and thereafter was an employee for the period from 16 March until 6 November 2009 . In the alternative, it is contended that if Mr Wright was an employee, his employment for the period between 30 June 2008 and 16 June 2009 was on a casual basis, and cannot be taken into account in determining whether Mr Wright had completed the minimum employment period, because of s.384(2) of the Act.

[3] Mr Wright contended that at all relevant times, he was an employee. For the period between 30 June 2008 and 16 June 2009, Mr Wright maintained that he was a casual employee and that his service in this capacity was continuous with his period of full time employment from 16 March to 6 November 2009. Mr Wright also contends that:

“Legal advice … is that [Mr Wright] may have been subject to a sham contract during the Contention period [between 30 June 2008 and 16 June 2009] which is now under investigation by the Fair Work Ombudsman.”

[4] Accordingly, Mr Wright contends that the period 30 June 2008 to 16 June 2009 is taken into account in determining whether he had the requisite period of service so that his service is continuous from 30 June 2008 until 6 November 2009.

Issues for Determination

[5] It is not in dispute that Runge ICT was a small business employer for the relevant period as defined in s.23 of the Act. It is also not in dispute that other than the question of whether Mr Wright had completed the minimum period of employment, he would be a person protected from unfair dismissal because at least one of the conditions in s.382(b) of the Act applied. The issue for determination is whether at 6 November 2009, Mr Wright had completed a period of employment with Runge ICT of at least the minimum period, so that at the point his employment was terminated, he was a person protected from unfair dismissal.

[6] In order to determine this issue, it is necessary to establish whether:

• Mr Wright was engaged as an independent contractor under a contract for service for the period from 30 June 2008 to 16 June 2009 so that this period is not taken into account in determining whether he had completed a minimum period of employment; and



• If Mr Wright was not engaged as an independent contractor for that period, whether Mr Wright was a casual employee; and



• If Mr Wright was a casual employee, whether the period of casual employment counts toward the minimum period of employment for the purpose of determining whether Mr Wright is a person who is protected from unfair dismissal.

Legislation and Case Law

[7] The provisions of the Act relevant to the determination of the issues in dispute are as follows. Section 382(a) provides:

“382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period;…”

Section 383 provides:

383 Meaning of minimum employment period

The minimum employment period is:

(a) if the employer is not a small business employer—6 months ending at the earlier of the following times:

(i) the time when the person is given notice of the dismissal;

(ii) immediately before the dismissal; or

(b) if the employer is a small business employer—one year ending at that time.

Section 384(1) and (2) provide that:

384 Period of employment

(1) An employee’s period of employment with an employer at a particular time is the period of continuous service the employee has completed with the employer at that time as an employee.

(2) However:

(a) a period of service as a casual employee does not count towards the employee’s period of employment unless:

(i) the employment as a casual employee was on a regular and systematic basis; and

(ii) during the period of service as a casual employee, the employee had a reasonable expectation of continuing employment by the employer on a regular and systematic basis; ….

[8] Thus if Mr Wright was not an employee who had completed a minimum period of employment of twelve months at the point his employment was terminated, he is not protected from unfair dismissal and is not able to bring an application under s.394 of the Act.

[9] In Abdallah v Viewdaze Pty Ltd 1 (Abdallah) a Full Bench of the Australian Industrial Relations Commission (AIRC) extensively reviewed the authorities setting out principles relevant to determining whether an employment relationship exists. The starting point is an analysis of the totality of the relationship2 including the nature of the work performed, the manner in which it is performed3 and the terms and terminology of the contract4. However, as Justice Gray observed in Re Porter; Re TWU:5

“A court will always look at all the terms of the contract, to determine its true essence, and will not be bound by the express choice of the parties as to the label to be attached to it….the parties cannot create something which has every feature of a rooster, but call it a duck and insist that everybody recognises it as a duck.”

[10] It is also necessary to make findings about what have variously been referred to as principles, criteria, tests or indicia of the relationship. These were summarised by the Full Bench in Abdallah as follows:

• whether the putative employer exercised or has the right to exercise control over the manner in which work is performed including the place of work, hours of work and similar matters;



• whether the worker performs work for others, or has a genuine and practical entitlement to do so;



• whether the worker has a separate place of work and/or advertises his or her services to the world at large;



• whether the worker provides and maintains significant tools or equipment;



• whether the work can be delegated or subcontracted;



• whether the putative employer has the right to suspend or dismiss the person engaged;



• whether the putative employer presents the worker to the world at large as an emanation of the business;



• whether income tax is deducted from remuneration paid to the worker;



• whether the worker is remunerated by periodic wage or salary or by reference to completion of tasks;



• whether the worker is provided with paid holidays or sick leave;



• whether the work involves a profession, trade or distinct calling on the part of the person engaged;



• whether the worker creates good will or saleable assets in the course of his or her work; and



• whether the worker spends a significant portion of his remuneration on business expenses. 6

[11] In carrying out this exercise, not all of the indicia will be relevant, and it will be necessary to weigh or balance them. Some will be given more weight than others based on the nature of the work performed and the manner in which it is to be performed. 7 The Full Bench in Abdallah also said that the list is not exhaustive and that features of a relationship that do not appear in the list may be relevant to the determination of the ultimate question. Further, the Full Bench said:

“If the indicia point both ways and do not yield a clear result the determination should be guided primarily by whether it can be said that, viewed as a practical matter, the individual in question was or was not running his or her own business or enterprise with independence in the conduct of his or her operations as distinct from operating as a representative of another business with little or no independence in the conduct of his or her operations.” 8

[12] It was also the view of the Full Bench in Abdallah that if, after weighing these indicia, the result is still uncertain, then the determination should be guided by the notions referred to in the judgment of the majority in Hollis v Vabu 9 including the statement that the distinction between an employer and an independent contractor can be “is rooted fundamentally” in the difference between a person who serves his or her employer in the employer’s business, and a person who carries on his or her own trade or business.10

Evidence

[13] Evidence was given in support of the jurisdictional objection by Mr Jonathan Charles Runge, the sole Director of Runge ICT and Mr James David Paul Lee, Senior Engineer and Team Leader. Evidence was given by Mr Wright on his own behalf. In relation to the background against which the contact was entered into, the evidence established that Runge ICT provides information technology (IT) services to medium and large companies ranging from help desk services to network security. In mid 2008, Runge ICT needed to obtain additional assistance in responding to customer issues.

[14] A resume was received by Runge ICT from Mr Wright. 11 The resume indicates that from 2007 to 2008 Mr Wright was a business owner and systems engineer of an entity called SkyNET Consultancy Services (SkyNET) and that this business had a number of clients including a major bank and others in the construction industry and legal profession. There was evidence that SkyNET is a registered business with an Australian Business Number, ABN 50 638 083 376 and had been active from 27 May 2007. SkyNET operates as an individual/sole trader, and the name of the entity is Damian Andrew Wright. These details were current at 21 January 2010, according to information on the Register of Australian Businesses.

[15] Mr Wright said that he obtained the Australian Business Number on 27 May 2007, and had a business before he started to perform work for Runge ICT. In response to the proposition that he was conducting his own business, Mr Wright said: “Yes. Not very often, but yes” 12. In relation to his resume, Mr Wright said that the experience outlined involved him doing work as a systems engineer for multiple companies, similar to what he later did at Runge ICT. Mr Wright also agreed that in doing so he was an independent contractor.

[16] An agreement entitled “Subconsultant Agreement” was entered into between SkyNET and Runge ICT on 30 June 2008, under which SkyNET agreed to provide consultancy services to Runge ICT. 13 The Agreement was executed by Mr Runge on behalf of Runge ICT and Mr Wright on behalf of SkyNET. The recitals state that:

“THIS AGREEMENT is made on the (sic) Sunday, 29 June 2008.

BETWEEN the Subconsultant, SkyNET Consultancy Services (ABN: 50 638 083 376) and the Client, Runge ICT Group Pty Ltd (ABN: 44 118 146 115) of Brisbane

WHEREAS

A. The Subconsultant is in the business of IT industry consulting

B. The Client is in the business of providing specialist consulting services in information communications and technology and project management fields throughout Australia and New Zealand.”

At clause 2, the Subconsultant Agreement provides that:

“2. Relationship Between the Parties

(a) This Agreement does not constitute any company, partnership or joint venture between the parties for any purpose. Neither party to this Agreement shall have any right to incur any liabilities nor obligations on behalf of or binding upon the other party except as provided for in that Agreement.

(b) The Subconsultant acknowledges and herby agrees that in relation to the supply of services under this Agreement it is responsible for all statutory requirements in relation to trading, including but not limited to the payment of all or any taxes, superannuation, workers compensation or other charge, levy or obligation imposed by law as a result of this Agreement.

(c) The Subconsultant shall in no event be liable to the Client for consequential or indirect financial loss or damage, nor in respect of any estimate of the time or cost to complete the work.…”

[17] At clause 8 of the Subconsultant Agreement, under the heading “Death or Injury Indemnity” the following appears:

“The Subconsultant warrants that it is an Independent Contractor.”

The scope of the work to be performed under the Subconsultant Agreement is set out in Attachment 1 as follows:

“The scope of services includes IT consulting associated with the consulting and business activities of Runge ICT Group Pty Ltd.”

Mr Runge’s evidence about the nature of the work was that when customers had an IT related issue they would telephone or email and their issue would be addressed through remote access to the customer’s computer system, or by telephone. If the issue could not be resolved in this way, Runge ICT would send someone to the customer’s premises. In order to perform the work a good knowledge of the software being operated by customers is required.

[18] In relation to the manner in which work was performed under the Subconsultant Agreement, Mr Lee said that Mr Wright worked alone to resolve issues in cases assigned to him. When Mr Wright attended at the site of a customer, it was up to him to resolve the issue. This work is typically done by looking at what had happened and trying to replicate the issue using brains and technical expertise. It is also necessary to identify whether an issue is a hardware or equipment problem or whether it involves software programs. Generally equipment was not taken to site, as the work involved replicating, resolving and troubleshooting based on expertise and knowledge on the part of the person performing the work.

[19] According to the Subconsultant Agreement, work is allocated by direction of the Managing Director of Runge ICT and/or nominated delegates. In his oral evidence Mr Runge said that work was assigned to Mr Wright on a case by case basis. Work was assigned by either Mr Runge, or Mr Lee. Each case carried a job number. Each job or case was given a priority depending on its urgency, ranging from 1 to 4. If a number of jobs had the same priority, Mr Wright was entitled to choose the order in which he would perform them. When Mr Wright went to a customer’s site he was generally alone, unless the job required two people.

[20] Mr Lee said in his evidence that in July 2008 when Mr Wright commenced working with Runge ICT, Mr Lee and Mr Runge were the only two technically able working employees. Mr Lee was responsible for assigning tasks to Mr Wright and would do so when the workload was such that he and Mr Runge could not complete it. Later, Runge ICT employed Mr Roland Jacobson, to complete cases and to undertake maintenance of internal systems. Mr Jacobson was also responsible for completing remote and onsite scheduled maintenance for clients paying a fixed amount each month.

[21] In response to the proposition that Mr Wright did not have a say in the tasks he performed for Runge ICT, Mr Lee said that the Company would assign a pool of work to Mr Wright and Mr Wright had control over the way he handled that work. Mr Wright said in his evidence that work was assigned to him through the system operated by Runge ICT and he had no say in what work he did.

[22] Mr Runge said in his evidence that the majority of work undertaken by Mr Wright was remote work carried out by means of an “accessory” which connected with the customer’s computer. This work was done from the premises of Runge ICT. Where a case could not be resolved by remote access, Mr Wright was required to attend at the customers premises to perform his work. Mr Lee said in his evidence that there were also occasions when Mr Wright performed work remotely from his own home to resolve issues for customers of Runge ICT. As long as the Company was notified there was no problem with that, as the resolution of the issue was more important. Mr Lee said that if Mr Wright performed work for Runge ICT from his own home, he would expect that Mr Wright would charge for that work at the rate provided in the contract, and would record the hours on a time sheet. Mr Lee agreed under cross-examination that there were instances when Mr Wright worked from home, where the work was performed “after hours”. Mr Lee agreed that the majority of work performed by Mr Wright was remote work. Mr Wright said that he went to work at the same place every day.

[23] In relation to hours of work, Mr Runge said that there was no guarantee of regular work for Mr Wright, and he was given jobs on an “as required” basis. Under cross examination, the proposition was put to Mr Runge that Mr Wright withdrew from university so that he could work on a full time basis for Runge ICT. Mr Runge said that he was not aware that this was the case. In response to the proposition that Mr Wright felt pressured to work more hours for Runge ICT and feared losing his job, Mr Runge said that there may have been pressure on Mr Wright if there were more cases. Mr Lee said that, while the Subconsultant Agreement was in effect, work was allocated to Mr Wright when it could not be completed by Mr Lee, Mr Runge or Mr Jacobson. If there was no work for Mr Wright to do, he was not at the office of Runge ICT. Mr Wright was effectively working on excess cases.

[24] Mr Wright was informed of the work he was to carry out either while he was in the office, or on an ad hoc basis by telephone or email. Mr Lee said that there were occasions when Mr Wright was in the office of Runge ICT at the end of a day, and it was known that he would be required on the following day. Mr Lee also said that on some occasions Mr Wright would indicate that he was not available to do work for Runge ICT. A number of emails were tendered through Mr Lee as follows:

• Email from Mr Wright to Mr Lee dated 23 November 2008 stating that Mr Wright has university classes on Tuesday and Thursday; 14



• Email from Mr Wright to Mr Lee dated 17 December 2008 asking when work would be available and a response from Mr Lee informing Mr Wright that the office would be closed for the next two weeks, that he would call Mr Wright midway through the first week the office reopened to see how things were looking, and there was no work at that time; 15



• Email from Mr Wright to Mr Lee advising that he will not be able to work on Monday 12 January 2009 as he is in the city doing other work; 16 and



• Email from Mr Wright to Mr Lee dated 16 February 2009 where Mr Wright advises that he could be late that day, but that it does not really matter as he is still a contractor. 17

[25] Mr Lee said in his evidence that there was a difference in the hours worked by Mr Wright in the March to November 2009 period when the Subconsultant Agreement applied and thereafter when he was employed by Runge ICT. As an employee, Mr Wright worked regular hours from 8.30 am to 5.30 pm and had set lunch breaks and tea breaks. The work also changed in that it was no longer based on cases that Mr Runge and Mr Lee did not have time to undertake, but was regular work including working in the call centre and performing work on internal systems such as backup and routine maintenance.

[26] Mr Wright said that he worked regular hours for Runge ICT while under the Subconsultant Agreement and went to work pretty much every day. Mr Wright agreed under cross examination that the time sheets were self explanatory and that they had been the subject of tax invoices that he tendered.

[27] The Subconsultant Agreement provided as a condition, that SkyNET agrees to introduce Runge ICT to its existing customers, or release those customers to external third parties. Further, the Subconsultant Agreement provided that on termination, Runge ICT will not engage with customers existing before the contract came into effect, unless those customers have been with Runge ICT for a period greater than one year and that SkyNET would not contact or discuss IT related products or services with Runge ICT clients for a period of one year from the termination of the contract. 18 The Subconsultant Agreement also provides at clause 2(f) that:

“The Subconsultant shall not without the prior written consent Runge ICT Group Pty Ltd, during this agreement or otherwise, be engaged or interested either directly or indirectly or in any capacity, in any business whatsoever for any other organisation.”

[28] Mr Runge said in his evidence that Mr Wright continued to operate a business under the name of SkyNET from 1 July 2008 until 20 March 2009, and provided services to companies other than Runge ICT. Mr Runge concluded that this was the case because he heard Mr Wright speaking on the telephone to other parties, who were not clients of Runge ICT. Mr Runge said that he did not take objection to this as long as Mr Wright was not billing Runge ICT for work performed for parties that were not its clients.

[29] Under cross-examination, Mr Runge agreed that Mr Wright had not asked for consent to work for other people, but maintained that the contractual term requiring the consent of Runge ICT had not been enforced. In response to the proposition that Mr Runge had overheard Mr Wright assisting a family member by navigating that person through some technical components, Mr Runge said that he did not know who Mr Wright was speaking to. An email tendered through Mr Lee dated 12 January 2009, states that Mr Wright is unable to work for Runge ICT on that date, because he is in the city finalising a “MOSS 2007 deployment with RMS”. Mr Lee said that this work was for a company that was not a client of Runge ICT. 19 Under cross examination Mr Lee said that he did not know whether or not Mr Wright had been paid for this work or had not charges for the work because it was for his professional development.

[30] Mr Lee also said that he had overheard Mr Wright making telephone calls of a technical nature from the office of Runge ICT and felt it necessary to take notes of those calls as they were not calls to clients of Runge ICT and he wanted to be sure that Mr Wright was not charging the company for time spent on those calls. There was one such call that Mr Lee overheard, and on other occasions Mr Wright would answer his telephone and step out of the office to take the call. There was no objection to this as long as Mr Wright was not charging Runge ICT for time spent doing work for his own clients. Mr Lee could not recall this practice continuing after Mr Wright signed the contract of employment and said that he would have remembered if this had been the case, because Mr Wright should not have been working on technical issues for persons who were not clients of Runge ICT while he was employed by the company.

[31] Mr Wright said that he understood that while he was working for Runge ICT, he was not allowed to work for other people. In response to the proposition that he had been observed at the office of Runge ICT speaking on the telephone dealing with matters that were not associated with that Company’s business, Mr Wright said that this was correct, and that he had probably not billed Runge ICT for that time.

[32] Mr Wright agreed that at the time he entered into the Subconsultant Agreement he had his own business and his own customers. Mr Wright said that Runge ICT requested that he no longer do work for those customers and requested a customer list. Mr Wright provided this, and Runge ICT sent letters to all of his clients indicating that Mr Wright now worked for the Company. 20 During cross examination, Mr Runge was shown a letter written by a former general manager of Runge ICT stating the following:

“I would like to introduce Damian Wright.

It is with great pleasure that we announce that Damian has joined our team here at Runge Networks as a Systems Engineer.

With Damian in his new role, I’m sure he will be able to offer you the highest level of service and will be happy to assist you with any IT issues that may arise in the near future!

Damian is contactable at the office … and he looks forward to assisting you with all your IT needs.” 21

[33] The letter indicates that it was sent by facsimile on 11 July 2008. It was put to Mr Runge that this letter had been sent to all of Mr Wright’s clients. Mr Runge said that he did not know whether this was the case, but that letters may have been written to all of Mr Wright’s clients.

[34] Mr Wright agreed that the Subconsultant Agreement did not prohibit him from working for other companies, and that he had not approached Runge ICT for permission to do so. Mr Wright said that he did not see the need to ask for permission as the work he was doing for other companies was free work. Mr Wright also agreed that he saw fit to continue to do work for others at his own discretion, and that was of no consequence to Runge ICT.

[35] The Subconsultant Agreement provides at clause 1(c) that the Subconsultant will supply all equipment, software and other expertise necessary for the provision of services. Mr Runge said in his evidence that Mr Wright was required to have a car and a mobile telephone. In relation to technical equipment, there was none that Mr Wright was required to take with him to perform work, but Runge ICT supplied specialised equipment. Mr Runge also said that in most cases there was not much equipment required, and that work was done using knowledge or through conducting research on site to understand and evaluate issues. The Subconsultant Agreement does not specifically require that the Subconsultant provide a car or a mobile telephone.

[36] Mr Runge said that Mr Wright was given a company mobile telephone at some time around the end of February, after Mr Jacobson left. It was put to Mr Runge in cross examination that Mr Wright did not have a car when he started working for Runge ICT and borrowed Mr Runge’s car on a number of occasions when he had to go to the premises of clients. Mr Runge said that he could not recall whether this was the case and thought that Mr Wright may have used a car belonging to his parents.

[37] Mr Lee agreed that Runge ICT provided Mr Wright with a desk and a computer, when he performed work in the Company’s office. Mr Wright said in his evidence that any tools he needed to get the job done, were provided by Runge ICT. These included screw drivers and tools to take computers apart, discs to fix software problems and software. Mr Wright said he did not provide any materials of his own, other than his brain. Under cross-examination, Mr Wright said that he often took network testing equipment that was owned by Runge ICT. In response to the proposition that most of the time he required no equipment but relied on his own knowledge, Mr Wright said that it was generally a case of using his knowledge but he always took equipment in case it was needed. Mr Wright also agreed that if he was operating from Runge ICT’s office and accessing client computers remotely, he did so using knowledge of the software used by clients.

[38] There is no specific requirement in the Subconsultant Agreement that the work is to be performed by Mr Wright personally, although this is what in fact occurred. At clause 8 under the heading “Death or Injury Indemnity” the contract states that the Subconsultant will be solely responsible for its staff, employees, consultants, agents and other service providers.

[39] Mr Runge said in his oral evidence that the Subconsultant Agreement provided for Mr Wright to allow other persons to do work subject of the contract, but that this had not occurred. Mr Lee agreed under cross examination that Mr Wright had not delegated work to other people, but maintained that Mr Wright could have done so under the terms of the contract.

[40] Mr Wright acknowledged that the Sub Consultant Agreement provided that he would be responsible for staff, employees, consultants, agents and other service providers, but maintained that he also understood that he was not allowed to work for other people.

[41] By virtue of clause 4 the Subconsultant Agreement could be terminated by either party giving 14 days written notice to the other party. According to the terms of the Agreement, Mr Wright was responsible for payment of all or any taxes in relation to supply of services. 22 The Subconsultant Agreement also provided that the Subconsultant was responsible for tax and superannuation. Mr Wright agreed under cross examination that he was aware that Runge ICT was not deducting tax from his remuneration under the Subconsultant Agreement and was not making superannuation contributions on his behalf.

[42] In relation to remuneration, the contract provided as follows:

“1. Performance of Services

…

(b) The Subconsultant will provide services at the rate per hour outlined in Attachment 2, plus expenses as agreed between the parties prior to the incurring of those expenses. The rate charged by the Subconsultant is specific to this Agreement only. Expenses incurred by the by the Subconsultant are charged to the Client at cost.

…

(d) The Subconsultant will provide the Client with a timesheet at the end of each week for the services showing the date of each day allocated to the provision of services. An invoice shall be submitted at the end of each month for services.

(e) The Client will pay the Subconsultant the amount calculated from the weekly time sheets at the rate determined in Attachment 2 within 14 days of the end of month of submission of invoice by the Subconsultant.”

[43] Attachment 2 of the Subconsultant Agreement sets out the rate of $25.00 per hour, which is stated to exclude Goods and Services Tax.

[44] Mr Runge’s evidence about the remuneration paid to Mr Wright under the Subconsultant Agreement was that Mr Wright was paid for all time indicated by him on service forms which related to each case assigned to him. Information would be taken from service forms for Runge ICT’s billing system, and that information would then be matched with invoices provided by Mr Wright. Mr Wright also completed time sheets provided in template form by Runge ICT, which included information such as the day on which work was performed, the name of the client, a description of the case, the start and finish times and the total time taken to complete the case. A bundle of time sheets covering the period from 4 February 2009 until 1 July 2008 was tendered. 23 Mr Wright was paid on the basis of time taken to complete each case. Mr Runge said that on some occasions clients were charged for less time than that taken by Mr Wright to complete a case, but Mr Wright was still paid for the actual time he designated on service forms. Mr Lee said that time sheets were only completed by Mr Wright during the period the Sub Consultant Agreement operated. Thereafter, Mr Wright was an employee and there was no requirement for him to complete time sheets.

[45] When Mr Wright was required to attend at the premises of a customer, he was generally not paid for time spent travelling. On one occasion Mr Wright was paid for travelling to the Gold Coast to complete a case. This was because the work was undertaken on Christmas Eve, and Mr Wright had not wanted to travel to the Gold Coast to perform work on that day. Mr Wright was paid $100 per hour for a period of three hours on this occasion, for a job that took fifteen minutes to complete. The invoice relating to this work was Exhibit 4. In relation to expenses, Mr Wright was entitled to charge for kilometres travelled to perform work at the rate of $0.70 per hour, and parking expenses incurred in conducting business or visiting clients. Travelling expenses were charged when Mr Wright was travelling from his home or the office of Runge ICT, to the premises of a client. Mr Runge agreed under cross examination that other employees of Runge ICT had travel expenses reimbursed on request.

[46] Mr Runge said in his oral evidence that invoices were received from SkyNET on a monthly basis, and at some stage on a fortnightly basis. The invoices which were Exhibit 9, bear the name, logo and Australian Business Number of SkyNET. Mr Runge also said that all invoices were paid, other than invoices for 3 March and 2 July 2009, which are in dispute and remained so at the point this matter was heard. The disputed invoices were Exhibits 5 and 6 respectively.

[47] Under cross-examination, the proposition was put to Mr Runge that Mr Wright was paid for time spent in the office of Runge ICT answering the telephone, in circumstances where there was no receptionist, such that Mr Wright was paid for time other than that spent working on cases for clients. Mr Runge was shown time sheets completed by Mr Wright which indicated that only 60 – 70% of the time he invoiced Runge ICT for was charged to clients. Mr Runge said that there was a degree of flexibility in the arrangements with Mr Wright and that it was expected that in return, he would answer telephones in the office.

[48] Mr Lee said that the percentage amounts hand written on time sheets were to indicate that less than 100% of Mr Wright’s time could be charged to clients. It had been made clear to Mr Wright that “more or less” 100% of his time should be charged to clients. Mr Lee did acknowledge that there were internal maintenance issues, and that Mr Wright also expended time filling in service forms. As a result there was some “good will” whereby Mr Wright was paid for all of the hours noted on time sheets, although not all of those hours could be charged to customers. It was put to Mr Lee under cross examination that a time sheet for 12 September 2008 showed that Mr Wright had been office for 2.75 hours and had billed 3.25 hours work, and that this indicated that Mr Wright was working unpaid overtime. Mr Lee said that this was the result of Runge ICT billing in fifteen minute intervals, when the actual work performed by Mr Wright had taken less time, rather than Mr Wright working overtime.

[49] Under cross examination Mr Wright was shown an email to Mr Runge dated 26 November 2009, 24 where he requested payment of a number of outstanding invoices from SkyNET Consulting for periods from 18 February to 3 March and 4 March to 20 March.25 The invoices were for IT services and travel expenses. Mr Wright said in relation to these invoices:

“These are requesting payment for invoices going back to late 2008, if not early 2009, before full-time employment commenced trying to get payment for things that haven’t been paid yet, from many months before I was an employee.” 26

[50] In response to the proposition that he was asserting a right as an independent contractor to be paid for services that he believed were due and owing, Mr Wright said: “I guess so. I just wanted to get my money.” 27 Mr Wright also said that he wanted the matter resolved and was happy if it was resolved through payment of the invoices, notwithstanding his allegation that the Subconsultant Agreement was a sham.

[51] Mr Wright agreed that the remuneration paid to him under the Subconsultant Agreement was paid into a bank account in the name of SkyNET Consulting and subsequently to the account of his brother Mr Charles Wright. Mr Wright said that this was because he owed Mr Charles Wright money and that when he was a full time employee his salary was still paid into the account of Mr Charles Wright. Mr Wright also agreed that in the time he had been an employee of Runge ICT, taxation instalments had been deducted from his salary, and superannuation contributions had been paid on his behalf. Mr Wright was shown an email he sent to Mr Charles Wright dated 30 January 2009. That email states:

“Send through $100 for this week. I have to go to the movies tonight with Olivia and I need petrol. Runge money will be coming Tue 17^th, the $1500 that wasn’t paid plus $300 odd in fuel expenses plus another 2 weeks of full time money. The mother load.

IDS never paid me by the way despite what you told Mum, I haven’t billed them yet as issues are outstanding with intranet developments.” 28

[52] In relation to this email, Mr Wright said that IDS was his brother’s company, and that he did work for that company and was not paid. In response to the proposition that the email indicated an intention to bill IDS Mr Wright said that he had not done so. Mr Wright also agreed that the email indicated that he had carried out work for IDS.

[53] There was no evidence that Mr Wright was provided with paid holidays or sick leave during the period the Sub Consultant Agreement operated. Mr Wright was shown an email during cross examination sent to Mr Lee on 7 July 2008 stating:

“I have a dental appointment on Wednesday morning at the Gold Coast which was booked a while ago. Just remembered as they rang me to confirm. So is it okay if I don’t come in that day? If I get back early enough, I might be able to come into the office in the afternoon though I would be in casual clothes. There will probably be follow up appointments in the next few weeks as I have to get a tooth extracted and he is also my orthodontist.” 29

[54] In response to the proposition that this email showed that he was aware that he could determine when he came to work, Mr Wright said that he was asking permission to be absent. Mr Wright could not recall whether he received such permission. There was evidence of a Christmas close down of approximately two weeks duration in December 2008, during which Mr Wright was not paid.

[55] An email tendered through Mr Lee dated 16 February 2009 contains the following exchange:

“[Mr Wright] I could be a bit late today or early. I’m currently on the Gold Coast, plan to get up at 6.00 am and drive back to my house then get ready and come into work. Guess it doesn’t really matter as I’m still a contractor but just letting you know my plans…

[Mr Lee] No worries mate. I’ll have a chat to Jon and see what’s happening about employment. Sorry for the delay.” 30

[56] On 11 March 2009, Mr Lee on behalf of Runge ICT presented Mr Wright with an employment contract. This date is noted on the front of the contract in Mr Lee’s handwriting. Mr Lee said that there was a vacancy at Runge ICT because Mr Jacobson had ceased employment. Mr Lee discussed the employment contract with Mr Wright and Mr Wright requested the weekend to consider his response. Mr Lee said that Mr Wright indicated that he wanted to weigh up the pros and cons, and stated that he enjoyed being able to dictate his own work and hours. There was also a discussion in relation to salary, and an amount of $51,000.00 per annum was agreed, subject to confirmation by Mr Runge. The employment contract was signed by Mr Runge and Mr Wright on 16 March 2009. The employment contract states at clause 3.1 that Mr Wright is to be employed in the position of Systems Engineer. 31

[57] Mr Lee said that he did not know whether the hourly rate under the contract of employment was the same as that under the Subconsultant Agreement. Mr Wright agreed under cross examination that the employment contract was different from the Subconsultant Agreement and that he was aware that this was the case when he signed the employment contract. However Mr Wright maintained that the salary paid under the employment contract was virtually identical to his remuneration under the Subconsultant Agreement.

Conclusions

[58] The work performed by Mr Wright for Runge ICT was skilled and required high levels of knowledge and expertise in relation to information technology, including computers, hardware and software. Further, Mr Wright was, according to the resume provided to Runge ICT prior to his engagement, making an independent career by operating his own IT business. Mr Wright had generated goodwill in that business, as evidenced by the clients referred to in his resume, and the client list he agreed to hand over to Runge ICT. 32 It cannot be said, as was observed in Hollis v Vabu that the notion that Mr Wright was running his own enterprise was “intuitively unsound”.33 At the point the Subconsultant Agreement was made, Mr Wright owned his own business, and performed work of the kind that Runge ICT sought to engage him to undertake.

[59] There is no evidence that Mr Runge or any other manager of Runge ICT required Mr Wright to enter into the Subconsultant Agreement to perform work for Runge ICT. Mr Wright made statements in his submissions to this effect. However the evidence clearly demonstrates that Mr Wright established his business and obtained an Australian Business Number in May 2007, over twelve months prior to entering into the Subconsultant Agreement. The business continues to be registered as at the date this matter was heard by FWA. Mr Wright also stated in his submission that he was tricked into handing over his list of clients to Runge ICT. Mr Wright did not give evidence on this matter and did not put this proposition to witnesses for ICT. In any event, this is not an issue that is relevant to whether the relationship between Mr Wright and Runge ICT was one of employment or independent contract. Further, it is clear from the evidence that Runge ICT employed Mr Jacobson and other persons to perform IT work, at the point the contract with Mr Wright was entered into, and that as soon as a position became available because Mr Jacobson ceased employment, that position was offered to Mr Wright. This is not consistent with the arrangement between Runge ICT and Mr Wright being a sham. Rather, it is consistent with the evidence for Runge ICT that Mr Wright’s engagement was to meet requirements associated with excess work that could not be done by existing employees.

[60] It is also the case that Mr Wright signed two agreements with Runge ICT – the Subconsultant Agreement and the employment contract. Mr Wright negotiated the terms of the employment contract, and Mr Lee’s evidence was that these negotiations centred on the rate of pay in the contract. Mr Lee gave uncontested evidence to the effect that Mr Wright discussed the pros and cons of an employment relationship compared to the terms applicable under the Subconsultant Agreement. Mr Wright also acknowledged in his evidence that there was a difference between the Employment Contract and the Subconsultant Agreement.

[61] I accept that the rates under the Employment Contract and the Subconsultant Agreement are very similar, however the Employment Contract also provides for superannuation, time off in lieu of overtime, annual leave, sick leave, public holidays and other terms and conditions to which full time employees are generally entitled. In my view, any similarity between the rates under the two instruments is not determinative of whether Mr Wright was at all times an employee. It is relevant that that immediately prior to the formation of the eployment contract, in an email dated 16 February 2009, Mr Wright acknowledged that he understood that it did not matter that he was late as he was still a contractor, and that Mr Lee responded, indicating that there were some discussions underway about Mr Wright becoming an employee. 34

[62] It is also the case that after the cessation of the employment relationship, Mr Wright pressed for payment of amounts he claimed to be entitled to under the Subconsultant Agreement. Overall, the evidence demonstrates that Mr Wright understood the distinction between the Subconsultant Agreement and the Employment Contract, at the point he entered into both of these arrangements with Runge ICT. On balance, I am satisfied that the factual background to the Subconsultant Agreement, the work performed, the manner in which it was performed and the terms and terminology of the Agreement itself, support the conclusion that the relationship established under it as that of principal and contractor and not employer and employee.

[63] The indicia of the relationship between Mr Wright and Runge ICT point both ways. In relation to control over the manner in which work was performed, I accept that Runge ICT exercised control over Mr Wright to the extent that it allocated him work, to which predetermined priority ratings were attached. However, once the work was allocated to Mr Wright, subject to him observing the priority ratings, he had control over which jobs he did and when. Mr Wright also had control over the manner in which he worked on individual jobs. Mr Wright was a skilled worker who, as he put it in his evidence, used his brain to analyse issues and develop solutions for the cases he was assigned. There is no evidence that any manager of Runge ICT worked with or oversaw the work performed by Mr Wright on the cases he was assigned.

[64] It is the case that Mr Wright principally worked from the offices of Runge ICT. However Mr Wright also worked from home and at the premises of clients. Essentially Runge ICT controlled the place of work through the allocation process and the fact that Mr Wright worked from the Company’s offices. However this control was incidental to the work and not determinative of the nature of the contract. I do not accept that Runge ICT exercised control over the hours worked by Mr Wright. Mr Wright had the ability to decide that he did not wish to work on certain days, and did so on a number of occasions. It is also the case that when the actual hours on the time sheets are analysed, there were significant variations in the hours worked from day to day and week to week.

[65] The Subconsultant Agreement does provide for Mr Wright to perform work for other clients. On the one hand, the provision of the Agreement dealing with this matter is framed in a negative way, so that Mr Wright was required to seek approval from Runge ICT in order to do so. It is also the case that Mr Wright agreed to hand over his client list to Runge ICT, and that the Subconsultant Agreement required Mr Wright not to engage with customers existing before the contract, unless those customers had been with Mr Wright for more than one year. On the other hand, there was no evidence that Mr Wright asked for approval to work for other businesses or was refused such approval. Further, Mr Wright concedes that he did perform work for other clients but maintains that he did so free of charge for the purposes of assisting family members or to increase his skills by performing work that he would not have an opportunity to do while working under the Subconsultant Agreement.

[66] It is also the case that the Subconsultant Agreement did not absolutely prohibit Mr Wright from performing work for previous clients. The email dated 12 January 2009 35, makes it clear that Mr Wright is engaging in work for another company. Mr Wright openly states in the email that this is the case, and does not seek approval to do so. Further, Mr Wright does not state in the email that he is performing the work for no remuneration and that it is for the purpose of updating his skills. It is more probable than not that if Mr Wright was restricted from performing work for other clients, he would have indicated these matters in his email. On balance I accept that during the period that the Sub Consultant Agreement was in effect, Mr Wright performed some work performed for other clients and was remunerated for that work. Even if Mr Wright was not remunerated for all of the work he performed for companies not clients of Runge ICT, it was his choice to do so, and is indicative that the relationship between Mr Wright and Runge ICT was not exclusive.

[67] There is no evidence that Mr Wright had a separate place of business or advertised his services to the world at large. It is the case that during the period the Subconsultant Agreement was in effect, Mr Wright was the owner of a registered business, SkyNET Consultancy Services. However, this does not, in my view, constitute Mr Wright advertising his services to the world at large.

[68] I do not accept that Mr Wright provided significant tools and equipment to undertake work for Runge ICT. It is apparent from the evidence that tools and equipment were not essential to the work performed under the Subconsultant Agreement. Any specialised equipment and software were provided by Runge ICT. There was no specific requirement in the contract for Mr Wright to have a motor vehicle or a mobile telephone, although for practical purposes he required at least the use of a vehicle to travel to the premises of customers. However, this type of work formed a significant minority of the work he performed for Runge ICT. Mr Wright also contended that he borrowed Mr Runge’s car on some occasions. Mr Runge’s evidence that he could not recall whether this was the case or not, was far from convincing. However, there is no indication that Mr Wright was directed to use any particular mode of transport to undertake this work. The provision of the mobile phone to Mr Wright was at approximately the time that the employment contract was being discussed. The mobile telephone was available because Mr Jacobson, an employee of Runge ICT to whom that telephone had been assigned, had ceased employment. There was also evidence that Mr Wright replaced Mr Jacobson. It is more probable than not that the mobile phone is related to the employment contract and not to the Subconsultant Agreement.

[69] The Subconsultant Agreement did not specifically provide for Mr Wright to delegate work to be performed under it. I accept that the Agreement did contain provisions stating that Mr Wright was solely responsible for staff, employees, consultants or agents and other service providers. However, this provision is found in the Subconsultant Agreement under a heading dealing with death or injury indemnity. There is also reference to officers or staff of the Subconsultant in the provisions requiring workers compensation insurance to be held by the Subconsultant. It is also the case that Mr Wright performed all of the work under the Subconsultant Agreement himself, and did not delegate or subcontract that work. In my view these provisions do not constitute a right to delegate or subcontract work to be performed under the Subconsultant Agreement.

[70] The Subconsultant Agreement provided for either party to terminate it with fourteen days notice. In Stevens v Brodribb Sawmilling Co. Pty Ltd 36it was noted that one indicia of an employment relationship is the right on the part of the principal to dismiss or suspend the person engaged.37 Here the right to terminate could be exercised by either party to the Subconsultant Agreement and not unilaterally by Runge ICT. There was no right under the Subconsultant Agreement for Runge ICT to suspend Mr Wright. There is evidence that Runge ICT presented Mr Wright to the world at large as an emanation of the Company. Whether the letter that is Exhibit 11 was sent to all of Mr Wright’s former customers or not, and regardless of the lack of evidence about exactly who the recipient of the letter was or her status, it is more probable than not that the letter was sent to Mr Wright’s former customers. This is so given the circumstances where Mr Wright’s uncontested evidence was that he had handed over his list of customers to Runge ICT. That letter was sent at the time Mr Wright was working under the Sub Consultant Agreement, and makes it clear that he is being presented as a member of the team at Runge Networks. However Mr Wright was not specifically represented as an employee of Runge ICT or related entities.

[71] Income tax was not deducted from Mr Wright’s remuneration under the Subconsultant Agreement and he acknowledged in his evidence that he knew this was the case. Superannuation contributions were not made on Mr Wright’s behalf by Runge ICT during the period the Subconsultant Agreement operated. Furthermore, Mr Wright was not remunerated under the Subconsultant Agreement by periodic wage. Rather, Mr Wright was remunerated by reference to cases he undertook and the hours that were expended in doing so. It is also relevant that Mr Wright’s remuneration was paid, for a period, into an account in the name of SkyNET Consulting Services. That Mr Wright at some other stage directed his remuneration into the bank account of his brother because he was repaying a debt, is not indicative of any matter relevant to the nature of the relationship between Mr Wright and Runge ICT. Mr Wright was not provided with paid holidays or sick leave. To the contrary, when Runge ICT had a close down for the Christmas period, Mr Wright was not paid for that period. Mr Wright did not query the fact that he was not paid, but rather, sought advice about when work would next be available. These matters are indicative of a relationship of independent contract.

[72] The work performed by Mr Wright involved a profession. It required significant skills and knowledge in the area of information technology. That work was also capable of creating good will or saleable assets, evidenced by Mr Wright having a client list which was of value, and the terms of the Sub Consultant Agreement placing restrictions on his dealings with his own former clients and clients of Runge ICT. There is no evidence as to Mr Wright’s expenditure on business assets.

[73] There are indicia in this case that point both ways. However on balance, and in the context of the factual background to the Sub Consultant Agreement, I am satisfied that the weight of evidence favours a finding that for the period from 1 July 2008 until 16 March 2009, Mr Wright was engaged under a contract for service and was not an employee of Runge ICT or any of its related entities. Accordingly, the period during which Mr Wright was employed by Runge ICT commenced on 16 June 2009, and at the point his employment was terminated, Mr Wright was not an employee protected from unfair dismissal. It follows that Mr Wright was not a casual employee during this period.

[74] The jurisdictional objection of Runge ICT is upheld and Mr Wright’s application for an unfair dismissal remedy is dismissed. I Order accordingly.

COMMISSIONER

Appearances:

Mr D. Wright on his own behalf.

Mr P. Challen, Solicitor on behalf of the Respondent.

Hearing details:

2010.

Brisbane:

February 4.

 1   Australian Industrial Relations Commission PR927971

 2   Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 29 per Mason J.

 3   Abdallah v Viewdaze Pty Ltd op. cit. at [34](1).

 4   Brodribb op. cit. at 37 per Wilson and Dawson JJ.

 5 [1989] FCA 226; (1989) 34 IR 179 at 185.

 6 Op. cit. at [34].

 7   Op. cit at [21] – [33].

 8   Ibid at [34](5).

 9   Op. cit. at 38 - 41

 10   Marshall v Whittaker’s Building Supply Co (1931) 46 CLR 210 at 217 per Windeyer J.

 11   Exhibit 2.

 12   Transcript 4 February 2010 PN516

 13   Exhibit 1.

 14   Exhibit 12.

 15   Exhibit 13.

 16   Exhibit 14.

 17   Exhibit 15.

 18   Exhibit 1 Attachment 3.

 19   Exhibit 14.

 20   Exhibit 11.

 21   Exhibit 11.

 22   Exhibit 1 clause 2(b).

 23   Exhibit 9.

 24   Exhibit 7

 25   Exhibits 5 and 6.

 26   Transcript 4 February 2010 PN533

 27   Transcript 4 February 2010 PN535

 28   Exhibit 17

 29   Transcript 4 February 2010 PN586

 30   Exhibit 15.

 31   Exhibit 8.

 32   cf. Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 42, where the majority noted that bicycle couriers were not providing skilled labour or labour which required special qualifications. Further it was noted that a bicycle courier is unable to generate an independent career as a freelancer or to generate any goodwill as a bicycle courier (per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ).

 33   Ibid at p. 42

 34   Exhibit 16.

 35   Exhibit 14.

 36 (1985-1986) 160 CLR 21.

 37   Ibid at 36.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR996276>