Mr Joseph Shiberras v The Trustee for Southern Paper Converters Trust trading as Visy Recycling

[2013] FWC 3520

[2013] FWC 3520

FAIR WORK COMMISSION

DECISION

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

Mr Joseph Shiberras
v
The Trustee for Southern Paper Converters Trust trading as Visy Recycling
(U2012/12988)

DEPUTY PRESIDENT SMITH MELBOURNE, 7 JUNE 2013

Whether a person was an employee or independent contractor; whether the person was covered by an award and/or was the person protected from unfair dismissal.

Introduction

[1] This decision arises from an application made by Mr Joseph Shiberras alleging that he was unfairly dismissed from his employment with The Trustee for Southern Paper Converters Trust trading as Visy Recycling (Visy).

[2] In the proceedings Mr Shiberras was represented by Mr J. McKenna of Counsel and Visy was represented by Mr M. Diserio, Solicitor. In both cases permission was granted for legal representation because it would permit the matter to be dealt with more efficiently having regard to the complexity of the matter.

[3] Visy raise two jurisdictional objections to the hearing of the matter pursuant to s. 394 of the Fair Work Act 2009 (the Act). The first objection is that it argues that Mr Shiberras was an independent contractor and in the alternative that he exceeded the high income threshold permitted by the Act. Given these objections, the issue of discussion under the Act [ss.398 and 399] was raised with the parties but it was considered that the appropriate course was to proceed with a hearing.

[4] Mr Shiberras rejected both jurisdictional arguments.

[5] Section 396 provides that certain matters must be considered before dealing with the merits:

“Initial matters to be considered before merits

The FWC must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:

(a) whether the application was made within the period required in subsection 394(2);

(b) whether the person was protected from unfair dismissal;

(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;

(d) whether the dismissal was a case of genuine redundancy.”

[6] There is no issue that the application was made within the required period. The challenge to the matter relates to whether or not Mr Shiberras was a person protected from unfair dismissal. Should it become relevant, I add for completeness that Visy is not a small business.

[7] It is to those relevant matters that I now turn.

Employee or Contractor?

[8] It is appropriate to record at the beginning that there is no written contract between the parties describing the relationship as either contractor or employee.

[9] It was the submission of Visy that it had little or no control over Mr Shiberras as he selected the days he worked and the hours he provided his services. Further, it is submitted that he conducted himself as an independent contractor and did not supervise other employees. It was submitted that he performed work for other persons and that he advertised his services to the world at large. It was put that Mr Shiberras submitted invoices with GST added and that no income tax was deducted from payments made to him. He was paid for hours completed. It was put that no annual leave or sick leave had been claimed or paid.

[10] In relation to these matters Mr Shiberras gave evidence. It was his evidence that:

• He is a qualified accountant.

• He attended the office of Visy from 8.00 a.m. to 6:00 p.m. Monday to Friday (inclusive).

• He was given various modes of access—keys, passwords etc. to allow him to perform his role.

• He was paid an hourly rate and he provided time sheets and a tax invoice at the end of each month. He added that his hourly rate was determined by Visy and any increase was solely at the discretion of Visy.

• He performed work at the office of Visy; was given a workstation and used Visy’s computer, stationary and resources. He did not have a home office.

• With the exception of the invoices he did not perform any work at home.

• He was set key performance indicators and underwent a performance appraisal.

• He did not hold, or was required to hold, professional indemnity insurance during the period.

• He held the role of first aid officer for Visy for approximately 3 years prior to his dismissal.

• In 2010 he lodged a workers’ compensation claim which was accepted.

[11] There are a number of uncontroversial facts. The first is that Mr Shiberras provided a monthly invoice “for services provided”. This invoice contained the days of work and the hours charged out at a unit price of $65. Mr Shiberras charged GST on the service charge he made. Mr Shiberras had an ABN. There is also no issue, on the evidence, that Mr Shiberras only performed work for Visy. Mr Shiberras was not on the payroll system of Visy but was paid via the account system. For the purpose of his income tax assessment, Mr Shiberras claimed income from personal services and described the professional activity as “accounting services”.

[12] It is now appropriate to analyse the evidence against the background of the tests adumbrated in Abdalla v Viewdase Pty Ltd [121 IR 215]. There the Full Bench examined the various authorities and helpfully summarised relevant indicia by reference to relevant decisions of the High Court of Australia. It is to each one of those “indicia” that I now turn.

• 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.

[13] In this mater Mr Monaco gave evidence as to the relationship with Mr Shiberras. To be fair to Mr Monaco he only held the position of National Finance and Administration Manager for Visy since May 2011 and he inherited the relationship that Mr Shiberras had with Visy. 1 There are matters in favour of finding that Visy exercised the requisite level of control over Mr Shiberras, noting that Mr Shiberras was professionally qualified and exercised specialists skills.2 Those matters include:

• Attending the office of Visy Monday to Friday from 8.00 a.m. to 6.00 p.m.

• Had formal reporting lines with Visy Mangers.

• Was treated in the same way as an employee when it came to notifying absences.

• Would undertake training with Visy.

• Was required to work at Visy premises.

• Undertook a performance appraisal.

• Was given priorities in relation to duties and performed other duties. 3

[14] What is put against this proposition is that whilst he was attending the office during the hours and days described that did not mean that he was prevented from doing other work. As to the formal reporting lines, it was submitted that even a contractor would have to answer to someone within the organisation. As to the proposition about absences, it was submitted that advice as to attendance or otherwise was a matter of courtesy rather than required. It was submitted that even a contractor would advise a client if they were not going to attend to a particular job. To highlight this aspect reference was made to the 13 month break in providing a service which would not have been possible if the person was an employee. 4

[15] Whilst in itself control is not determinative of whether or not a person is an employee or independent contractor, it is acknowledged that such a test plays an important part of the overall assessment. In examining this question I am drawn to the conclusion that, apart from the method of remuneration, Mr Shiberras was indistinguishable from other Visy employees. He had keys, passwords, participated in all relevant matters. He was a part of the team, 5 so to speak, and Mr Monaco, when he became aware of the payment arrangements,6 clearly sought to regularise the relationship as either one thing or the other. This was a proper governance approach. He was also concerned about the cost of the present relationship.7 In my view the evidence tends to a conclusion the the issue of cost and proper governance led to action by Mr Monaco which brought the matter to a head rather than the nature of the work and the relationship of that work within the business. I am not unmindful of the fact that the issue of redundancy of the role may have also played a part in the controversy between the parties. To conclude this section I find that, against the background of professional employment,8 there was sufficient control exercised over the work of Mr Shiberras to be a factor in his favour that he was an employee and not a contractor.

• Whether the worker performs work for others (or has a genuine and practical entitlement to do so).

[16] This aspect is easily determined. Given the hours of work and the days of work, I find that there is no genuine or practical entitlement to work for others. I note that the evidence of Mr Monaco was that there was not inhibition of performing work for others but the history of the relationship would not support a finding that such an entitlement existed either in theory or practice.

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

[17] Mr Shiberras did not have a separate workplace. Indeed, it appears that he was expected to attend the workplace of Visy. Whilst there was some evidence that an advertisement for Mr Shiberras appeared in Hotfrog. There is no evidence to support that Mr Shiberras placed the note in the website and he was not cross-examined on the point. I find that Mr Shiberras did not advertise his services to the world at large.

• Whether the worker provides and maintains significant tools or equipment.

[18] Mr Shiberras did not have a home office and apart from the preparation of the monthly invoices did not perform work from home. Noting again the nature of professional employment, all the equipment necessary for him to perform his functions were provided by Visy including aspects of training.

• Whether the work can be delegated or subcontracted.

[19] There was no suggestion that the work could be subcontracted by Mr Shiberras, indeed Mr Monaco agreed that he could not delegate his work. 9

• Whether the putative employer has the right to suspend or dismiss the person engaged.

[20] In relation to this matter there is no written contract between the parties so the position is unclear but Visy did consider that the position held by Mr Shiberras was redundant and this is what led to the end of the relationship.

• Whether the putative employer presents the worker to the world at large as an emanation of the business.

[21] Of course whilst not determinative, Mr Shiberras did have a Visy email address and was dealing with Visy customers. Also relevantly, Mr Monaco did not know Mr Shiberras was a contractor when he took over the role. 10

• Whether income tax is deducted from remuneration paid to the worker.

[22] It was not.

• Whether the worker was remunerated by periodic wage or salary or by reference to completion of tasks.

[23] It is clear from the evidence that Mr Shiberras was not paid either a wage or salary nor was he paid by reference to a completion of tasks. Mr Shiberras kept a log of the hours he worked and constructed an invoice for payment. Indeed the payments were not task related because work that needed to be corrected was also charged out at an hourly rate rather than it being the responsibility of Mr Shiberras.

• Whether the worker is provided with paid holidays or sick leave.

[24] He was not.

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

[25] The work performed by Mr Shiberras was of a professional nature and could have been the assigned to an independent contractor.

• Whether the worker creates goodwill or saleable assets in the course of his or her work.

[26] There was no suggestion that a business was being created which would attract goodwill or any saleable assests.

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

[27] Mr Shiberras did not spend a significant portion of his income on business expenses. He subscribed to professional journals and professional membership. Neither of which would tips the scales either for or against a conclusion about the matter before the Commission.

Finding

[28] When examining this question in its totality, I keep in mind what was said in Stevens v. Brodribb Sawmilling Company Proprietary Limited 11 where it is said: “The ultimate question will always be whether a person is acting as a servant of another or on his own behalf..”12 Put another way in Hollis v Varbu,13 if this was viewed as a practical matter,14 was Mr Shiberras running his own business? From the foregoing examination it appears to me that he was not.

[29] I must also observe at this stage that Mr Shiberras was a trained accountant and knew very well the nature of the relationship that he created with Visy. This does not appear to be a case where an employer has imposed as a condition of “employment” the need to obtain an ABN number. 15However, an intention to enter into a particular type of arrangement was also evident in Treloar v. Bearings Incorporated (Australia) Pty Ltd16 and that was not determinative in the conclusion. There may be of course consequences for both parties in participating in an arrangement which does not stand up to scrutiny.

[30] I find that Mr Shiberras was an employee of Visy.

Covered by an Award?

[31] The next issue is whether or not Mr Shiberras was covered by an award of the Commission. It is sought to be argued that Mr Shiberras was covered by the Clerks-Private Sector Award 2010 (the Award) [MA000002].

[32] Clause 4.1 of the Award describes who it covers. It reads:

    “4.1 This award covers employers in the private sector throughout Australia with respect to their employees engaged wholly or principally in clerical work, including administrative duties of a clerical nature, and to those employees.......”

[33] Clerical work is defined in Clause 3 of the award as follows:

“clerical work includes recording, typing, calculating, invoicing, billing, charging, checking, receiving and answering calls, cash handling, operating a telephone switchboard and attending a reception desk.”

[34] Needless to say, in advancing this argument Mr Shiberras sought to down play the work he was required to perform rather than accepting that he is a skilled accountant and the work he performed called in aid his skills as an accountant.

[35] The work performed by Mr Shiberras is not of a clerical nature and does require the professional skills held by Mr Shiberras. I am satisfied that it is of sufficient complexity so as to take it beyond the scope of the Award and that Mr Shiberras undertakes work which is not wholly or principally clerical work. Indeed, accountants were the subject of consideration in the modern award process. They were traditionally not covered by awards and care was taken not to include them. The Professional Employees Award 2010 [MA000065] was limited in its application and lest it was thought that they would be picked up in the Miscellaneous Award 2010 [MA000104] the following provision was inserted:

    “4.2 The award does not cover those classes of employees who, because of the nature or seniority of their role, have not traditionally been covered by awards including managerial employees and professional employees such as accountants and finance, marketing, legal, human resources, public relations and information technology specialists.”

Finding

[36] I find that Mr Shiberras is not covered by the Award.

High Income Threshold

[37] Section 382(b) provides who is protected from unfair dismissal. Relevantly it provides:

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

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

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.”

[38] Section 332 of the Act provides:

“(1) An employee’s earnings include:

(a) the employee’s wages; and

(b) amounts applied or dealt with in any way on the employee’s behalf or as the employee directs; and

(c) the agreed money value of non-monetary benefits; and

(d) amounts or benefits prescribed by the regulations.

(2) However, an employee’s earnings do not include the following:

(a) payments the amount of which cannot be determined in advance;

(b) reimbursements;

(c) contributions to a superannuation fund to the extent that they are contributions to which subsection (4) applies;

(d) amounts prescribed by the regulations.

Note: Some examples of payments covered by paragraph (a) are commissions, incentive-based payments and bonuses, and overtime (unless the overtime is guaranteed).

(3) Non-monetary benefits are benefits other than an entitlement to a payment of money:

(a) to which the employee is entitled in return for the performance of work; and

(b) for which a reasonable money value has been agreed by the employee and the employer;

but does not include a benefit prescribed by the regulations.

(4) This subsection applies to contributions that the employer makes to a superannuation fund to the extent that one or more of the following applies:

(a) the employer would have been liable to pay superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 in relation to the person if the amounts had not been so contributed;

(b) the employer is required to contribute to the fund for the employee’s benefit in relation to a defined benefit interest (within the meaning of section 292-175 of the Income Tax Assessment Act 1997) of the employee;

(c) the employer is required to contribute to the fund for the employee’s benefit under a law of the Commonwealth, a State or a Territory.”

[39] The High Income Threshold is currently $123,300. There is no issue between the parties that Mr Shiberras was being paid $64 an hour and that his working week was 8.00 a.m. to 6.00 p.m. Monday to Friday. It is also not a matter of controversy that Mr Shiberras is covered by the National Employment Standards which for maximum weekly hours for full-time employees of 38 per week. 17 Additional hours may be worked provided they are reasonable and an employee may refuse to work additional hours where they are unreasonable.18

[40] Various methods were proffered as a basis for determining the annual earnings of Mr Shiberras. I proceed on this basis: Mr Shiberras has been found to be an employee and therefore entitled to a period of 4 weeks paid annual leave. 19 I reject the proposition that I should only take the actual earning he billed given the success achieved in the argument that he was an employee which comes with certain entitlements. He was paid $64 per hour.

[41] Therefore $64 an hour times 38 hours of ordinary time per week equals $2432 per week. It is not disputed that there are 52.2 weeks in the year. Accordingly Mr Shiberras was entitled to $126,950.40. This exceeds the high income threshold.

Finding

[42] Mr Shiberras’ earnings exceed the high income threshold.

Disposition of the Matter

[43] In this decision I have found:

• Mr Shiberras was an employee of Visy.

• Mr Shiberras was not covered by a modern award.

• Mr Shiberras exceeds the high income threshold.

[44] It follows that Mr Shiberras is not a person protected from unfair dismissal and his application is dismissed for want of jurisdiction.

DEPUTY PRESIDENT

Appearances:

J. McKenna of Counsel on behalf of the applicant.

M. Diserio Solicitor on behalf of The Trustee for Southern Paper Converters Trust trading as Visy Recycling.

Hearing details:

2013.

Melbourne:

January, 1;

February, 28.

 1   Transcript PN531

 2   Ermogenous v Greek Orthodox Community of South Australia Inc. (2002) 209 CLR 95, at 124 (Kirby J)

 3   See generally applicants table of evidentiary propositions

 4   This is explained in the submission in reply by the applicant at paragraphs 8 and 9

 5   Transcript PN527/529/548/593

 6   Mr Monaco was not aware of the relationship when he was appointed to his current position-PN599

 7   Transcript PN499

 8   Humberstone v Northern Timber Mills (1949) 79 CLR 389 at 404

 9   Transcript PN578

 10   Transcript PN599-601

 11 [1985-1986] 160 CLR 16

 12   Ibid at 37

 13 [2001] 207 CLR 21

 14   Ibid at 41

 15   Bibic v First Interstate Security [Print S7290]

 16   [Print R4924]

 17   s.62(1)

 18   s.62(2)

 19   s.87

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