Mr Kenneth Gascoyne v Marvelle Tiling Pty Ltd T/A Marvelle Tiling

[2014] FWC 8398

[2014] FWC 8398

FAIR WORK COMMISSION

DECISION

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

Mr Kenneth Gascoyne
v
Marvelle Tiling Pty Ltd T/A Marvelle Tiling
(U2014/1740)

COMMISSIONER SPENCER BRISBANE, 24 NOVEMBER 2014

Application for relief from unfair dismissal - jurisdictional objections - contractor vs. employee and no dismissal

Introduction

[1] This decision relates to an application made by Mr Kenneth Gascoyne (the Applicant) pursuant to s.394 of the Fair Work Act 2009 (Cth) (the Act) for an unfair dismissal remedy on the grounds that the termination of his employment from Marvelle Tiling (the Respondent) was harsh, unjust and or unreasonable. The Respondent in this matter raised jurisdictional objections (the jurisdictional objections) to the application, alleging that the Applicant was not an employee of the Respondent (rather acted as an independent contractor) and further, that the Applicant was not dismissed.

[2] The Respondent requested that the jurisdictional objections be determined prior to conciliation of the substantive matter. A conciliation conference was cancelled to allow the matter to be listed for Jurisdictional hearing.

[3] Directions were set for the filing of submissions and evidence in relation to the jurisdictional objection and the substantive application. Material was filed by both parties.

[4] The Respondent sought to rely upon initial filed submissions and the statement of Warren Clifford (Director of the Respondent), and the further statements of Mr John Miller and Mr Michael Sterling and another in relation to the jurisdictional objections. In addition, the Respondent sought to rely on submissions in reply, which also addressed the jurisdictional objections.

[5] The Applicant relied upon submissions in relation to the substantive application and the witness statement of the Applicant. In relation to the jurisdictional objections, the Applicant sought to rely on further submissions and a witness statement of the Applicant filed 4 August 2014 and then a supplementary witness statement of the Applicant.

[6] It is noted that whilst not all of the evidence and submissions in this matter are referred to, all have been considered in making the determination.

Background

[7] The Applicant commenced working as a tiler with the Respondent on 28 June 2007 and submitted weekly invoices to the Respondent for payment. He had previously been employed with the Respondent via a labour hire contractor.

Relevant Provisions of the Legislation

[8] The substantive application has been made pursuant to s.394 of the Act. Section 394 provides as follows:

“394 Application for unfair dismissal remedy

(1) A person who has been dismissed may apply to the FWC for an order under Division 4 granting a remedy.

Note 1: Division 4 sets out when the FWC may order a remedy for unfair dismissal.

Note 2: For application fees, see section 395.

Note 3: Part 6 1 may prevent an application being made under this Part in relation to a dismissal if an application or complaint has been made in relation to the dismissal other than under this Part.

(2) The application must be made:

(a) within 21 days after the dismissal took effect; or

(b) within such further period as the FWC allows under subsection (3).

[9] It is not in dispute that the application was filed within the time prescribed by s.394(2)(a).

[10] The relevant consideration in relation to the first jurisdictional objection is s.382(a), that is, whether the Applicant is an employee.

[11] Section 382 of the Act provides as follows:

“382 When a person is protected from unfair dismissal

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.”

[12] The relevant consideration in relation to the second jurisdictional objection is s.386(2)(a), as follows:

386 Meaning of dismissed

(1) A person has been dismissed if:

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

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

(2) However, a person has not been dismissed if:

(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or

(b) the person was an employee:

(i) to whom a training arrangement applied; and

(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;

and the employment has terminated at the end of the training arrangement; or

(c) the person was demoted in employment but:

(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and

(ii) he or she remains employed with the employer that effected the demotion.

(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person’s employment, to avoid the employer’s obligations under this Part.

Summary of the Respondent’s Submissions and Evidence

Jurisdictional Objection 1: Not an employee

[13] The Respondent submitted that the Applicant was engaged as an independent contractor to carry out tiling work for the duration of approximately seven years and he sought to be “re-engaged” as an employee in or about April 2014.

[14] The Respondent submitted that, if it was found that the Applicant was re-engaged as an employee on different terms in or about April 2014 (after the Applicant sought such for superannuation purposes), the Applicant would be barred from an unfair dismissal application as the Respondent employs 6 people, and is therefore a small business and the Applicant would not have met the minimum employment period.

[15] The Respondent referred to Jiang Shen Cai T/A French Accent v Do Razario 1 (French Accent) which sets out a list of indicia in considering whether the Applicant was a contractor or an employee. The Respondent’s submissions addressed the indicia with reference to Mr Clifford’s witness statement.

Control

[16] Mr Clifford gave evidence that he did not exercise direct control over the Applicant’s job performance. Mr Clifford stated that before a workday commenced, he would speak to the Applicant about a particular job and give him an explanation as to what was required in terms of tiles and pattern. The Applicant would complete the work at the job location and Mr Clifford stated that he was often not present at the job.

[17] Mr Clifford gave evidence that the Applicant, from time to time, would inform Mr Clifford that he would not be available to work for the Respondent because he had to perform work for persons other than the Respondent, and that the Respondent took no issue with this. Mr Clifford stated that when the Applicant was available to work, the Applicant would inform Mr Clifford and if work was available, the Respondent would offer it to the Applicant 2. The Respondent submitted that Mr Clifford’s evidence demonstrated that the Respondent did not insist on the Applicant’s attendance.

Performed work for others

[18] The Respondent submitted that an attachment to the statement of Mr Clifford marked “WC-1”, via which the Applicant advertised his tiling services to the market, was evidence that the Applicant performed work for others. Mr Clifford stated that the phone number and the email address, which appeared in the advertisement, were known by him to be those of the Applicant’s.

[19] Mr Clifford stated that the Applicant had informed Mr Clifford that he also advertised his tiling services on the website “Gumtree”.

[20] Mr Clifford stated that the Applicant told Mr Clifford that he was unable to work for the Respondent because he had to perform work for others.

[21] The Respondent relied on the statements of Mr John Miller and Mr Michael Sterling, as evidence of the Applicant performing work outside of his work for the Respondent. The statements are similar in that the Respondent referred the client to the Applicant, the Applicant performed the work and the Applicant was paid for the work. Mr Sterling stated that the Applicant was not wearing the uniform of the Respondent when the work was performed.

Separate place of work/advertising

[22] The Respondent submitted that when the Applicant carried out work for other persons other than the Respondent, the Applicant did not carry that work out at the Respondent’s place of business.

Tools and equipment

[23] The Respondent’s submissions referred to Paragraphs [21] to [23] of Mr Clifford’s statement. Mr Clifford stated that the Applicant used his own vehicle to transport himself and his own tools, and that all tools used by the Applicant were owned and maintained by the Applicant. In addition, Mr Clifford stated that the Applicant paid for and replaced his own disposables used for the tiling work.

Delegate/subcontract work

[24] Mr Clifford stated that, although it was never specifically discussed if the Applicant wished to arrange for a person other than himself to carry out work for the Respondent, this was not “forbidden”. Mr Clifford stated that he would have had to ensure that the person proposed by the Applicant would have been competent and able to do the work.

Right to suspend/dismiss person engaged

[25] The Respondent submitted that whether the Respondent had the right to suspend or dismiss the Applicant was a relevant indicia. The Respondent had, in summary, submitted that the Applicant was not an employee but a contractor, as evidenced by the arrangements between the parties. In this regard, the respondent stated their business arrangement ended as the Applicant sought superannuation payments from the Respondent, in line with an employment contract. On this basis, the Respondent proposed reconfiguring the contractor remuneration arrangement to reflect payment of wages and superannuation as an employee, and the Applicant refused this.

Presentation of the Applicant as an emanation of the business.

[26] The Respondent’s submissions refer to Paragraphs [13] and [14] of Mr Clifford’s statement. Mr Clifford stated that as a contractor, the Applicant was entitled to work for whomever he wished.

[27] Mr Clifford stated that there were a number of occasions where the Respondent was unable to carry out work, and Mr Clifford would often recommend the Applicant and give the client the Applicant’s details. Mr Clifford stated that Mr Kapali of Calamvale and Mr John Miller were such referrals of work to the Applicant.

[28] Whilst the Applicant was initially provided with the Respondent’s T-shirts, the Respondent submitted that the Applicant was not required to wear these T-shirts or anything bearing the Respondent’s logo.

Remuneration

[29] The Respondent submitted that the Applicant was paid an hourly rate per task, and that if the Applicant did not work for the Respondent, he was not paid.

[30] In relation to the superannuation, the Respondent submitted as follows:

“26. From the commencement of the Contract I asked Ken if he required the Respondent to make superannuation contributions on his behalf.

27. Each time Ken assured me that he was making his own superannuation contributions and that the Respondent did not have to do anything.

28. My wife Terri Clifford is the accounts person for the Respondent.

29. I recall on 4 July 2012 she said to me words to the effect that she was concerned about weather (sic) or not we should be making superannuation contributions for Ken.

30. On 6 July 2014 I recall I again asked Ken words to the effect as to whether he wished for us to deduct superannuation from his payments and for the Respondent to make these payments on his behalf.

31. Ken said no because he was making his own payments to his super fund.” 3

[31] The Respondent submitted that he and his wife, the accounts person, had raised superannuation queries with the Applicant and at all times the Applicant has confirmed he was making his own superannuation payments. The Respondent submitted that it was this issue that brought about the end of the business relationship. Mr Clifford stated as follows:

“32. I recall sometime around April 2014 Ken said to me words to the effect that he had been to his accountant and the ATO who had informed him that the Respondent ought to have been making superannuation contributions on behalf of Ken.

33. I was bemused. I said to Ken words to the effect that I had asked him on several occasions if he wished for the Respondent to make superannuation contributions for him on several occasions and on each of those occasions he had refused and said words to the effect that he was making his own.

...

39. I recall shortly after this conversation that I said to Ken that if he wished for the Respondent to make superannuation contributions on his behalf that the Respondent would treat him as an employee of which he would be paid a wage from which PAYG and superannuation would be deducted.

40. Shortly thereafter Ken informed me that he could not afford to be treated as an employee.

41. I asked Ken to sign an employee declaration in person on two occasions. Despite the request Ken did not sign the form.

42. Ken did not return to work. This was of his own choosing.” 4

Business expenses

[32] The Respondent submitted that the Applicant incurred costs associated with the acquisition of equipment and disposables, in line with a contractor.

Contractor not an employee

[33] The Respondent’s submissions stated that the Applicant’s application for an unfair dismissal remedy is beyond the jurisdiction of the Commission due to the jurisdictional objections. The Respondent’s submissions do not address the substantive application further, but go on to make further submissions in relation to the jurisdictional objections.

[34] In relation to the Respondent’s jurisdictional objection that the Applicant was not an employee of the Respondent, the Respondent submitted that the evidence of Mr Clifford, that the Applicant operated his own business, was the principal factor which confirmed the Applicant was not an employee of the Respondent. Further jurisdictional submissions referred to the Applicant being paid upon the provision of a tax invoice and that the Applicant accounted for payment of his own income tax. The Applicant was also not required or directed to wear a uniform or other identification indicating that he was part of the Respondent’s business, which is evidenced in Mr Clifford’s statement at paragraph [25].

Jurisdictional Objection 2: No dismissal

[35] The Respondent submitted that the Commission is required to consider whether there was a repudiation of the contract by the Applicant, according to Allied Express Transport Pty Ltd v Owens 5. Further, the Respondent referred to the test in Laurinda Pty Ltd v Capalaba Shopping Centre Pty Ltd6, as to:

“whether the conduct of the employer, judged objectively by reference to the effect on a reasonable person evinced an intention to no longer be bound by the contract.”

[36] The Respondent submitted that the evidence of Mr Clifford would be that it was a term of the contractual arrangements organised between the parties that the Applicant would be responsible for the payment of his own superannuation; this was taken into account when the hourly rate was negotiated; if the Respondent had not agreed to this term then the Respondent would have engaged the Applicant as an employee. The contract had been discharged between the parties on this basis with commensurate remuneration and no superannuation payments since 2007.

[37] In response to the Applicant then seeking superannuation payments, when the Respondent proceeded to implement the new arrangement by amending the Applicant’s wage rate and paying his superannuation as an employee, the Applicant said to the Respondent that he could not afford to be paid as an employee; and the Applicant then failed to attend work at his own initiative.

[38] The Respondent submitted that, after the final discussion, the Applicant repudiated the contract by failing to attend work and that the Respondent accepted the Applicant’s repudiation of the contract.

[39] The Respondents submitted in their further submissions that the Commission must determine the “principal contributing factor in the resultant termination of employment” 7.

[40] The Respondent submitted that the Applicant sent the following text message to Mr Clifford. The Respondent submitted that by the Applicant stating:

“Hi Warren, I can’t afford to go wages as u want, the ato said I can stay my abn and u just pay the superuation. But its something u need to look at. Also you need contact the ato about the super I haven’t been payed for the last 5-6 years, even though we had an agreement, still obligations haven’t been met as I am an employee. Warren I have a heavy heart with this, I just hope something can be sorted out” 8,

the Applicant ceased to consider himself bound by the arrangement as it then was and it was a refusal by the Applicant to accept the Respondent’s offer of full-time employment. The Respondent submitted that the offer was to engage the Applicant as an employee with the Respondent to make superannuation contributions for the Applicant, as he had then requested.

[41] The Respondent submitted that they accepted the Applicant’s text message as a refusal of the Respondent’s offer of employment. The Respondent submitted that the Applicant has failed to particularise the words or representations, used by the Applicant, to describe his relationship with the Respondent to the Australian Tax Office.

[42] The Respondent stated that Mr Clifford informed the Applicant that, for the Respondent to make superannuation contributions to the Applicant, he would have to become an employee of the Respondent. It was submitted that the Applicant wanted to remain as an independent contractor but have the Respondent make superannuation contributions on his behalf in addition to the current remuneration payments.

[43] The Respondent submitted that they could not have dismissed the Applicant because the Applicant was not an employee of the Respondent.

Summary of the Applicant’s Submissions and Evidence

[44] The Applicant submitted that the Applicant’s dismissal was harsh, unjust and unreasonable. The Applicant’s further submissions addressed the jurisdictional objections.

Jurisdictional Objection 1: Not an employee

[45] The Applicant submitted that there were significant factual controversies between the parties which must be resolved, by evidence, before a determination can be made. It was submitted that the indicia and weight of evidence clearly favoured the conclusion that the Applicant was an employee.

[46] The statement of the Applicant (filed 4 August 2014), addressed the statement of Mr Clifford. The Applicant stated he did not state that he wished to be treated as an independent contractor, as per paragraphs [8] and [9] of Mr Clifford’s statement, The Applicant stated that when he started with the Respondent, the Applicant believed he was going to be a regular employee. The Applicant referred to a payslip and timesheet in relation to his employment with Workforce Personnel/Kaija Pty Ltd (his prior labour hire employer), who withheld tax and paid superannuation on the Applicant’s behalf. These payment arrangements were distinct from his subsequent arrangements with the Respondent.

[47] The Applicant stated that he did not agree to the conditions listed in paragraph [10] of Mr Clifford’s statement, in which the Applicant would provide invoice, pay his own taxation and superannuation, provide his own tools, not be paid for days he didn’t work or be able to work for whomever he chose. The Applicant stated that the first time he met Mr Clifford was on the first day of the Applicant’s work and that Mr Clifford informed the Applicant that Workforce Personnel would take care of the Applicant’ pay and super and that the Applicant only had to complete the timesheets for Mr Clifford to approve.

[48] The Applicant stated that on or about 1 June 2007, the Respondent offered to re-employ the Applicant directly through the Respondent. The Applicant stated that on the first day he started work directly for the Respondent, Mr Clifford informed the Applicant that because he was not trade qualified and had no BSA qualification, the Respondent would start to pay to Applicant on an hourly rate (which was increased) on a casual, full time basis where the Respondent would pay superannuation and insurance but not for holidays or sick leave. The Applicant stated that he asked Mr Clifford if he could use his ABN, to which Mr Clifford replied yes, but that the Applicant had to take care of his own taxation and invoice the Respondent for hours worked. The Applicant submitted that there was no discussion of whether the Applicant was a contractor or an employee.

[49] In response to Mr Clifford’s evidence that the Applicant performed other work when the Respondent was unable to, the Applicant stated that he did the work at Mr Clifford’s request and was paid through the Respondent and did not send any invoices. The Applicant stated that he understood the clients were friends and business suppliers to the Respondent. Cash payments were made from the people receiving this work to the Applicant.

[50] The Applicant stated that he placed the advertisement on Gumtree after Mr Clifford informed the Applicant that the Respondent will stop work for 4-5 weeks over Christmas and New Year and that there would be no work for the Applicant. The Applicant stated that he asked Mr Clifford if he could put the advertisement on Gumtree and that Mr Clifford agreed to the Applicant placing the add over the Christmas break and after that, only for work on weekends and after work. The Applicant stated that Mr Clifford said that he was employed to the Respondent during the week, but it was up to the Applicant what he did on weekends. The Applicant stated he got no work from the Gumtree advertisement.

[51] The Applicant stated that there were many times when Mr Clifford had no work for the Applicant. The Applicant stated that he also arranged days off to have surgery or when his wife was having a baby. The Applicant stated that he did not have time off to work anywhere else because the Applicant did not work anywhere else.

[52] The Applicant stated that Mr Clifford told him where to work, what work to do and how long it should take. The Applicant stated that Mr Clifford would give him the plans for the job and would discuss with the Applicant what Mr Clifford wanted the Applicant to achieve. The Applicant stated that if Mr Clifford was not at the site, they would talk about it over the phone.

[53] The Applicant stated that from the beginning, Mr Clifford informed the Applicant that he must have his own transport and tools. The Applicant stated that in the beginning, Mr Clifford would supply sponges, crosses and other items and the Applicant would pay him cash for them. The Applicant stated that Mr Clifford would never give him a receipt for them, so after a year the Applicant began to purchase them himself so as to be able to claim a tax deduction.

[54] The Applicant stated that the ability to subcontract was never spoken about. The Applicant stated that is never occurred to him that he could arrange someone else to work in the Applicant’s place and that it never happened.

[55] The Applicant stated that he was required to wear a uniform shirt as per the photograph marked “KG4” attached to his statement. The Applicant stated that if he couldn’t wear the shirt, he was to wear something plain and appropriate.

[56] The Applicant stated that from the beginning it was agreed that the Respondent would take care of the Applicant’s superannuation.

[57] The Applicant stated that he did not say to Mr Clifford that he was taking care of his own superannuation, as per Mr Clifford’s statement at paragraphs [27] to [31]. The Applicant stated that he spoke to Mr Clifford about 3 years ago and told him that he expected the Respondent to take care of his super. The Applicant stated that when Mr Clifford said he wasn’t paying super the applicant said he was surprised. However, the Applicant stated that because Mr Clifford was the Applicant’s friend and the Applicant looked up to him, the Applicant brushed aside his thoughts about superannuation, as he needed to work to support his wife and children.

[58] The Applicant filed a further witness statement on 14 August 2014 in relation to the statements of Mr Miller and Mr Sterling. The Applicant stated that the job performed for Mr Sterling was a cash job to be performed on the weekend, and Mr Clifford provided the material and they split the cash.

[59] The Applicant stated that the work performed for Mr Miller was to be performed on the weekend and that Mr Clifford told him that he would be grateful if the Applicant could “look after” Mr Miller. The Applicant stated that he was paid $300.00 in cash by Mr Clifford on 28 August 2013.

[60] It was submitted on behalf of the Applicant that while it was clear that the Applicant provided weekly invoices to the Respondent, which is an indicator of a contractual relationship, it “was not a sophisticated invoicing operation” 9, and that no statements were given, only invoices. It was submitted that these were given by hand in a simple, rudimentary style, in a carbon page book. It was submitted that the fact of the invoicing was the least important of the factors in characterising the relationship.

[61] The Applicant submitted that the “control test” was the most important point to consider. In respect of the Applicant’s control over how the job was to be performed and when the Applicant performed the job, Mr Jenshel submitted that:

“What Mr Gascoyne says about the control test is that he would have discussions with Mr Clifford about the job, about what needed to be done, how long it would take, how many people, et cetera, et cetera. He was not, to my recollection, cross-examined about this point. Neither was there any great difference between what was said by Mr Clifford, particularly in cross-examination and what was said by Mr Gascoyne. Essentially Mr Gascoyne knows how to lay a tile and he knows how to grout and I’m sure he knows how to cut the right angles and so on and so forth. It’s not suggested for one second that Mr Clifford was leaning over his shoulder and saying, yes, yes, now apply a little more glue, yes that’s right, now apply a little more grout. Clearly Mr Gascoyne was a competent tiler in every respect, but that is about where his discretion ended. Mr Clifford would explain how the job is to be done. How many square metres, what the tiling pattern was, whether the same tiles would be used wall and floor, floor and splashback and so on and so forth. Whether there would be ornamental features and what not.

That is, in my respectful submission, about the maximum level of discretion that would be afforded for jobs of this kind. Please bear in mind, I would respectfully urge you to bear in mind that this is not, for example, a complex office function in which issues of individual discretion can take on a much more critical and much wider aspect. This is tiling, and as much as I do not wish to be heard to denigrate the skill involved in tiling, the reality is that it is not a function in which one would expect a true employer to lean over a competent employee and say no, no, don’t do it this way, don’t do it that way. The discretion that Mr Clifford was exercising was the maximum he could be expected to exercise within the confines of the particular reality of the jobs that were being undertaken.

Importantly, as Mr Gascoyne said in his statement, Mr Clifford would determine where the work was performed, the composition of the team that performed the work, the times and so on. He was not challenged on any of these aspects. In my respectful submission, if one were to use the control test exclusively, which of course is not the case, but if one were to use it exclusively in my submission it would point inevitably and unwaveringly towards a conclusion of employment. Now what about some of the other criteria, not all of them applicable in the limited confines of this case. But one of the important matters is whether or not the putative employee is properly to be regarded as an emanation of the employer’s business. In this respect it’s important to note that Mr Gascoyne did not perform the full spectrum of tasks of an independent tiler. He did not, for example, quote for Mr Clifford’s jobs, that much is clear.

Mr Clifford is quite explicit in his witness statement at paragraph 4. He says, “I make all the decisions to do with the respondent including decisions about who was employed.” Mr Gascoyne therefore provided almost invariably just one thing, labour. He did so with a high degree of regularity. Monday to Friday. Week in, week out. Apart from certain anomalous suggestions which I will come back to in a moment that he requested time off and so on and so forth, Mr Gascoyne was not challenged or certainly not comprehensively challenged on the idea – on the assertion, I should say, that he worked for Marvelle Monday to Friday. Moreover, he did so for a period of in excess of about six years. This high degree of commitment to a single employer and this high degree of consistency of hours and days of the week is an indicator that points more towards, much more towards employment than it does to an independent contractual relationship.” 10

[62] Mr Jenshel, on behalf of the Applicant, also submitted that rises in the rate that the Applicant was paid at the Respondent’s initiative were more indicative of an employment relationship 11.

[63] In respect of a requirement to wear a uniform, the Applicant gave evidence that was given three shirts by Mr Clifford in his first year he was engaged by the Respondent which contained the Respondent’s name and Mr Clifford’s phone number, and that other tilers and apprentices also wore the shirts 12. On days that the Applicant could not wear one of the shirts, the Applicant gave evidence that he was told to wear something appropriate by Mr Clifford13. It was submitted that the Applicant was expected to wear the shirts and that this was a powerful indicia of an employment relationship.

[64] The Applicant’s representative submitted that any additional work performed on weekends was not forbidden, nor unusual or exceptional for someone hired on a causal basis 14. It was submitted that the Applicant gave unchallenged evidence that he was able to do whatever he wanted after hours and that cash jobs on weekends did not disqualify the Applicant from being classified as an employee. It was submitted that the jobs carried out for Mr Capelli and Mr Miller came about through Mr Clifford.

[65] Mr Jenshel submitted that it was relevant that the Applicant did not exclusively work on his own and was regularly blended with other staff on single jobs. Further it was submitted as relevant that the Applicant’s tools were sometimes shared and that he sometimes transported other staff to and from work. It was submitted that this sharing was “anathema to a contracting relationship, it is much more consistent with an employment relationship, albeit one where individual tools are maintained.” 15 Mr Jenshel submitted that the Applicant’s vehicle and tools were not deployed to build a business, but were simply a prerequisite to be given work. It was also submitted as relevant, that the Applicant sometimes supervised at least one and possibly two apprentices. Mr Jenshel submitted that this was not “consistent with the classical idea of a lone wolf contractor who supplies everything, works in isolation and has a high degree of discretion”16.

[66] Mr Jenshel submitted that a rate of pay based on an hourly rate was more typically to be found in contracting relationships, however, the Applicant, it was submitted, was a causal employee and there is nothing exceptional about an hourly rate being specified for a casual 17. It was also submitted that right to control rather than the exercise of control which is critical to the question of the classification of the employment relationship and that Mr Clifford exercised a higher level of actual and theoretical control over the Applicant, having regard to the limits of tiling18.

Jurisdictional Objection 2: No dismissal

[67] The Applicant stated that he never told Mr Clifford he could not be treated as an employee, but that he told Mr Clifford that he could not afford $250.00 per week less in wages. The Applicant stated that he told Mr Clifford he could talk to the Australian Tax Office about superannuation.

[68] The Applicant stated that he did not return to work because he was told not to. The Applicant stated that he would have been happy to keep working and to “chase” his superannuation from the Respondent in a different way.

[69] It was submitted that Mr Clifford accepted in cross examination that he said “don’t come back to work no more” or words to that effect 19. Mr Clifford gave evidence that he said to the Applicant, “Don’t bother coming back to work tomorrow.”20. The Respondent stated the statement was in regard to the impasse reached of the Applicant seeking the additional payments. It was submitted that the Applicant never gave the ultimatum that he was going to leave if his super was not being paid21. Mr Jenshel stated as follows:

“An employee is perfectly entitled to demand what the employee sees as an entitlement without also reading into that demand some kind of implied threat that they will or do resign if that demand isn’t met.” 22

Consideration

[70] In relation to the first jurisdictional objection, the question before the Commission is, was the contractual relationship, as between the Applicant and Respondent, when properly construed and understood, a contract for services or a contract of services? The Applicant contends that he was employed pursuant to the terms of a contract of service, that is, that the Applicant was an employee of the Respondent. The Respondent contends that the Applicant was employed pursuant to the terms of a contract for services and that the Applicant was an independent contractor.

[71] If the contract between the parties was a contract for service and the Applicant was not an employee of the Respondent, the first jurisdictional objection must be upheld and the application filed by the Applicant pursuant to s.394 of the Act must be dismissed on the ground that it is jurisdictionally barred as there was no employment relationship. If the first jurisdictional objection is dismissed, the second jurisdictional objection, as to whether a dismissal occurred, must be considered.

[72] The material provided by both parties has been reviewed to assess the nature of the relationship between the parties.

[73] The review of whether the Applicant is an employee has been undertaken based on each of the indicia, to conclude the nature of the overall working relationship. No single criterion is determinative of the outcome; all of the indicia and other relevant factors must be weighed in informing the overall view of the working relationship. The relationship has been considered against the range of indicia including: control, the right to work for others, place of work, arrangements as to tools and equipment and expenses, right as to delegation of subcontracting, right to suspend or dismiss, emanation of the business, taxation and related payment arrangements, leave arrangements, development of goodwill or assets, and other factors have all been assessed. The evidence and submissions of the parties on all of the elements have been taken into account.

[74] The approach set out in French Accent 23 is adopted; the consideration of the indicia is not a ‘mechanical exercise’24 but requires an appreciation of the whole of the relationship.

[75] The characterisation of the relationship by those parties to it, may simply be a product of ‘convenience’ or how one party views it. However the label put on the contract is of less influence than ‘the rights and obligations created by the contract’ 25.

[76] The indicia are relevant to an employment contract and are examined in light of the whole ‘picture’ of the relationship. That is, was the nature of the contract, control, work, supervision and payment matters commensurate with a contract of employment. 26

[77] One of the leading cases in relation to the contractor/employee test is ACE Insurance Limited v Trifunovski and others 27(ACE Insurance) a decision of the Full Court of the Federal Court of Australia. This unanimous decision of the Court reviewed the case authorities; the conclusion and approach in that decision is adopted, in relation to the material before the Commission in this case.

[78] It is apparent from the case law, that the question of whether a person was an employee or an independent contractor requires an assessment of a variety of factors. 28 The case authorities describe, in broad terms, on the relevant indicia, how the question is to be approached. What is clear from the authorities, is that no one single criterion, will necessarily be determinative and that each matter will turn upon the particular circumstances of the case, with the decision maker weighing all the relevant factors.29 Various factors have been found to be relevant as the authorities have developed, but it is acknowledged that the relevant factors considered in the cases to date are not exhaustive or exclusive. The list of factors is not closed, nor is the application to the facts at hand entirely prescriptive.

[79] A series of cases were also relied on by both parties, whilst not all have been cited, all have been considered.

Contract

[80] The following extract from Ace Insurance refers to the contentions relevant to a contract of employment:

“Contracts of employment (contracts of service traditionally so-called) are contracts for personal service. Benefits and obligations of contracts of individual service of this kind are not unilaterally assignable by either party... The requirement for personal service has the effect that a contract which truly permits discharge in another fashion or by another person, is not a contract of employment. Thus, contracts with corporations, contracts with partnerships, contracts permitting unlimited delegation and contracts which do not actually compel the performance of work but pay only on results, are each prima facie not contracts of the necessary quality...” 30

[81] The initial point of examination would normally be to look at the contract that existed between the parties, to assist in the examination of whether the relationship of the parties was that of an employee and employer. In this matter there is an absence of such a document, but the evidence of the parties in relation to the arrangement and how it markedly differed from the pre-existing employment is considered. However, even if a contract existed, whilst the contract is a matter to take into account, it is not determinative. This is well settled on the relevant case authorities in relation to the question of whether a person is an employee. 31

Personal Services

[82] The authorities have considered that contracts of service, being contracts of employment, are contracts for personal service. That is, the benefits and obligations of the contract cannot be unilaterally assigned by either party. 32

[83] In this regard the Courts will look at whether the contract in question “truly permits discharge in another fashion or by another person”. 33 In this regard Buchanan J in ACE Insurance held:

“contracts with corporations, contracts with partnerships, contracts permitting unlimited delegation and contracts which do not actually compel the performance of work but pay only on results, are each prima facie not contracts of the necessary quality...” 34

[84] Buchanan J highlights however that the last category in the passage is more contestable than the first three.

Control test

[85] A necessary factor to be taken into account is the degree of control the putative employer has over the putative employee.

[86] In the matter of Humberstone v Northern Timber Mills 35 it was held:

“The question is not whether in practice the work was in fact done subject to a direction and contract exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter’s order and directions.”

[87] The Applicant submitted that Mr Clifford exercised “the highest level of actual and theoretical control over Mr Gascoyne, having regard to the limits of tiling” 36.However, in reality he provided the location and the parameters of the job only; rarely providing any further direction of control, simply expecting and paying on the results.

Taxation, insurance and superannuation arrangements

[88] In assessing the nature of the relationship and whether the arrangements entered into between the parties genuinely characterised the relationship; the following extracts of ACE Insurance are relevant 37:

“In the present case, the contracts executed by the parties stated that the agents were not employees, but were independent contractors. The judgment under appeal held to the contrary. There may be many good reasons why it might suit an individual worker to be treated as an agent or a contractor rather than as an employee. Those reasons may include a freedom to incorporate or act in partnership (with one’s spouse for example); different taxation obligations; more freedom about when, and how, work is done; the ability to work for others at the same time etc. However, it is increasingly necessary that parties conduct themselves (in their relations with regulatory agencies, and not just each other) in accordance with a correct appreciation of the nature of their relationship, not just as it may suit them (or one of them). The parties may agree the terms of their contract, but any statement by them about the character of their relationship, or of their contract, has consistently been held not to be decisive of the true legal character of either.

In the case of an employee, an employer is bound to deduct and remit income tax, make superannuation contributions on behalf of the employee and pay payroll tax. These all involve the discharge of obligations to regulatory agencies and, in some cases, failure to do so may attract criminal sanctions. On the other side, where a contractor is carrying on business independently of employment, that contractor will need to take responsibility for insurance, income tax arrangements, and the lodging of appropriate tax returns. Those arrangements will depend on whether the “contractor” is a sole trader, is in partnership, is engaged to provide services through a corporate entity and so on. The method chosen by the contractor will generate procedures for the acquittal of any tax liability which will need to be observed. Under whichever arrangement is appropriate, tax deductions for business and operating expenses may be claimed. The company engaging the contractor will usually have no involvement in these matters and may not even know about them.”

[89] With respect to superannuation payments, the evidence indicates that no agreement was reached that the Respondent would pay the Applicant’s superannuation. The Applicant stated that Mr Clifford told him he had to take care of his own taxation and provide invoices if the Applicant wanted to be paid under an ABN. The evidence is that the arrangements were discharged on this basis and no superannuation was paid or recorded to the Applicant. The Applicant gave evidence that some three years later he enquired about superannuation to the Respondent, who informed the Applicant that it was his responsibility. While the Applicant stated that he was shocked, he continued to provide invoices for work to the Respondent and did not pursue the issue further with the Respondent until the discussions that led to the finalisation of the relationship.

[90] It is relevant here that the Applicant knew that the Respondent was not paying his superannuation three years after starting with the Respondent and chose not to do anything about it.

ABN/Remuneration/Commissions

[91] In relation to the provision of an ABN, paragraph [34] in ACE Insurance states as follows:

“Often, perhaps even usually these days, a contractor will need an Australian Business Number and to be registered under the GST legislation. The contractor will be entitled to demand a 10% additional payment on account of GST, which must be remitted to the taxation authorities pursuant to regular returns. The contractor will have the right to claim, as a deduction, input tax credits (GST credits). Although the engaging company would be required to furnish some of the material necessary to make the returns, it would not be involved in all aspects. Ultimately, compliance with the taxation legislation, in this and other respects, would be a matter for the contractor.” 38

[92] In the current matter, the evidence was that the Applicant, after having been paid as a employee by the Respondent, via the prior labour hire arrangement, sought to provide his ABN and be paid as a contractor distinct from the payment of wages, tax and superannuation which the Respondent had been paying him. The Applicant commenced with an ABN and was paid via invoices and without superannuation for approximately seven years.

Uniform

[93] The Applicant was provided with three shirts by the Respondent in the first year of the Applicant doing work for the Respondent. No evidence was brought as to a policy that required the shirts to be worn, nor were enough shirts provided to cover a full working week. The fact that no new shirts were provided in seven or so years, apart from the initial three, indicate that there was no requirement for the Applicant to wear the shirts or a uniform of the Respondent. The provision of the shirts is neutral in this regard.

Provision of tools and transport

[94] The provision of tools and equipment is a relevant factor. The Applicant supplied his own vehicle, tools and equipment. Initially, there were some disposables for the jobs supplied to the Applicant, but the Applicant began to purchase these himself (when the Applicant stated the Respondent refused to provide receipts) for his taxation purposes. The Applicant submitted that it was relevant that other workers shared the Applicant’s tools, and that he sometimes transported other staff. The evidence that the Applicant transported other staff is relatively weak as the Applicant provided his evidence as follows:

“Were you the only one to travel in that vehicle to and from work sites?”

---Mostly, yes, sometimes over the years I picked one or two of them up, but mostly yes.

Who is them?---Warren’s son, a labourer, going back years ago.” 39

Does the employer present the worker as an emanation of the business?

[95] The only evidence in this regard was the provision of 3 T-shirts over seven years that were not mandatory to wear, therefore such does not support an employment relationship.

Periodic wage or salary by reference to tasks and income tax deducted

[96] Ace Insurance is authority for the proposition that this was the least important of all indicia. However, on the current material, the payments made to the Applicant via invoices and the ABN with no tax deducted do not denote that he was an employee.

Work of a professional, trade or distinct calling on the part of the person engaged

[97] The work undertaken by the Applicant was characterised by that of an independent contractor in the tiling trade, completing a job on referral by the Respondent. The fact that nearly all of his work was with the respondent does not negative the contractor arrangement.

Paid holidays/sick leave

[98] The Applicant advised the Respondent when he would not be available to work. There was no particular evidence that the Applicant was entitled to a specific provision or was paid for holidays or that prescribed authorised leave was accrued and or taken. This weighed against the relationship being considered as that of employee and employer.

Did the worker create goodwill or saleable assets?

[99] There was no evidence that the Applicant created goodwill or saleable assets for the Respondent.

[100] The parties had, at the request of the Applicant, operated (separate to his former wages arrangement with the Respondent and the labour hire company) via the provision of an ABN and the Applicant was remunerated in response to invoices. Whilst there had been a consistency of payments, this was commensurate with the consistency of work. It was the separate request for superannuation payments on top of the agreed and accepted arrangements that brought about a dispute to the agreed working relationship. The Respondent stated such superannuation payments could be introduced, but with a reconfiguration of the arrangement by putting the Applicant on a wages arrangement that, given the additional superannuation payments required, would result in less income than was being received in the remuneration through the ABN. The Applicant objected to this and, on the face of the evidence, that was the only basis the Respondent would accept the Applicant’s new terms. The Applicant objected to these new terms, not being as he sought (that is, the current arrangement with the additional superannuation payments, effectively double dipping).

[101] On this basis, the Respondent would not accept the conversion of the contractual arrangement to an employment contract on the terms the Applicant sought, therefore the Applicant did not return to the Respondent. A contractor relationship was in place. On this basis, it cannot be construed that when this ended, a dismissal occurred. The application is jurisdictionally barred, on the basis that no employment relationship existed, and therefore no termination of employment occurred.

Conclusion

[102] The Commission has considered the effect of the totality of the evidence before the Commission.

[103] The following matters, as set out in the case of ACE Insurance, are all considered concluding the nature of the relationship of the Applicant is not an employee:

“[9] There is no one single criterion that will necessarily be determinative of the issue. The issue will be decided by weighing all the relevant factors.

...

[17] In my opinion, the primary judge was right in concluding that, absent the respondents’ own belief that they were not employees and their structuring of their financial affairs to that effect, there were no other indicia to support the appellant’s contention that they were independent employees.

...

[25] ...The requirement for personal service has the effect that a contract which truly permits discharge in another fashion or by another person, is not a contract of employment.

...

[32] ...The parties may agree the terms of their contract, but any statement by them about the character of their relationship, or of their contract, has consistently been held not to be decisive of the true legal character of either.

...

[36] ...although conventionally some weight is given to how parties have represented their relationship, as I have already said, what they have stated is not conclusive. In many cases, a decision by the parties about how to characterise the relationship merely accords with what is thought to be the characterisation of greatest convenience to one party, or both.

[103] ...Of the indicia of employment it is clear that a right of control remains an important consideration in many cases. It may be found in a right of organisation and allocation of work, as much as in some theoretical right to say how actual work should be done. ” 

[104] The indicia, as set out in French Accent (referred to above), favour the conclusion that the Applicant is not an employee but was rather a contractor.

[105] Where the Respondent raises a jurisdictional objection in a matter, the onus is on the Respondent to satisfy the Tribunal of their case. 40 The Respondent must demonstrate their case on the balance of probabilities.41

[106] The dispute between the parties relates to whether the Applicant was an employee of the Respondent, and if so, whether the employee was dismissed by the Respondent.

[107] I have considered the material, evidence and case authorities. On the material currently before me I find that the Applicant was employed pursuant to the terms of a contract for services and was therefore not an employee of the Respondent, but rather an independent contractor.

[108] In the current matter, the Applicant performed his work as a contracted tiler undertaking tiling jobs referred by the Respondent. The Respondent simply indicated the details of the job and the Applicant, using his own transport, tools, and organisation over completing the job, was paid via an ABN with no tax withheld or superannuation paid at the Applicant’s request. This was done for approximately seven years. There was no evidence of further direction or control over the Applicant or the job by the Respondent. If the Applicant had not been able to complete the job, on this arrangement, another tradesperson could have been contacted.

[109] On the basis of the material presented before the Commission, and on the balance of probabilities, the Applicant was not an employee of the Respondent and could not have been dismissed, and therefore was not a person protected from unfair dismissal under the Act.

[110] The jurisdictional objections are upheld. The Applicant operated as a contractor rather than as an employee. The Applicant was therefore not a person protected from unfair dismissal within the meaning of s.382(a). The substantive application filed pursuant to s.394 must therefore be dismissed.

[111] I Order accordingly.

COMMISSIONER

Appearances:

Mr Jenshel, of counsel, with Mr Keleman for the Applicant

Mr Black, of counsel, with Mr Trotman for the Respondent

 1   [2011] FWAFB 8307.

 2 Statement of Warren Clifford at [18].

 3   Statement of Warren Clifford at [26] to [31].

 4   Statement of Warren Clifford at [32] to [33]and [39] to [42].

 5   [2011] FWAFB 2929 at [23]-[24].

 6   (1989) 166 CLR 632 at 14.

 7   Mohazab v Dick Smith Electronics Pty Ltd (No. 2) (1995) 62 IR 200.

 8   Attachment “KG1” to the Witness Statement of Kenneth Gascoyne.

 9   Transcript, per Mr Jenshel at PN918.

 10   Transcript, per Mr Jenshel at PN919 to PN 922.

 11   Transcript, per Mr Jenshel at PN919 to PN 923.

 12   Transcript, per Mr Gascoyne at PN 93 to PN98.

 13   Transcript, per Mr Jenshel at PN 101 to PN105.

 14   Transcript, per Mr Jenshel at PN927.

 15   Transcript, per Mr Jenshel at PN937.

 16   Transcript, per Mr Jenshel at PN938.

 17   Transcript, per Mr Jenshel at PN944.

 18   Transcript, per Mr Jenshel at PN961.

 19   Transcript, per Mr Jenshel at PN941.

 20   Transcript, per Mr Clifford at PN758.

 21   Transcript, per Mr Jenshel at PN943.

 22   Transcript, per Mr Jenshel at PN944.

 23   French Accent v Michael Anthony Do Rozario [2011] FWAFB 8307 at [30].

 24   Ibid.

 25   French Accent v Michael Anthony Do Rozario [2011] FWAFB 8307 at [10]-[29]; TNT Worldwide Express (NZ) Ltd v Cunningham (1993) 3 NZLR 681 at 699.

 26   Lee v Klean King Pty Ltd[2013] FWC 6759 at [70].

 27 [2013] FCAFC 3.

 28   Ace Insurance Limited v Tifunovski and others [2013] FCAFC per Lander J at [9].

 29   Ibid.

 30 (2013) 295 ALR 407; [2013] FCAFC 3, per Buchanan J at [25].

 31   For example ACE Insurance Limited v Trifunovski (2013) 295 ALR 407; [2013] FCAFC 3.

 32   Ibid per Buchanan J at [25].

 33   Ibid.

 34   Ibid.

 35 (1949) 79 CLR 389 per Dixon J at [404].

 36   Transcript, per Mr Jenshel at PN961.

 37   Ace Insurance Limited v Tifunovski and others [2013] FCAFC per Buchanan J at [32]-[33].

 38 Ibid at [34].

 39   Transcript, per Mr Gascoyne at PN116 to PN117.

 40   Crema and Others v Abigroup Contractors[2012] FWA 5322 at [81].

 41  See for example Govinda Prasad Dhungel v The Baking Company Australia Pty Ltd[2012] FWA 4717, Deputy President Sams; Eva v Victorian Radio Network Pty Ltd [2007] AIRC 814, Commissioner Eames.

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