Mr Mark O'Connell v Floor Grinding Services Pty Ltd

[2018] FWC 4065

[2018] FWC 4065

FAIR WORK COMMISSION

DECISION

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

Mr Mark O'Connell
v
Floor Grinding Services Pty Ltd
(U2018/3854)

COMMISSIONER JOHNS SYDNEY, 27 AUGUST 2018

Application for relief from unfair dismissal - whether to extend time for lodging the application – no extension required.

Introduction

[1] The Fair Work Act 2009 (FW Act) provides that an Applicant for an unfair dismissal remedy made pursuant to section 394 of the FW Act must lodge an application within 21 days after the dismissal took effect. 1 However, the Fair Work Commission (Commission) may allow a further period for lodgement in exceptional circumstances.2

[2] Mr Mark O'Connell (Applicant) lodged an application for an unfair dismissal remedy against Floor Grinding Services Pty Ltd (Respondent) on 12 April 2018 (UFD Application). The Respondent contends that the Applicant’s employment ended on 31 January 2018 with the consequence that the UFD Application was made outside the 21 day time limit provided for in the FW Act. The Applicant contends that his employment was terminated on 23 March 2018 with the consequence that the UFD Application was made within the prescribed time limit.

[3] This decision is about when the effective date of termination occurred. That requires an assessment of whether the Applicant (who was undoubtedly an employee up to 31 January 2018) was engaged as an independent contractor from 1 February 2018 and 23 March 2018. If the effective date of termination is 31 January 2018 then it is necessary for the Commission to determine whether it should allow a further period for lodgement of his application for an unfair dismissal remedy.

[4] On 10 May 2018 the Respondent objected to the Commission exercising its jurisdiction in relation to the UFD Application. The Respondent contended that,

a) the Applicant was not dismissed, but, rather, that he resigned on 31 January 2018 in order to pursue his own business, OCON Floor Prep Pty Ltd (OCON).

b) from the period of 1 February 2018 to 23 March 2018, the Applicant was operating through OCON and invoicing the Respondent for work performed.

c) in the alternative, if the termination occurred at the initiative of the Respondent the UFD Application was out of time.

[5] The matter did not settle at conciliation on 14 May 2018. Consequently, Deputy President Dean directed the Applicant to file evidence about the effective date of dismissal.

[6] On 24 May 2018 the matter was then allocated to me and I issued directions for the parties to provide submissions and witness statements in relation to the jurisdictional objections and the effective date of dismissal.

Background

[7] The following facts are agreed or not otherwise disputed by the parties. Consequently, I make the following findings of fact:

a) The Applicant was engaged as an employee in 14 March 2011. The Applicant claims this is from 14 March 2011 while the Respondent claims it is from simply “March 2011”. This has little bearing on the decision and as such I find the Applicant was engaged from 14 March 2011.

b) The Applicant was paid 1329.79 per week after tax (exclusive of overtime and allowances) every Thursday.

c) During his employment the Applicant was the only employee of the Respondent. Anyone else was engaged under a subcontracting arrangement.

d) After conversations with his accountant on 31 October 2017, the Applicant set up OCON on 3 November 2017.

e) In the months leading up to 23 March 2018, the parties were negotiating terms as between OCON and the Respondent. Specifically, the Respondent offered OCON profit share at “a 33% rate”. The Applicant (as the principal of OCON) did not accept that rate. The negotiations are evidenced in text messages as follows:

i. On 17 January 2018, from the Applicant to the Mr Sheehy asking for a flat rate that would be provided under a potential arrangement.

ii. On 12 March 2018, from the Applicant to the Mr Sheehy requesting invoices for jobs performed and an end of year profit and loss statement for the 3 years prior.

iii. On 12 March 2018, from the Applicant to Mr Sheehy asserting that a 33% rate would mean he would be worse off financially.

iv. On 19 March 2018, from the Applicant to the Mr Sheehy asking if he had considered his redundancy entitlements in relation to the company closing. Mr Sheehy replied “Talk tomorrow”.

v. On 21 March 2018, from the Applicant to the Mr Sheehy asking for profit and loss statements for the 4 years prior, the base records for the first 2 quarters of this financial year, and stating that he could not agree to the 33% rate if he did not have any set out figures. Mr Sheehy sent through an image of a profit and loss statement for the 2015/2016 and 2016/2017 financial years. The Applicant replied stating he requires copies in full, not simply photos of the statements.

vi. On 23 March 2018, from Mr Sheehy to the Applicant stating the turnover for the 2013/2014 & 2014/2015 financial years. Mr Sheehy then asked for an invoice from the Applicant along with OCON’s bank details. Finally he stated that a client wanted work done on Monday, 25 March 2018. The Applicant replied that his partner would send the requested details.

vii. On 23 March 2018 from the Applicant to Mr Sheehy notifying him where his keys for the Respondent’s company had been placed for return.

f) While the Respondent contends that the arrangement was confirmed by the Applicant’s conduct on 31 January 2018, it made the concession that no concrete agreement had been reached regarding an arrangement between OCON and the Respondent.  3

g) Between 31 January 2018 and 15 March 2018 the Respondent continued to pay the Applicant directly into the same bank account that it had always paid into when the Applicant was indisputably an employee. During the same period the Applicant continued to perform the same work for the Respondent that he had always performed.

h) After 31 January 2018 the Respondent continued to make superannuation contributions to the Applicant.

i) On 23 March 2018 on request of Mr Sheehy, the Applicant produced an invoice which appeared to list works done from the period of 1 February 2018 to 23 March 2018.

j) On 23 March 2018, the Applicant ceased to be engaged by the Respondent in any respect and shortly after relinquished his company property to the Respondent.

[8] The following facts are in dispute:

a) Whether the Applicant resigned on 31 January 2018.

i. The Applicant contends he remained employed as an employee after the text message exchanges that took place on this day. Under cross-examination, the Applicant denied that the messages pointed to him “taking control of the business” but rather that it was part of the ongoing negotiations of the subcontracting arrangements between the Respondent and OCON. 4

ii. The Respondent in contrast contends that this exchange amounted to the resignation of the Applicant and his engagement as a subcontractor. 5

b) The nature of the employment relationship between the Applicant and Respondent between 1 February 2018 and 23 March 2018.

i. The Applicant contends that he was an employee. 6 Further that this shown by how the rates of pay post 31 January 2018 matched the rates he was paid as an employee and how the Respondent continued to pay his superannuation.

ii. The Respondent contends that the Applicant was a subcontractor. 7 It explained that the reason the Applicant was paid under the same rates as an employee is because Mr Sheehy understood these amounts would be a deducted from a future invoice provided by the Applicant. It said superannuation was paid in error.8

c) The effective date of termination.

i. The Applicant contends that this occurred on 23 March 2018 by telephone call with Mr Sheehy. 9

ii. The Respondent contends this occurred on 31 January 2018 when the Applicant became a subcontractor. 10 Further that on 23 March 2018, that after reviewing the rates shown on the invoice, he told the Applicant that he simply could not afford those rates. 11

Hearing

[9] I conducted an extension of time hearing over the course of two days, 8 & 19 June 2018. At the hearing:

a) the Applicant represented by Mr Adam Ahmed, of Adam Ahmed & Co Pty Ltd.

b) the Respondent was represented by Mr Nick Leon, of Bartier Perry.

[10] During the course of the hearing I received and marked the following evidence I have had regard to all of the material in coming to this decision:

a) Submissions of Applicant Dated 07/06/2018 (Exhibit A1)

b) Letter to Deputy President Dean Dated 23/05/2018 (Exhibit A2)

c) Supplementary Submissions of Applicant Dated 15/06/2018 (Exhibit A3)

d) Witness Statement of Mark O'Connell Dated 13/06/2018 (Exhibit A4)

e) Submissions of Respondent Dated 07/06/2018 Plus Attachments (Exhibit R1)

f) Supplementary Submissions of Respondent Dated 15/06/2018 (Exhibit R2)

g) Witness Statement of Edmund Sheehy Dated 07/06/2018 (Exhibit R3)

h) Witness Statement of Edmund Sheehy Dated 15/06/2018 (Exhibit R4)

[11] The Applicant filed one witness statement dated 13 June 2018, it stated, 12

a) The Applicant was employed from the period of 14 March 2011 to 23 March 2018 as the only employee of the Respondent, other than Mr Sheehy.

b) After conversations with his accountant on 31 October 2017, the Applicant set up OCON on 3 November 2017. At this time he had not disclosed this fact to the Respondent.

c) After returning to work from the Christmas break, the Applicant raised the possibility of subcontracting through OCON with Mr Sheehy.

d) On 17 January 2018, the Applicant followed up this enquiry with the Mr Sheehy to no response.

e) On 18 January 2018, the Applicant had a conversation with the Mr Sheehy bargaining the rates on which the arrangement may occur. Similarly, on 4 February 2018, once returning from holiday, the parties had a conversation over dinner which ended with the Applicant suggesting Mr Sheehy’s accountant contact his own. The Applicant contends he had not done so.

f) Sometime after this the Applicant raised the issue of insurance with the Ms Sheehy via telephone, who stated he would contact his own accountant.

g) On 14 February 2018, Mr Sheehy approached the Applicant stating that the he may sub-contract on the condition the Applicant only perform 80% of the work. This conversation was interrupted.

h) On 12 March 2018 Mr Sheehy offered a 33% share instead of an hourly rate for subcontracting. The Applicant contends that it did not at this time have the appropriate insurance to operate. The Applicant then messaged Mr Sheehy asking for more information, which he reviewed and decided that it “would not work”. On request he sent Mr Sheehy timesheets.

i) On 14 March 2018 Mr Sheehy approached the Applicant on site stating that the overtime bill he received was too high, and that he would instead transfer $25,000. Mr Sheehy never transferred amount to the Applicant.

j) On 19 March 2018 the Applicant had a phone conversation with Mr Sheehy who was stressed and concerned about the “state” of the company. The day after the two parties messaged each other, with Mr Sheehy repeatedly offering the 33% share.

k) On 22 March 2018, Mr Sheehy and the Applicant had an on-site discussion where the 33% share was offered once more. Mr Sheehy then asked the Applicant for an invoice of the work performed since 1 February 2018 to “see what the deal with OCON would look like”.

l) On 23 March 2018, Mr Sheehy again asked for the invoice, and in addition, the bank details of OCON. The Applicant complied. The same day Mr Sheehy and the Applicant had a phone conversation whereby Mr Sheehy stated that he was shutting down the company and that the Applicant was “no longer needed”.

m) Leading up to termination, the Respondent was paying the Applicant’s regularly weekly wage up to and including 22 March 2018.

[12] During cross-examination, Mr Leon put it to the Applicant numerous times that he was in fact running a business, in contrast to simply registering a company.

[13] Mr Leon asked the Applicant why he would produce an invoice if he was not running a business. 13 The Applicant stated that this was so Mr Sheehy could “get an idea of what I was looking for”.14

[14] The Applicant was taken to a text message sent on 30 January 2018 from himself to Mr Sheehy, 15 whereby he stated words to the effect of “I’m full up until Wednesday”. The Applicant clarified that this was in relation to all the jobs he was completing for the Respondent while Mr Sheehy was away, and not in regards to any jobs performed by OCON.16 On the same message, Mr Leon directed the Applicant to a picture sent by the Applicant of a diary with the words “Mark Off” highlighted on 3 & 4 February 2018. The Applicant stated he did not book any work that weekend.17

[15] The Applicant was then directed to a text message dated 31 January 2018, 18 where the Applicant and Mr Sheehy were discussing work. Mr Leon put it to the Applicant that this indicated he was “taking control of his business”. The Applicant stated that this was a negotiation, where he was offered the 33% of the income of the jobs performed and Mr Sheehy would send him a list of jobs so that he could get an idea of what the finances may look like.19 The last message on this image is the Applicant stating he would be worse off after GST, insurance and his accountant. I observe that this is consistent with paragraph 19 of the Applicant’s statement.20

[16] The Applicant was taken to the OCON invoice he provided to Mr Sheehy. 21 The invoice showed both a day and night rate which the Applicant clarified was for use in negotiations and that no “deal” had been done.22 Further, the Applicant stated that the amount marked “Paid” was the amount that he had been paid as an employee. He stated that the Respondent did not owe him monies indicated on the invoice as the parties had not yet reached agreement.23

[17] On re-examination by Mr Ahmed, the Applicant was taken to the text message in Exhibit A4 under paragraphs 27 and 30 on Friday, 23 March 2018. The Applicant stated that he understood that he was working for a specified company on the Monday, and that when Mr Sheehy called him to tell him that he was cancelling the jobs due to shutting down the business, the Applicant stated he was shocked. The Applicant once again confirmed that the OCON invoice was not paid, and that the bank account for the business contains no funds. 24

[18] Finally, the Applicant was taken to paragraph 20 of his statement, 25 where he recounts Mr Sheehy approaching him onsite about the Applicant’s overtime bill. The applicant stated that he was never paid the $25,000 owing.26

[19] Mr Sheehy filed two witness statements, the first, dated 7 June 2018 asserted,  27

a) In either October or November 2017 the Applicant advised Mr Sheehy that he was going to set up his own company due to tax implications. This conversation ended with Mr Sheehy advising he would confer with his accountant further. In early November the Applicant advised Mr Sheehy that he had established OCON and that it was apparent the Applicant did not want to be an employee of the Respondent.

b) From December 2017, the parties began negotiations as to charge rates, including various text messages exchanged on 17 January 2018.

c) On 31 January 2018, the parties exchanged text messages related to work over the following two weeks.

d) In early February the parties verbally negotiated as to a flat rate, with Mr Sheehy offering $60 per hour.

e) Since 31 January 2018 that the Applicant operated under OCON, which the Respondent had contracted to perform work, which was confirmed later with the Applicant issuing an invoice for works performed.

f) In March 2018 the parties on numerous occasions were negotiating the charge rate. This continued until 13 March 2018 where Mr Sheehy advised the Applicant that the Respondent would not be viable at the rate the Applicant was proposing.

g) On 19 March 2018 the Applicant sent a text message to Mr Sheehy asking about redundancy. This was a misunderstanding of his previous comment, namely that the Respondent would go out of business (if it was charged higher rates), not that it in fact had gone out of business.

h) On 21 March 2018 the Applicant sent Mr Sheehy text messages requesting business information about the Respondent.

i) On 23 March 2018 the Mr Sheehy asked via text message for an invoice from the Applicant for work done by OCON. The Applicant complied, with the invoice period starting at 1 February 2018. This shows the relationship between the Respondent and OCON as contracting and not the Applicant remaining as an employee. Mr Sheehy on the same day advised in conversation that he could not pay the rates on the invoice. The Applicant then by text message advised Mr Sheehy to switch back to his original pay, not the “pty rate” and that there was still 4 weeks’ notice and redundancy owing.

j) During February & March 2018 it was very clear that the Applicant was subcontracting and did not want to be an employee.

k) While negotiations were occurring regarding the charge rate, it was clear that $60 per hour was the rate until another could be agreed upon.

l) The Respondent did not continue to treat the Applicant as an employee after engaging OCON. While the Respondent continued to pay the Applicant on the basis of his pay as an employee, it was Mr Sheehy’s understanding that this would be deducted from the invoice, which is in fact shown on the invoice ($9,308.53).

m) Any superannuation paid to the Applicant during his time as contractor was in error due to the fact the Respondent makes quarterly superannuation payments.

[20] Mr Sheehy’s supplementary statement dated 15 June 2018 was mainly in response to the Applicant’s witness statement asserted, 28

a) That the Applicant did not first approach him about becoming a contractor after Christmas break, rather it was in October or November 2017.

b) The conversation on the 18 January 2018 did not happen as asserted; rather Mr Sheehy offered to engage OCON for $60 per hour.

c) The conversation on 4 February 2018 which the Applicant contends took place over dinner regarding insurance, holiday and sick pay did not occur.

d) The conversation on 12 March 2018 held onsite where the Mr Sheehy had asked if the Applicant had the company set up to which the Applicant stated he only had an ABN and bank account, did not occur. If the Applicant had advised he did not have the appropriate insurances, Mr Sheehy would not have engaged OCON.

e) It was Mr Sheehy’s understanding that OCON had obtained all relevant insurances as during a conversation on 1 April 2018 he witnessed between the Applicant and Mr Sheehy’s wife, where the Applicant stated he had taken out insurance.

[21] During cross-examination by Mr Ahmed, Mr Sheehy agreed that when the Respondent subcontracts to other businesses, it usually pays based on a square metre rate determined before the work commences. This has been his practice for 12 years in which he has been profitable, has a good reputation, in light of the fact he may make losses on some jobs performed. 29 I then put it to Mr Sheehy that he would not engage a subcontractor if he had not first confirmed pay rates. He agreed.30

[22] Mr Sheehy then agreed that he had never came to a “fixed agreement” with the Applicant regarding pay rates, that there was never a “meeting of minds”. 31 He also agreed that he would never hire a subcontractor that did not have the appropriate insurances, and that he would normally see what insurances the subcontractor had through an invoice, which the invoice supplied by the Applicant did not contain.32

[23] When asked why he had in early 2018 offered multiple options to the Applicant regarding charge rates, he stated that it was because the Respondent could not afford the $75 an hour proposed by the Applicant. 33

[24] Mr Sheehy stated that the Respondent provided most of the equipment used by the Applicant, and that the Applicant brought with him the experience he had garnered over the past 7 years. 34

[25] Mr Sheehy then asserted that the reason the Applicant was paid superannuation during his alleged time as a subcontractor was in error as it is paid every three months. He confirmed that he does not pay superannuation to any other subcontractor he engages. 35

[26] On re-examination by Mr Leon, he put it to Mr Sheehy that the conversation in early February where he offered $60 an hour was where the parties had reached an agreement. I interjected pointing out that Mr Sheehy had previously conceded there was no “meeting of minds” regarding an agreement. 36

Submissions

[27] As noted above the Applicant stated that the dismissal took effect on 23 March 2018 (i.e. within 21 days of 12 April 2018). On 23 May 2018 it was submitted that

“1. Confirm the date you say your dismissal took effect

23 March 2018

2. Explain why you say this date is the date of dismissal

Mr O’Connell was continuously employed by Floor Grinding Services Pty Ltd (FGS) from 14 March 2011 to 23 March 2018.

Mr O’Connell notes the following:

a. The pay cycle was from the previous Friday to the Thursday. Mr O’Connell was paid $1329.79 per week after tax (exclusive of overtime and allowances) on the Thursday of the relevant week. Attached at Annexure A are his bank statement that shows this amount continued to be paid in the week ending 23 March 2018. (As a separate matter it appears the tax withheld was more than was required.)

b. Mr O’Connell was paid superannuation during the period he had allegedly resigned (to 2 March 2018). Attached at Annexure B are his superannuation statements.

c. Mr O’Connell has also not been paid for the 23rd of March.

d. Mr O’Connell received a phone call on 23 March 2018 that it was his last day and FGS collected the company van from him on that day.

FGS have alleged that Mr O’Connell resigned from his employment on 31 January 2018 and made a number of assertions to support this argument.

Mr O’Connell’s response is as follows:

a. Mr O’Connell and FGS were negotiating a different arrangement – the discussion was around Mr O’Connell becoming a contractor through OCON which would in turn either be paid a different rate or a profit share. Annexure C includes the discussions by text message. These discussions took place over January, February and March, indicating that no arrangement had been agreed to at that time.

b. FGS asked OCON to issue it an invoice because FGS wanted to see “what the deal with OCON would look like” based on the rates OCON was proposing to allow comparison with current costs and other options. This was the reason the invoice was issued. This invoice was never paid nor actioned because this “deal” was not agreed to.

c. OCON does not have the relevant insurances to actually operate. This was never done because no arrangement was agreed to which involved OCON.

d. No contract was ever entered into between OCON and FGS.

e. FGS sent a without prejudice offer to Mr O’Connell regarding his entitlements following termination. FGS did not send anything to OCON. This letter is attached as Annexure D. Further correspondence is included in Annexure E.

f. The director of FGS was overseas on 31 January 2018 and Mr O’Connell was the only employee in Australia that could work on the job being done by FGS at the time (the job was for QB Interiors).

g. Mr O’Connell has not been paid his overtime, his notice period, travel, meals, or redundancy. FGS has been trying to bargain with Mr O’Connell in an attempt to have him accept less than his entitlements.

h. The idea that Mr O’Connell had resigned was never mentioned until Mr O’Connell hired a solicitor to help him recover his entitlements.”

[28] On 7 June 2018, the Respondent submitted that:

“A. Introduction

1. The determination of whether the Application is out of time requires consideration of the Applicant’s status and the determination of the time he resigned his employment to commence operation of his business, OCON Floor Prep Pty Ltd (OCON). These jurisdictional matters of status (i.e. Applicant is not an employee) and resignation (i.e. he was not dismissed) provide separate basis to dismiss the Application.

2. The Applicant, through his own actions and decisions, left his employment with the Respondent on 31 January 2018 to operate his business OCON on and from 1 February 2018. Applying “a fair go all round”, the Commission would not hold the relationship to be other than what the Applicant himself established and intended. It is fair and just that the Application is dismissed, including because it is out of time and because it is out of time and because it has no merit

B. Facts

3. The Applicant was employed by the Respondent in March 2011. 37

4. In about October or November 2017, the Applicant advised the Respondent that he had seen an accountant, sought advice about establishing his own business and had been advised by his accountant to set up his own company and cease to be an employee of the Respondent. 38 For reasons peculiar to himself, the Applicant accepted the advice of his accountant.

5. In pursuit of that objective, on 3 November 2017, the Applicant established OCON by registering this company with the Australian Securities and Investment Commission.3 39

Annexed to this submission is:

(a) at Annexure FG1 –a copy of OCON’s current and historical company information; and

(b) at Annexure FG2 – a copy of the application for OCON to be registered as a proprietary limited company; and

(c) at Annexure FG3 – a copy of OCON’s ABN status as recorded on the Australian Government’s Australian Business Register.

6. It is readily apparent that the Applicant himself attested to the regulator that he was a director/secretary and shareholder of a proprietary limited company. A company, by name, that wanted to be involved in the business of floor preparation.

7. In December 2017 and January 2018, and consistent with his actions to establish OCON, the Applicant (on behalf of OCON) continued discussions with the Respondent as to charge rates for work to be performed by OCON subcontracting to the Respondent. 40

8. On about 31 January 2018, the Applicant resigned from his employment with the Respondent and commenced working through his own company, OCON. The Respondent operated on the basis of the Applicant’s own wish for OCON to be a subcontractor to the Respondent. 41

9. On 1 February 2018, OCON commenced providing services to the Respondent. 42

10. As is apparent, by the Applicant’s own actions (including later in issuing an invoice) he explicitly disavowed an employment relationship. It would be unjust and unfair to impose a different relationship on the parties (and in particular, the Respondent).

11. Consistent with being a business, OCON pursued negotiations for rates. OCON proposed a rate of $75.00 per hour plus GST. The Respondent rejected that offer and offered $60.00 per hour plus GST. 43 The rate, plus GST, was also consistent with the relationship not being employment.

12. On 23 March 2018, OCON submitted a tax invoice for work performed by OCON from 1 February 2018 through to 23 March 2018. That invoice:

(a) identified the issuer as OCON Floor Prep Pty Ltd;

(b) identified the relevant ABN as 53 622 653 052;

(c) had an amount for GST; and

(d) identified the account details for OCON Floor Prep Pty Ltd. 44

13. Had the Commission’s timetable not been truncated, the Respondent would have sought to issue a summons to the Applicant seeking records relating to establish OCON, including the application to obtain an ABN, bank account records, his accountant’s advice etc. – all of which would have confirmed his deliberate and intentional decision to establish and operate his own business (and not be an employee).

C. Rejection of an employment relationship

14. Critically, the Respondent did not ask or require the Applicant to be a subcontractor, or to do so via a corporate vehicle. The Applicant did so by himself. That is, it was a deliberate and intentional decision of the Applicant to not be an employee.

15. A court will not readily “deconstruct the fundamental nature of the relationship which the parties intended.” 45 Further, legal theory will not impose, on parties, obligations that neither of them intended to make. In Babsari Pty Ltd v Douglas Chee Yin Wong & Ors,46 the Queensland Supreme Court observed at [46]:

“The parties to that contract have a different view of it. It does not seem right that legal theory can impose on parties contractual obligations (or benefits) which both, without artifice, disavow. Where the parties accept neither of them intended to contract on the terms that the other intended to constitute the bargain, a stranger cannot insist that they are bound because other intended to constitute the bargain, a stranger cannot insist that they are bound because the mistake is not obvious to outsiders. There is no inconvenience in not holding parties to an agreement that neither intended to make.” 47

16. That is, in circumstances where a party chooses, for his own reasons and importantly without duress or pressure from the other party, to conduct his affairs as a contractor, a court or tribunal should not impose an employment relationship on the parties.

D. No dismissal at the initiative of the Respondent

17. The Full Court of the Federal Court in Mohazab v Dick Smith Electronics (No.2) 48 articulated an important feature of what termination at the initiative of the employer is:

“that the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship.” 49

18. In O’Meara v Stanley Works Pty Ltd 50 (O’Meara), the Full Bench of the AIRC concluded that there must be action by the employer that either intends to bring the relationship to an end or has that probable result.51

19. The Full Bench in O’Meara also concluded that in determining whether a termination was at the initiative of the employer, an objective analysis of the employer’s conduct is required to determine whether it was of such a nature that resignation was the probable result or that the employee had no effective or real choice but to resign. 52

20. Given the facts set out above, it is apparent that there was no act of the Respondent which resulted “directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee”. On the contrary:

(a) The Applicant resigned his employment on about 31 January 2018 in order to pursue the business of his company, OCON.

(b) The Applicant’s conduct was a clear and unambiguous statement that he no longer wished to be an employee of the Respondent; and

(c) The Respondent did not exert any pressure or influence on the Applicant in relation to his decision to resign.

21. Therefore there was no “termination at the initiative of the employer” for the purposes of the Application.

E. Out of time

22. The date of the employment ended (by resignation) was on or about 31 January 2018. After 31 January 2018, the Applicant operated his business, OCON.

23. Therefore the Applicant’s Application was made outside the 21 day time limit.

24. Section 394(3) of the FW Act provides that the Commission may allow a further period for the making of an application if it is satisfied that there are “exceptional circumstances”.

25. In Nulty v Blue Star Group Pty Ltd (2011) 203 IR 1, the Full Bench of FWA (as it then was) said at paragraphs [13] to [14]:

“[13] In summary, the expression “exceptional circumstances” has its ordinary meaning and requires consideration of all the circumstances. To be exceptional, circumstances must be out of the ordinary course, or unusual, or special, or uncommon but need not be unique, or unprecedented, or very rare. Circumstances will not be exceptional if they are regularly, or routinely, or normally encountered...

[14] Mere ignorance of the statutory time limit in s.366(1)(a) is not an exceptional circumstance. Indeed, unfortunately, it would seem to be all too common for dismissed employees to be unaware of the time limits imposed in relation to making an application for an unfair dismissal remedy or a general protections FWA application. The parliament has chosen to condition the discretion to extend time for making such applications on the existence of “exceptional circumstances”. In doing so the parliament must be presumed to have proceeded on the basis that an employee who is aggrieved at being dismissed ordinarily ought be expected to seek out information on any remedy they may have in a timely fashion such that delay on account of ignorance of the statutory time limit is not, of itself, an exceptional circumstance.”

The reason for the delay and when the person first became aware of the dismissal

26. The Applicant has not set out the reasons for the delay. The Respondent apprehends that the Applicant will claim that he remained an employee until 23 March 2018. However, such a claim is disingenuous because it was the Applicant:

(a) who sought advice as to establishing OCON;

(b) who embarked on the course of conduct to establish OCON, including completing the application for its registration and lodging it with ASIC;

(c) who sought to subcontract with the Respondent through OCON; and

(d) who invoiced the Respondent for work performed by OCON after 1 February 2018.

27. The Applicant resigned to pursue his own business. In so doing, the Applicant must have been aware that his conduct meant that he could no longer an employee of the Respondent. The Applicant was therefore aware of the purported “dismissal” took effect on 31 January 2018.

28. The Applicant operated as a business from 1 February 2018 therefore there is no acceptable explanation for any delay.

Any action taken by the Applicant to dispute the dismissal

29. The Applicant did not take any action to dispute the purported ‘dismissal’ but took no action as he operated as a business from 1 February 2018.

Prejudice to the employer

30. There has been considerable prejudice to the Respondent and that tells against the grant of an extension of time. The Respondent is a small business and has been put to significant expense in defending the Application in circumstances where the Applicant resigned and it merely acceded to the Applicant’s wishes to be a contractor through OCON.

Merits of the application

31. The Respondent submits that the merits of the Application are poor. The Applicant resigned from his employment to commence his own company. The reasons for the Applicant so doing were entirely his own and the Respondent played no role in the Applicant’s decision.

32. At the time that OCON was disengaged by the Respondent, the Applicant was not an employee of the Respondent within the meaning of the FW Act.

33. The Application is wholly without merit.

Fairness between the Applicant and other persons in a similar position

34. This is a neutral consideration. However, the mere absence of prejudice was an insufficient basis to grant an extension of time: Prasad v Alcatel-Lucent Australia Ltd (2011) 29 IR 236.

F. Conclusion

35. The Respondent submits that there are no “exceptional circumstances” which warrant the Commission granting an extension to the statutory time limit. There is nothing exceptional about an employee resigning from his employment to pursue new opportunities (such as his own business). Further, there is also nothing exceptional about a person, whose new venture does not work out as planned, thinking, with the benefit of hindsight, that he should not have left his employment. That is simply a case of buyer’s remorse.

36. The Application should be dismissed.

[29] On 7 June 2018, the Applicant submitted that:

“(Order 1(a)) Effective date of dismissal

The applicant submits that his effective date of dismissal is 23 March 2018. The applicant was dismissed by telephone call. The respondent called the applicant at 2:55pm (missed call) and the applicant called him back at 3:07pm.

The applicant’s submissions are set out in his letter dated 23 May 2018 to Deputy President Dean and the evidence contained therein (annexed at Annexure A).

(Order 1(b)) Subsection 394(3) of the Fair Work Act 2009 (Cth)

In the event that the FairWork Commission finds that the applicant’s effective date of dismissal is a date earlier than 23 March 2018 and is outside of the 21 day time limit, the applicant makes the following submission under subsection 394(3) of the Fair Work Act 2009 (Cth):

(a) Reason for the delay – the respondent continued to represent and act as an employer by paying the applicant up to the date of his dismissal and so the question of delay should not arise.

(b) Date of becoming first aware of the dismissal - the applicant became aware of the dismissal when the respondent advised him by telephone on 23 March 2018 and the respondent then attended the applicant’s premises to collect the company vehicle. Until that time the applicant was still an employee and was negotiating various alternative arrangements none of which came to pass.

(c) Action taken – The applicant sought to contact the respondent in relation to the dismissal which culminated in a meeting on 1 April 2018 to discuss, among other things, the dismissal, his entitlements and the amounts owing.

(d) Prejudice to employer – the applicant submits that the employer would not be prejudiced as it appears from negotiations that took place in the meeting dated 1 April 2018 that the employer also considered that the applicant was an employee until 23 March 2018 and this position only changed when the employer engaged a solicitor.

(e) Merits of the application – the applicant was not given any fair warning in relation to the dismissal and the dismissal was completely unexpected. The applicant has not been paid any of his entitlements, was out of work for 5 weeks and has since been forced to accept a job with a much lower pay rate. The applicant has also incurred legal costs.

(f) Fairness - the applicant was the only employee of the respondent (other than directors/owners) and was the only person running the business when the director was overseas.”

[30] Following the hearing on 8 June 2018, I directed parties to make any supplementary submissions.

[31] On 15 June 2018 the Respondent submitted that:

“B. Determination of the matter

5. The determination of whether the Application is out of time requires consideration of the Applicant’s status and the determination of the time he resigned his employment to commence operation of his business, OCON Floor Prep Pty Ltd (OCON). These jurisdictional matters of status (i.e. Applicant is not an employee) and resignation (i.e. he was not dismissed) provide separate basis to dismiss the Application.

6. The Applicant, through his own actions and decisions, left his employment with the Respondent on 31 January 2018 to operate his business OCON on and from 1 February 2018. Applying “a fair go all round”, the Commission would not hold the relationship to be other than what the Applicant himself established and intended. It is fair and just that the Application is dismissed, including because it is out of time and because it has no merit.

C. Determining whether a worker is an employee and independent contractor

7. In order to determine the true nature of a relationship a Court must look at the entire relationship and balance a number of different indicia to form a view.1

8. The authorities indicate that courts rely on the consideration of a number of factors or indicia which are characteristic of an employment or contractor relationship to determine the true nature of the relationship. These indicia include:

(a) how the parties describe the relationship.

(b) whether the worker has an ABN, own insurances etc.

(c) the mode of remuneration.

(d) the provision and maintenance of equipment, the nature of the equipment and the capital outlay for the equipment.

(e) obligation to work and the freedom to accept or refuse work. (f) the ability to control work or how work is performed.

(g) the ability of a contractor to delegate the work to others. (h) the obligation to remedy defect work at own cost.

(i) the provision of benefits.

(j) the nature of the work performed by the person and whether the work is skilled work.

(k) whether the worker is integrated into the business is supportive of an employment relationship.

9. A balancing exercise will always be undertaken in determining the nature of the relationship. For example, in a recent case involving an Uber driver, the Commission said Janaka Namal Pallage v Rasier Pacific Pty Ltd [2018] FWC 2579:

I am satisfied that, as with the applicant in Kaseris, [the driver] was able to choose when to log-in and log-off to/from the Partner App; that he had control over the hours he wanted to work; and that he was able to accept or refuse trip requests.

Together with that weak control, the commissioner determined that tax arrangements, not having to wear a uniform or display branding, equipment provision, being able to work for others and irregular remuneration pointed away from an employer-employee relationship.

It is evident that the weight of those indicators leads to the finding that [the driver] was not engaged as an employee, but instead as an independent contractor.

Consideration of all but two of the indicators, delegation or subcontracting and capacity to suspend or dismiss, resolve against [him].

10. There is no set rule as to how to ‘weigh up’ these various indicia. However it is apparent that no one indicium is determinative.

no one indicium is determinative.

D. The totality of the evidence supports the conclusion that the Applicant resigned from his employment and commenced working through OCON

11. The Respondent submits that the totality of the evidence supports a conclusion that the Applicant resigned from his employment on 31 January 2018 and shortly thereafter his company, was engaged as a contractor by the Respondent.

12. The Commission should not “deconstruct the fundamental nature of the relationship which the parties intended.”2

13. Importantly, this is relationship expressly sought by the Applicant. The Respondent submits that it did not ask or require the Applicant to be a contractor, or to do so via a corporate vehicle. The Applicant did so by himself. The available evidence supports a conclusion that it was a deliberate and intentional decision of the Applicant to not be an employee. For example:

(a) the Applicant establishing the OCON of his own volition. Indeed the Applicant says at paragraph [6] that it was his accountant who “recommended” establishing OCON;3

(b) at paragraph [7] that “[t]he company…was set up on Friday 3 November…the only person who knew about this company was myself, my partner and my accountant”;

(c) The Applicant approaching Mr Sheehy about his desire to become an independent contractor.4

14. The Respondent submits that the fact that a small number of preliminary payments were made directly to the Applicant as opposed to OCON are at best a neutral consideration having regard to the following:

(a) The invoice is a business record prepared on behalf of OCON which confirms that the

Applicant was operating through his own entity from 1 February 2018.

(b) The Applicant’s evidence that the invoice was prepared so the Respondent “could see what it looks like”5 is disingenuous in circumstances where his own evidence elsewhere confirms the Respondent played no part in his decision to establish the company6 and that he approached the Respondent about becoming a contractor.7

(c) The Applicant is the sole director, secretary and shareholder of OCON.8 That is, it is for all intents and purposes his corporate vehicle and as such he has authority to allow monies due to the company to be paid to other parties (including himself).

(d) The invoice accounts for monies already paid to the Applicant.

(e) It is for the Applicant to explain how he accounted to OCON for those payments.

15. Further, legal theory will not impose, on parties, obligations that neither of them intended to make. In Babsari Pty Ltd v Douglas Chee Yin Wong & Ors,9 the Queensland Supreme Court observed at [46]:

“The parties to that contract have a different view of it. It does not seem right that legal theory can impose on parties contractual obligations (or benefits) which both, without artifice, disavow. Where the parties accept neither of them intended to contract on the terms that the other intended to constitute the bargain, a stranger cannot insist that they are bound because the mistake is not obvious to outsiders. There is no inconvenience in not holding parties to an agreement that neither intended to make.”10

16. That is, in circumstances where a party chooses, for his own reasons and importantly without duress or pressure from the other party, to conduct his affairs as a contractor, a court or tribunal should not impose an employment relationship on the parties.

17. The Applicant should not be allowed, with the benefit of hindsight, to disavow the bargain he has struck.

E. Conclusion

18. The Respondent otherwise relies on and repeats the submissions set out in its outline of submissions including:

(a) with respect to the effective date of termination;

(b) that there was no termination at the initiative of the employer; and

(c) that there are no “exceptional circumstances” which warrant the Commission granting an extension to the statutory time limit.

19. There is nothing exceptional about an employee resigning from his employment to pursue new opportunities (such as his own business). Further, there is also nothing exceptional about a person, whose new venture does not work out as planned, thinking, with the benefit of hindsight, that he should not have left his employment. That is simply a case of buyer’s remorse.

20. The Application should be dismissed.

[32] On 15 June 2018 the Applicant submitted that:

“1. Throughout the respondent’s statement, specifically point 16 to 24, it is an agreed fact that the respondent and the applicant was still negotiating on rates or profit share if the applicant’s company were to become a sub-contractor to respondent. These negotiations never led anywhere and nothing was agreed.

2. Ultimately the proposals made by the respondent were not acceptable because they would essentially result in a pay reduction for the applicant.

3. The proposals made by the applicant were also not acceptable to the respondent. Work was continuing during this time and there is no alternate basis that this work could be conducted under other than through the continuation of the employment relationship. The consistent pay and superannuation payments are indications of this.

4. The applicant asked the respondent on 12 June 2018 whether the respondent would continue to press their objection on the basis that the applicant would incur further costs and so if the respondent did not wish to proceed then being so advised would save the applicant some unnecessary costs. It was noted the respondent had refused to pay anything to the applicant since the dismissal and the applicant had taken a lower paying job and so it would be unnecessarily difficult and increase the financial strain on the applicant if there were delays in hearing the substantive issue.

5. The respondent advised that the respondent would be pressing their objections. The applicant submits that the respondent has responded to the applicant’s application vexatiously and without reasonable cause and wishes to apply for costs.”

[33] After the final day of the hearing on 19 June 2018 the parties were provided with an opportunity to file any final written submissions.

[34] On 28 June 2018, the Respondent submitted that:

“A. Introduction

1. Following the Extension of Time hearing on 19 June 2018 Commissioner Johns made directions for the filing of submissions by 27 June 2018. These final submissions are made in accordance with those directions.

B. The immediate issue

2. An immediate issue in the proceedings is:

(a) whether the Applicant was an employee or a contractor; and

(b) whether that fact was agreed.

3. The Respondent submits that the Applicant disavowed employment and commenced work through his own business, OCON Floor Prep Pty Ltd (OCON). There is evidence he obtained advice and set up that company of his own volition.

4. The Respondent accepted that change in status (see the statement of Mr Sheehy dated 7 June 2018 at paragraph 16 which was undisturbed in cross examination).

5. Consistent with a “meeting of the minds” as to the Applicant’s status as a contractor and his own disavowment of employment, OCON submitted an invoice to the Respondent for work performed from 1 February 2018 until 23 March 2018.

6. During the course of cross-examination of Mr Sheehy, the Commissioner put a series of questions to him regarding whether there was a “meeting of the minds” as to charge rates for OCON. The relevant part of the transcript is set out below (our underline):

PN369

THE COMMISSIONER: Am I right, Mr Sheehy, that you never reached an agreement with the applicant about the rate he would be paid?---Well, yes, we came to - I offered him the $60 per hour - - -

PN370

No, I understand what you offered. I understand what he wanted?---Yes.

PN371

Am I right that you two never came to an agreement?---No, we didn't, not a fixed agreement. I understand when I received the invoice which he put in at the rates that he required, I - - -

PN372

Yes, and you never agreed to those rates?---No.

PN373

There was never a meeting of minds between you and him about what he would be paid for the jobs. Isn't that right?---Yes.

PN374

Whilst you were still having these conversations, you were continuing to pay him as an individual into his account?---We had agreed that that would be deducted from the bill when it was - - -

PN375

Once you did a deal?---Yes.

PN376

Yes, but you never did the deal. Isn't that right?---We hadn't got to it. I had offered him 33 per cent and he wanted more, and the company just couldn't afford that amount. We're only a one-man - - -

PN377

That's all right. Whilst you were continuing those discussions, he was being paid as an employee?---I don't see it like that. I see it that it was part-payment of the invoice and he actually marked that down on his invoice himself, as paid off the invoice, because we had agreed to that.

PN378

All right. I understand. Thank you.

… PN426

THE COMMISSIONER: Well, his evidence before me earlier – the transcript will reflect this – was that he never reached an agreement. There was never a meeting of the minds. That was his evidence. Anything further, Mr Leon?”

7. The Respondent submits that the exchange set out above relates to an agreement with respect to rates only and does not go to the question of any agreement (and acceptance of the Applicant’s status as a contractor). Specifically:

(a) At PN369 the Commissioner asked Mr Sheehy the following “[a]m I right, Mr Sheehy, that you never reached an agreement with the applicant about the rate he would be paid?” Mr Sheehy answered the question by reference to the charge rate.

(b) At PN370 the Commissioner expanded on Mr Sheehy’s response to the question at PN369 when he said “[n]o, I understand what you offered. I understand what he wanted?” This question from the Commissioner arises from Mr Sheehy’s response to the question in PN369 (which concerned charge rates) and Mr Sheehy’s response of “yes” is entirely consistent with the question being about whether there was an agreement as to rates.

(c) At PN371 the Commissioner then asked “Am I right that you two never came to an agreement?” That question is clearly qualified by the questions in PN369 and 370 (and Mr Sheehy’s answers). So much is clear from the Mr Sheehy’s answer of “[n]o, we didn't, not a fixed agreement…” That is, Mr Sheehy’s response of was clearly about there not having been ‘fixed’ agreement as to rates. Mr Sheehy’s answer was further put into context as he continued by explaining with reference to the “invoice which [the Applicant] put in the rate he required…” This part of the response also makes it clear that Mr Sheehy is referring to the agreement as to rates only.

(d) The Commissioner then continued, at PN372 “[y]es, and you never agreed to those rates”. Again the question is directed to rates and Mr Sheehy’s response of “no” is entirely consistent with is evidence before the Commission.

(e) At PN373 the Commissioner put to Mr Sheehy that “[t]here was never a meeting of minds between you and him about what he would be paid for the jobs. Isn't that right?” Again, this question refers to rate (what the Applicant “would be paid for jobs”) and consistent with his evidence, Mr Sheehy answered in the affirmative.

(f) At PN374 the Commissioner asked Mr Sheehy about how the payments were being made as follows “[w]hilst you were still having these conversations, you were continuing to pay him as an individual into his account?” Mr Sheehy gave evidence, consistent with his statement, of the agreed arrangement (that those amounts would be deducted from OCON’s invoice).

(g) At PN375 the Commissioner’s question [o]nce you did a deal?” Must be understood by reference to the questions in PN374 which prior which all concerned whether there was an agreement as to rates. Mr Sheehy’s answer of “yes” must be understood as an answer to a question about a “deal for rates” or a “meeting of the minds about what [the Applicant] would be paid for jobs”).

(h) Similarly, at PN376 the Commissioner asked “[y]es, but you never did the deal. Isn't that right?” Mr Sheehy’s response clearly indicates that the “deal” to which he is referring is the agreement about rates. Specifically, Mr Sheehy describes the revenue sharing model that he had proposed to the Applicant as an alternative to an hourly rate.

(i) At PN377, the Commissioner then put to Mr Sheehy the following question “[t]hat's all right. Whilst you were continuing those discussions, he was being paid as an employee?” Mr Sheehy rejected that assertion and said “I don't see it like that. I see it that it was part-payment of the invoice and he actually marked that down on his invoice himself, as paid off the invoice, because we had agreed to that.” This response is entirely consistent with his understanding of the agreement between the Respondent and the Applicant and OCON.

(j) Finally, at PN426 during re-examination of Mr Sheehy, the Commissioner summarises Mr Sheehy’s evidence, set out above as follows “[w]ell, his evidence before me earlier– the transcript will reflect this – was that he never reached an agreement. There was never a meeting of the minds. That was his evidence.” With respect, having regard to the line of questioning referred to by the Commissioner, that conclusion is not available on the evidence. The line of questioning referred to by the Commissioner (set out at paragraph 6, above) concerned whether there had been agreement as to rates.

8. The Respondent submits that at general law, the question of what rates will apply is a contractual matter which does impact on the question of whether the Applicant was an employee or contractor. The question as to rates, may, for example be resolved by reference to what the existing rates where or for a mechanism for their calculation on the basis of quantum meruit [sic].

9. The question before the Commission, is whether the Applicant was an employee or a contractor. The answer to that question, consistent with the facts set out in paragraphs 3 to 5, above is that the Applicant was a contractor. That was agreed, and demonstrated by the conduct of the parties, particularly of the Applicant.

10. The Applicant commenced working through his own company, OCON.

11. Accordingly, it was a deliberate and intentional decision of the Applicant to not be an employee which is supported by the provision of an invoice prepared on behalf of OCON which confirms that the Applicant was operating through OCON from 1 February 2018. That was his action and choice.

C. Conclusion

12. The Respondent submits that having regard to the totality of the evidence that the Applicant intended to be engaged by the Respondent as a contractor and was only a contractor.

13. The Respondent proceeded in accordance with the Applicant’s wishes and in those circumstances the Commission should not “deconstruct the fundamental nature of the relationship which the parties intended.”1

14. The Applicant should not be allowed, with the benefit of hindsight, to disavow the bargain he has struck at the time. A “fair go all round” demands that outcome.

15. The Respondent otherwise relies on and repeats the submissions set out in earlier submissions with respect to:

(a) the effective date of termination;

(b) that there was no termination at the initiative of the employer; and

(c) that there are no “exceptional circumstances” which warrant the Commission granting an extension to the statutory time limit.

16. There is nothing exceptional about an employee resigning from his employment to pursue new opportunities (such as his own business). Further, there is also nothing exceptional about a person, whose new venture does not work out as planned, thinking, with the benefit of hindsight, that he should not have left his employment. That is simply a case of buyer’s remorse.

17. The Application should be dismissed.

[35] On 27 June 2018, the Applicant submitted that:

“In addition to the submissions made on 7 June 2018 and 15 June 2018, the applicant makes the following submissions.

The applicant submits that his date of dismissal was 23 March 2018 and relies on the following:

1. Setting up a company (OCON Pty Ltd) in itself is not an indication that the applicant wished to terminate his employment with the respondent and in any event the date the company was established pre-dates the date the respondent submits is the date of termination.

2. The applicant and respondent had an employment relationship. The evidence shows that this was not supplanted by any other agreement either verbal or written. We refer to the hearing transcript PN373.

3. The respondent admitted in evidence that it would not engage a subcontractor on a job without an agreement. We refer to the hearing transcript PN360. Notwithstanding this the applicant continued to work for the respondent and the only basis upon which this could have been done was the existing employment arrangement.

4. The respondent admitted in evidence that he would never engage a subcontractor that doesn’t have insurance. We refer to the hearing transcript PN379. The applicant does not have insurance and the respondent never received any evidence from the applicant that he had the requisite insurance.

5. As per our previous submissions, throughout the negotiations the respondent had acted and represented itself as an employer to the applicant which was evidenced by the respondent paying the applicant the same amount as always, being $1329.79 per week after tax (exclusive of overtime and allowances) on the Thursday of the relevant week.

6. It would be expected that a subcontractor comes to a job with their own tools and equipment. Throughout the whole period of employment up to the termination date of 23 March 2018 the applicant never had his own equipment. He was using the respondent’s equipment including the respondent’s company car. We refer to the hearing transcript PN410 and PN414.

7. The respondent continued to pay superannuation to the applicant beyond the date that the respondent claims the applicant had apparently resigned. The respondent admitted in evidence that he would not pay superannuation to subcontractors and stated that subcontractors would need to have their own insurance and pay their own superannuation. We refer to the hearing transcript PN416 and PN417.

8. The evidence shows that the date of dismissal was 23 March 2018. Earlier on the same day the respondent had sent a message advising the applicant of where he would be working on the 26th of March 2018. There is then evidence of a phone call and the applicant’s witness statement evidences that this was to terminate his employment. There are then text messages to show that the respondent came to collect the company vehicle on the same day.

For these reasons the applicant respectfully submits that the date of dismissal was 23 March 2018.”

Was the applicant an independent contractor between the period 1 February 2018 and 23 March 2018?

[36] Having considered all that has been put in relation to the matter, in particular the evidence about the negotiation as between OCON and the Respondent, I am not satisfied that on and from 1 February 2018 the applicant was engaged as an independent contractor through OCON.

[37] It is well known that for a contract to be legally binding it must contain four essential elements: namely, an offer, acceptance, intention to create a legal relationship and consideration (usually money). There is usually a mutuality of obligation and an agreement on the key terms of the contract.

[38] The evidence in this matter establishes that there was no legally binding contract as between the Respondent and OCON. For all of the relevant period the parties continued to be negotiating terms. The key term upon which there was no agreement was the rate of pay that OCON would receive in exchange for the work performed by its principal, the Applicant.

[39] Further, during the relevant period the Applicant continued to render personal service to the Respondent. The Respondent continued to pay the Applicant as it always had right up to 23 March 2018. The Respondent continued to make superannuation payments on behalf of the Applicant’s period. While the Respondent says the payment of superannuation was an error, it is evidence of a continuing employment relationship in the period 1 February 2018 to 23 March 2018. There is simply no evidence that there was an agreement reached as between OCON and the Respondent such that monies paid personally to the Applicant would be deducted from an invoice that OCON was to provide to the Respondent later in time once there was an agreement on the rate to be paid to OCON. That did not happen. There was no such agreement. Such an arrangement would have been inconsistent with the independent contractor arrangements that the Respondent commonly put into practice.

[40] I have no doubt that the Applicant aspired to operate OCON. He thought, on advice from his accountant, that it would be financially advantageous to him. But that arrangement never became operational because there was no agreement as between OCON and the Respondent. The setting up of OCON is not evidence that an independent contract or arrangement had been established. It is simply evidence of an aspiration for such an arrangement.

[41] Consequently, the only conclusion that can be reached is that after 31 January 2018 the Applicant continued as an employee of the Respondent.

Conclusion

[42] For the reasons set out above, having considered all the circumstances, on balance, the Commission, as presently constituted, is satisfied that the Applicant,

a) did not resign on 31 January 2018;

b) was not an independent contractor between 1 February 2018 and 23 March 2018; and

c) the effective date of termination of the Applicant was 23 March 2018.

[43] Consequently, because the UFD Application was filed on 12 April 2018 it was filed within the 21 day time limit required by the FW Act and there is no need to grant an extension of time.

[44] The matter will now be listed for a Directions hearing so that the substantive UFD Application can be programmed for hearing.

COMMISSIONER

Appearances:

Mr A Ahmed, Adam Ahmed & Co Pty Ltd for the Applicant.

Mr N Leon, Bartier Perry for the Respondent.

Hearing details:

8 & 19 June 2018

Printed by authority of the Commonwealth Government Printer

<PR608859>

 1 Section 394(2)(a) FW Act. Note that the 21 days for lodgment does not include the date that the dismissal took effect by reason of the operation of the Acts Interpretation Act 1901 (Cth) s.36(1) (item 6—where a period of time ‘is expressed to begin after a specified day’ the period ‘does not include that day’).

 2 Section 394(3) FW Act.

 3   PN371.

 4   PN213.

 5   Exhibit R3.

 6   Exhibit A2.

 7   Exhibits R1, R2.

 8   PN415 – 418.

 9   Exhibit R1, R2.

 10   Exhibits R1, R2.

 11   Exhibit R3.

 12   Exhibit A4.

 13   PN165.

 14   PN166.

 15   NS2 of Exhibit R3.

 16   PN187 – PN199.

 17   PN201.

 18   NS2 (page 7) of Exhibit R3.

 19   PN213.

 20   Exhibit A4.

 21   NS3 of Exhibit R3.

 22   PN238.

 23   PN246.

 24   PN308 – PN320.

 25   Exhibit A4.

 26   PN322.

 27   Exhibit R3.

 28   Exhibit R4.

 29   PN347 – PN358.

 30   PN360.

 31   PN378.

 32   PN379 – PN 382.

 33   PN388.

 34   PN414.

 35   PN415 – 418.

 36   PN422 – 426.

 37 Statement of Edmund Sheey at [7].

 38 Statement of Edmund Sheehy at [10].

 39 Statement of Edmund Sheehy at [11].

 40   Statement of Edmund Sheehy at [12] – [14].

 41   Statement of Edmund Sheehy at [15] – [18].

 42   Statement of Edmund Sheehy at Annexure NS7.

 43 Statement of Edmund Sheehy at [16].

 44   Statement of Edmund Sheehy at Annexure NS7.

 45 Vella v Integral Energy [2011] FMCA 6 at [9].

 46 [1999] QSC 326.

 47 Babsari Pty Ltd v Douglas Chee Yin Wong & Ors [1999] QSC 326 at [46]; see also, Redeemer Baptist

School Ltd v Graeme Francis Glossip & 5 Ors [2006] NSWSC 1201 at [81] and [94], Air Great Lakes Pty Ltd

v K S Easter Holdings Pty Ltd (1985) 2 NSWLR 309, per Mahoney, JA at p 331 and Vella v Integral Energy

[2011] FMCA 6 at [9].

 48 (1995) 62 IR 200.

 49   Ibid at 205.

 50   PR 973462.

 51   Cited with approval in Barkla v G4S Custodial Services Pty Ltd, [2011] FWAFB 3769 at [24].

 52 PR 973462 at [23].