Mr Robert McCrae v Perth 178 Backpackers and Convenience Store

[2020] FWC 424

[2020] FWC 424

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
Section 394 - Application for unfair dismissal remedy

Mr Robert McCrae
v
Perth 178 Backpackers and Convenience Store
(U2019/10017)

DEPUTY PRESIDENT ANDERSON ADELAIDE, 30 JANUARY 2020

Application for an unfair dismissal remedy – jurisdictional issue – whether guest of hostel performing cleaning work was an employee – elements of contract – whether a private or domestic arrangement – contract of employment found – dismissal – jurisdiction established

[1] This decision determines a jurisdictional objection made by Perth 178 Backpackers and Convenience Store (Perth Backpackers) in response to an application for an unfair dismissal remedy by Robert McCrae (Mr McCrae).

[2] The jurisdictional objection concerns a claim that Mr McCrae was not dismissed from a contract of employment and thus there was no dismissal of an employee within the meaning of Part 3-2 of the Fair Work Act 2009 (the FW Act).

[3] Following a hearing of the jurisdictional objection, I issued a Statement on 4 December 2019. 1 The Statement expressed a provisional, but not concluded, view on the jurisdictional objection. It provided the parties with a further opportunity to resolve the matter via a conciliated rather than arbitrated route, aided by my provisional view. The Statement also set out the factual background to this matter and should be read in conjunction with this Decision.

[4] The Statement directed the parties into Member-assisted conciliation. Conciliation scheduled before Commissioner Platt on 16 December 2019 was cancelled due to the unforeseen event of a fire at an unrelated hostel where Mr McCrae was staying, resulting in him requiring medical treatment.

[5] Member-assisted conciliation was rescheduled and conducted in person by Deputy President Binet on 20 January 2020. The matter did not resolve. Consequently, Mr McCrae’s application remains before me for determination.

[6] I now determine the jurisdictional objection.

Consideration

[7] As noted in the Statement, 2 for Mr McCrae’s application to fall within the Commission’s jurisdiction I need to be satisfied that:

1. There was an agreement between Mr McCrae and Perth Backpackers that formed a contract at law; and

2. The contract at law was a contact of employment; and

3. Mr McCrae was dismissed from the contract of employment (within the meaning of section 386 of the FW Act).

[8] I adopt the findings of fact set out in the Statement. 3

[9] For reasons set out in the Statement, on issue 3 (above), I conclude that there was an agreement between Mr McCrae and Perth Backpackers to do cleaning work in exchange for free accommodation and that this agreement was terminated by Perth Backpackers on 9 August 2019 effective 16 August 2019. That termination was capable of being a dismissal within the meaning of section 386 of the FW Act as it was conduct at the initiative of the business.

[10] Also for reasons set out in the Statement, I further conclude on issue 2 (above) that the weight of evidence points against Mr McCrae having been an independent contractor under a contract for services. He was not operating his own business. He was using equipment supplied by Perth Backpackers. He was under the supervision and control of Mr and Mrs Hon as to the quality and general frequency and timeliness of his work. The labour services he provided and the manner in which they were provided were indicative of employment, not independent contracting.

[11] I now turn to whether there was an agreement that formed a contract at law, or was the arrangement purely of a private and domestic nature?

[12] For reasons set out in the Statement, I conclude that there was an offer, an acceptance and valuable consideration in the form of an exchange of promises for mutual benefit. 4

[13] As foreshadowed in the Statement, I have considered further whether there was, in an objective sense, an intention to create legal relations on agreed and enforceable terms.

[14] I conclude that there was.

[15] The agreement between Perth Backpackers and Mr McCrae was not a mere domestic arrangement or voluntary work. The following facts are sufficient to establish, in an objective sense, the requisite intention:

1. The length of the arrangement in which work was performed in exchange for free accommodation was for a prolonged period (two years);

2. It was not an informal arrangement between friends or family members to lend a hand or occupy time productively;

3. In 2017 Mr McCrae had arrived at the hostel unknown to Mr and Mrs Hon and in the initial weeks had paid commercial board. That only changed upon the arrangement to perform cleaning work commencing; and

4. The context in which work was performed and its regularity resulted in the business expecting the labour services to be delivered to an acceptable standard and in Mr McCrae expecting (and receiving) free accommodation day in and day out over this period.

[16] I take into account that Mr McCrae was free to leave at any time to secure a job, referred to himself as a “guest” in some of his emails to Mr Hon and was told by other guests and the owners not to hold himself out as a staff member (let alone an ‘assistant accommodation manager’).

[17] However, these are not decisive considerations, individually or cumulatively. Employees are generally free to leave their employment on giving required notice (if any). Mr McCrae held dual roles, as both guest and as a provider of cleaning services. The fact that he was a guest does not mean that he was not also employed to clean. Being told by guests and the owners not to hold himself out as an employee was said in the context of Mr McCrae being counselled not to use the self-declared titles of ‘Assistant Accommodation Manager’ or ‘Security Manager’. He was not told to not describe himself as a cleaner. Patently he did that work.

[18] The formality of the manner in which the arrangement concluded also points in favour of the position advanced by Mr McCrae. I make allowance for Mr Hon’s poor English and use of terms in his email of 9 August 2019 that he did not intend to be taken as a “sacking” or “termination” from “staff”. However, the subjective intention of a party is not a proper basis to determine this matter. Objectively, even without the dismissal-type language used by Mr Hon that brought the arrangement to an end, it was an arrangement on which both parties placed a degree of reliance. That reliance was consistent with an intention to regard each other as bound to a deal that had been made, for however long it lasted.

[19] For these reasons I conclude there was an intention to create legal relations on agreed and enforceable terms.

[20] The arrangement was a contract at law.

Conclusion

[21] The agreement between Perth Backpackers and Mr McCrae was a contract at law. At least for the purposes of Part 3-2 of the FW Act that contract was a contract of employment, not a contract for services. The action of Perth Backpackers on 9 August 2019 terminated the contract of employment effective from 16 August 2019.

[22] In these circumstances there was a termination of employment on the employer’s initiative within the meaning of section 386(1)(a) of the FW Act.

[23] There being a dismissal of an employee, Mr McCrae’s application falls within the Commission’s jurisdiction.

Next steps

[24] The matter not having been settled by conciliation, is required to be determined on the merits; that is, whether Mr McCrae’s dismissal was harsh, unjust or unreasonable and (if so) the question of remedy.

[25] I will re-list the matter for directions with a view to setting a date and time to take such further evidence as the parties wish to lead on merits and remedy, and to deal with the further production of documents.

[26] I repeat my observation in the Statement of 4 December 2019 that “many of the outcomes sought by Mr McCrae in his letter of demand appear beyond the Commission’s jurisdiction”. 5 The merits arbitration will focus specifically on the considerations in Part 3-2 of the FW Act, and those matters only.

[27] Consideration of the merits will necessarily include whether Perth Backpackers was a small business employer and, if so, whether the dismissal was consistent with the provisions of the Small Business Fair Dismissal Code (section 388). At the directions hearing I will ask the parties whether the number of persons employed by Perth Backpackers at the date dismissal took effect was less than 15 employees (small business employer definition: section 23 FW Act). If necessary I will determine that question at the substantive hearing.

DEPUTY PRESIDENT

Appearances:
R. McCrae, on his own behalf, with C. Polaine
A. Hon, for the Respondent

Hearing details:
2019.
Adelaide; Perth.
21 and 28 November.

Printed by authority of the Commonwealth Government Printer

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 1   [2019] FWC 8212.

 2 At [46].

 3   At [16] to [38].

 4 At [49].

 5   At [38] and [64].