[2015] FWC 6352 [Note: An appeal pursuant to s.604 (C2015/6320) was lodged against this decision - refer to Full Bench decision dated 28 January 2016 [[2016] FWCFB 140] for result of appeal.]

FAIR WORK COMMISSION

DECISION

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

Mr Tom Tyler
v
JG King Homes
(U2015/993)

COMMISSIONER WILSON

MELBOURNE, 18 SEPTEMBER 2015

Application for relief from unfair dismissal.

[1] Tom Tyler has made an application for unfair dismissal by JG King Homes from a position in which he was required to sell new homes for the company, including home and land packages. His application claims that he commenced working for JG King Homes in September 1990 and, having worked for the business continuously since that time, he was called into a meeting on 16 February 2015 and told that his work with the company would end with immediate effect. His unfair dismissal application claims that he asked for reasons and was told that he was not entitled to know why.

[2] JG King Homes resist the application, principally for the reason that it argues Mr Tyler has never been an employee of the company. In the alternative it argues that if Mr Tyler was an employee, he has not been unfairly dismissed.

[3] Section 396 of the Fair Work Act 2009 (the Act) requires the determination of four initial matters to be considered before considering the merits of the application. In relation to three of the elements within the section, I find that Mr Tyler’s application was within the 21 day period for making such applications and that questions of consistency with the Small Business Fair Dismissal Code or genuine redundancy do not arise.

[4] However, it is contested that Mr Tyler is a person protected from unfair dismissal, for the reason that it is argued he was never an employee. In the event that he was an employee, a further consideration arises for determination in relation to whether he is a person protected from unfair dismissal, since it is argued his income was beyond the high income threshold and that he was not covered by an award or agreement, which would allow his protection from unfair dismissal, irrespective of his earnings as an employee.

Whether the Applicant was an employee

[5] The meaning of the word "dismissed" is set out within s.386 of the Act and refers broadly to a person having been dismissed from “employment”. The terms “employee” and “employer” are defined within s.12, The Dictionary, as being further defined in the first Division of each Part of the Act in which the term appears. In that respect, and relevant to the question of whether a person has been unfairly dismissed, s.380 refers to the meanings of the terms being respectively a national system employee and employer, which terms are in turn defined in s.30C and 30D of the Act.

[6] The Full Bench has held that there is no single decisive criterion to determine whether a contractual relationship is one of employment or one subject to a contract for services. Application of the multifactorial tests established through the Courts has been confirmed in the recent matter of Kimber v Western Auger Drilling Pty Ltd 1(Kimber);

“[40] The question of whether a person is an employee for the purposes of an application for an unfair dismissal remedy made under s.394 of the Act is one of jurisdictional fact as is the related question in this case; whether the appellant had completed the minimum employment period at the time of her dismissal. In this appeal we must therefore determine whether the Commissioner reached the right conclusion as to whether the Appellant was an employee or contractor during the relevant period and whether she had completed the minimum employment period, not simply whether the Commissioner’s finding in this respect was reasonably open to her.

[41] The courts have developed a multi-factorial approach, in which there is no single decisive criterion to determine whether a contractual relationship is one of employment or one subject to a contract for services. This approach requires the consideration of the various indicia as summarised in French Accent set out above. It is also clear from the decision of the Full Bench of the Federal Court in ACE Insurance Limited v Trifunovski and others, 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.

[42] French Accent also endorses the following propositions in Abdalla v Viewdaze Pty Ltd t/a Malta Travel that:

“the ultimate question will always be whether the worker is the servant of another in that other’s business, or whether the worker carries on a trade or business of his or her own behalf: that is whether, viewed as a practical matter, the punitive worker could be said to be conducting a business of his or her own. This question is answered by considering the terms of the contract and the totality of the relationship.” 2 (references omitted)

[7] In Kimber, the Full Bench endorsed the approach set out in the earlier matter of French Accent v Do Rozario 3 (French Accent), which in turn followed the principles laid out by the High Court in Stevens v Brodribb Sawmilling Co Pty Ltd,4and the later case of Hollis v Vabu5 (Hollis). An earlier Full Bench analysed Hollis as follows;

“We think it particularly significant that the joint judgment endorsed the proposition that ‘‘the distinction between an employee and an independent contractor is ‘rooted fundamentally in the difference between a person who serves his employer in his, the employer’s, business, and a person who carries on a trade or business of his own’’’. In [47] their Honours dealt with the issue in the case before them by in essence asking whether, ‘‘viewed as a practical matter’’ the workers in question were ‘‘running their own business or enterprise’’ with ‘‘independence in the conduct of their operations’’.” 6

[8] The Full Court of the Federal Court has noted that in Hollis;

“… a real emphasis was authoritatively placed on the notion of working in the business of another, rather than in the business of the individual.” 7

[9] In the same judgment, the Full Court noted, with particular relevance to this matter;

“There have been a number of cases decided at the highest level concerning whether salesmen working on commission were employees. The cases (like the present case) had the feature that they involved contracts stating that the salesmen were not employees. That contention has been frequently disapproved.” 8

[10] After an extensive analysis of the relevant cases, the Full Court found an inconclusive picture that only reinforced the need to consider the full circumstances of each matter;

“The picture which is left by the various cases concerning the work of salesmen, or even of insurance salesmen in particular, is inconclusive. There is no central feature of the work itself that suggests that contracts for doing that work are likely to be found, or not likely to be found, to be contracts of employment. Much depends on the particular features of the contracts and whether those features are matched by the reality. Assertions about the character of the relationship carry weight, but are far from conclusive.” 9

[11] French Accent also had regard to the earlier Full Bench matter of Abdalla v Viewdaze Pty Ltd t/a Malta Travel. 10 The following principles were laid out in French Accent, and I refer to them in detail for the reason that, following their endorsement in Kimber, it is appropriate I analyse Mr Tyler’s circumstances in accordance with this approach;

“[30] The general law approach to distinguishing between employees and independent contractors may be summarised as follows:

(1) In determining whether a worker is an employee or an independent contractor the ultimate question is whether the worker is the servant of another in that other’s business, or whether the worker carries on a trade or business of his or her own behalf: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own of which the work in question forms part? This question is concerned with the objective character of the relationship. It is answered by considering the terms of the contract and the totality of the relationship.

(2) The nature of the work performed and the manner in which it is performed must always be considered. This will always be relevant to the identification of relevant indicia and the relative weight to be assigned to various indicia and may often be relevant to the construction of ambiguous terms in the contract.

(3) The terms and terminology of the contract are always important. However, the parties cannot alter the true nature of their relationship by putting a different label on it. In particular, an express term that the worker is an independent contractor cannot take effect according to its terms if it contradicts the effect of the terms of the contract as a whole: the parties cannot deem the relationship between themselves to be something it is not. Similarly, subsequent conduct of the parties may demonstrate that relationship has a character contrary to the terms of the contract.

(4) Consideration should then be given to the various indicia identified in Stevens v Brodribb Sawmilling Co Pty Ltd and the other authorities as are relevant in the particular context. For ease of reference the following is a list of indicia identified in the authorities:

Whether the putative employer exercises, or has the right to exercise, control over the manner in which work is performed, place or work, hours of work and the like.

Control of this sort is indicative of a relationship of employment. The absence of such control or the right to exercise control is indicative of an independent contract. While control of this sort is a significant factor it is not by itself determinative. In particular, the absence of control over the way in which work is performed is not a strong indicator that a worker is an independent contractor where the work involves a high degree of skill and expertise. On the other hand, where there is a high level of control over the way in which work is performed and the worker is presented to the world at large as a representative of the business then this weighs significantly in favour of the worker being an employee.

The question is not whether in practice the work was in fact done subject to a direction and control 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.” “[B]ut in some circumstances it may even be a mistake to treat as decisive a reservation of control over the manner in which work is performed for another. That was made clear in Queensland Stations Pty. Ltd v Federal Commissioner of Taxation, a case involving a droving contract in which Dixon J observed that the reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract.

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

The right to the exclusive services of the person engaged is characteristic of the employment relationship. On the other hand, working for others (or the genuine and practical entitlement to do so) suggests an independent contract.

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

Whether the worker provides and maintains significant tools or equipment.

Where the worker’s investment in capital equipment is substantial and a substantial degree of skill or training is required to use or operate that equipment the worker will be an independent contractor in the absence of overwhelming indications to the contrary.

Whether the work can be delegated or subcontracted.

If the worker is contractually entitled to delegate the work to others (without reference to the putative employer) then this is a strong indicator that the worker is an independent contractor. This is because a contract of service (as distinct from a contract for services) is personal in nature: it is a contract for the supply of the services of the worker personally.

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

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

Typically, this will arise because the worker is required to wear the livery of the putative employer.

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

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

Employees tend to be paid a periodic wage or salary. Independent contractors tend to be paid by reference to completion of tasks. Obviously, in the modern economy this distinction has reduced relevance.

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

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

Such persons tend to be engaged as independent contractors rather than as employees.

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

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

It should be borne in mind that no list of indicia is to be regarded as comprehensive or exhaustive and the weight to be given to particular indicia will vary according to the circumstances. Features of the relationship in a particular case which do not appear in this list may nevertheless be relevant to a determination of the ultimate question.

(5) Where a consideration of the indicia (in the context of the nature of the work performed and the terms of the contract) points one way or overwhelmingly one way so as to yield a clear result, the determination should be in accordance with that result. However, a consideration of the indicia is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture of the relationship from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another. The ultimate question remains as stated in (1) above. If, having approached the matter in that way, the relationship remains ambiguous, such that the ultimate question cannot be answered with satisfaction one way or the other, then the parties can remove that ambiguity a term that declares the relationship to have one character or the other.

(6) If the result is still uncertain then the determination should be guided by “matters which are expressive of the fundamental concerns underlying the doctrine of vicarious liability” including the “notions” referred to in paragraphs [41] and [42] of Hollis v Vabu.” 11 (references omitted)

[12] I will consider the evidence presented in this matter against each of the indicia referred to above.

Control

[13] The circumstances of Mr Tyler’s engagement include that it commenced with he and his father providing services to JG King Homes through their private company, Realty Listing of Australia Pty Ltd (Realty Listing). Mr Tyler’s memory is that his father started providing his services to JG King Homes in about January or February 1990. 12 Realty Listing was a shelf company acquired at about the same time by Mr Tyler’s father for the purpose of providing sales services to JG King Homes,13 however, the evidence of Director appointments would suggest the company vehicle was acquired by the Tylers earlier, perhaps in mid-1989.14

[14] The two men provided sales services to JG King Homes. 15 Mr Tyler’s father stopped work in about 1992 or 1993, however he remained a Director of Realty Listing until 1997.16

[15] These arrangements stand in distinction to the arrangements in recent years.

[16] Of themselves, the parties’ own characterisations of their arrangements carry no particular weight in determination of this matter. In this regard the Full Bench has previously referred to an applicant employee’s assertions as being of “a conclusion of mixed law and fact and are not probative”. In the same case, the Full Bench held that assertions to the effect that the parties had agreed the worker was an employee had little probative value. 17

[17] In recent years Mr Tyler has performed services as the only salesperson supplied by Realty Listing to JG King Homes, although his son performed paid work experience for about six months about 15 years ago, with Mr Tyler having been asked by JG King Junior to put someone on. 18

[18] Realty Listing also arranged and paid for “sales hostesses”. 19 However, detailed evidence was not provided about the engagement of the sales hostesses and the amounts invoiced for their services. Accordingly, there is no evidence about whether they were regularly or intermittently engaged, or whether the costs associated with their engagement were significant or not.

[19] On balance, the overall relationship in the few years prior to 2015 appears markedly different from the early years, when Realty Listings supplied the services of both Mr Tyler and his father to JG King Homes, and the middle years, when Realty Listing provided Mr Tyler’s services and the “work experience” services of his son.

[20] Mr Tyler’s evidence is that he was subject to the supervision of Wayne Jones, Central Area Manager for Regional Victoria, for about the past 18 months. The evidence however does not detail the nature of that supervision.

[21] Mr Tyler’s evidence is that his responsibility at JG King Homes was to receive sales leads from various sources, including JG King Homes’ website, telephone calls and “walk-ins” to its reception. The evidence also supports that Mr Tyler was rostered, which informed him when and where he could work with the expectation that he attend a nominated location on the indicated days. The evidence also supports that Mr Tyler was expected to be in attendance for the full period of hours specified in the roster. The evidence is that the roster specified by name the attendance of Mr Tyler as opposed to merely nominating Realty Listings.

[22] The evidence is also that the roster did not differentiate between persons such as Mr Tyler and those classified by the Respondent as employees.

[23] Rosters prepared by JG King Homes referred to Mr Tyler as attending its premises for work, 20 rather than making a more neutral reference to the attendance of an unspecified person from Realty Listing, or perhaps even “Tom from Realty Listing”.

[24] The evidence of Joanna Brennan, JG King Homes’ Human Resources Manager, is that Mr Tyler and Realty Listing were treated differently from other sales people. Realty Listing could decide when work would be undertaken;

“Realty was required to be in attendance at nominated display centres at nominated hours and days per week. However Realty could decide to work such hours and days each week as it suited it. It could decide who would be in attendance at the display centre and it could decide who was to provide the services and how the services would be provided.” 21

[25] Further, this was said by Ms Brennan to be different from others;

“With Realty Listing, they had far more freedom. So if we - with employees, if we asked them to be in the office from 8.30 till five, they need to be in the office from 8.30 to five. With consultants, they generally - if they weren’t on office duties or if they were running late, they would just bowl in when they needed to bowl in, or they would go straight to display homes, they wouldn’t come in at all.” 22

[26] Mr Tyler’s evidence about attendance included this rebuttal of what Ms Brennan had to say, suggesting the freedoms to which she referred either did not practically exist, or were heavily limited;

“It was also said in the evidence that you might have heard today that you could have just simply worked or not worked as you chose, so why wouldn't you have just simply not worked on one of those days rather than arranged someone else to take your spot?---Because the phone would have started ringing immediately and there would have been serious repercussions if I just hadn't shown up.

So you were required to find someone else?---Absolutely.” 23

[27] The freedoms to which Ms Brennan refers in choosing when to work were not referenced to interactions she had directly with Mr Tyler or Realty Listing, and it is not apparent how she came by the knowledge she relates. Her own witness statement contradicts what she has to say – on the one hand, Realty Listing was required to attend at certain sites on nominated days for nominated hours; on the other, it could decide to work the hours and days that suited. Ms Brennan did not refer to a process by which the two propositions might co-exist, such as through placement of forward roster bids, and Mr Tyler’s evidence that he was told when and where to work is to be preferred.

[28] When it came to personal leave or annual leave, Mr Tyler was expected to conform to the JG King Homes processes for requesting or justifying such leave, including the use of forms that would otherwise be used by employees. However, Mr Tyler would continue to be paid his retainer, even during periods of leave. 24

[29] On the basis of the evidence before the Commission, I find that Mr Tyler was working under the control of JG King Homes as would be expected of an employee. He was subject to supervision and was rostered for the hours and days on which he was expected to work; he was expected to conform to the Respondent’s requirements about notification of absences and leave. Mr Tyler’s case is not featured by an absence of control, but instead appears to be one featured by a relatively high level of control over the way in which work was performed.

Work for others

[30] Whereas the right to exclusive services from a person engaged can be characteristic of employment, working for others or the entitlement to do so is characteristic of an independent contractor. 25

[31] The evidence presented to the Commission does not address Realty Listing’s or Mr Tyler’s ability to undertake work for other businesses.

[32] Accordingly this is a neutral factor in my consideration.

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

[33] The evidence is that Mr Tyler was allocated an office in JG King Homes Ballarat showrooms. While Realty Listing has an address stated on the invoices, which does not appear to be connected with JG King Homes in any way, there is no evidence that would suggest that address as being a separate place of work for the company or Mr Tyler, or that he was advertising such to the world at large.

[34] As a result, I find this factor to resolve in favour of Mr Tyler being an employee.

Tools or equipment

[35] The services provided by Realty Listing to JG King Homes are of a sales nature. This is not an industry or occasion in which one would expect to find significant capital investment from the contractor. The evidence shows that Mr Tyler provided little in the way of what could be called equipment or tools. Instead he used JG King Homes’ telephone system, its photocopier, stationery and business cards. He also used JG King Homes’ computer system, including its hardware in the form of a laptop. 26 The equipment that was used by Mr Tyler was apparently provided on similar terms to people who were employees.27

[36] There is no evidence that Mr Tyler provided any significant equipment or tools to the relationship.

[37] On balance it could perhaps be expected in the case of a sales contractor, that only minimal tools and equipment are provided on the part of the contractor supplying services, and such was the case with Mr Tyler. However, in Mr Tyler’s case, there appears to be no appreciable tools and equipment that he brought to the arrangement, and his arrangement appears indistinguishable from what one might expect of an employee. Accordingly this is a factor which resolves in favour of Mr Tyler being found to be an employee.

Delegation or subcontracting

[38] According to the Respondent’s witnesses, Mr Tyler had the right of delegation or subcontract.

[39] At least at the hypothetical level, one witness, Ms Brennan, the company’s Human Resources Manager, took the view that Mr Tyler was entitled to delegate the work to anyone he chose, although her personal view was that JG King Homes may not like such a prospect without first being told. 28

[40] Ms Brennan did not think it fanciful that a stranger could simply attend and commence work at the JG King Homes premises on behalf of Mr Tyler. 29 Ms Brennan’s evidence is also that Mr Tyler had the right to and did engage sales hostesses who were paid for by Realty Listing.30

[41] Mr Tyler’s evidence about what happened when he was unable to attend for work includes the following in his supplementary written witness statement;

“During my engagement with the Respondent, my ability to delegate my duties was extremely limited. The only form of quasi delegation that occurred was when myself or other employees were required to provide a replacement on days when we were unable to fill our rostered shifts in display homes due to illness, family events etc. On such occasions, we usually had to swap shifts amongst ourselves, or if a replacement could not be found we were required to arrange for other non sales consultants of the Respondent to sit in the display homes. If the replacement was required because we had a social engagement on (i.e. a birthday) we were required to pay these replacements in cash for their time, on other times (i.e. annual leave) this cost was met by the Respondent.” 31

[42] He amplified on the practical limitations in his oral evidence;

“Can I take you to paragraph 30? You say that your ability to delegate was extremely limited?—Non-existent.

Non-existent?—I believe, yes.

But you acknowledge that you had the right that if you were to go on leave you could appoint someone else to take your role and you would pay that person?—Nonsense. If I went on leave, that was organised by JG King Homes.” 32

[43] I consider that Ms Brennan’s evidence on this subject puts forward circumstances about the rights to delegation that appear unlikely on the basis of the other evidence led in this matter, including how the relationship actually played out on a daily basis. I prefer Mr Tyler’s evidence that his ability to send any delegate he chose of Realty Listing to JG King Homes was non-existent. The wider evidence is that significant direction and attention was turned by JG King Homes to how its business was run. This was not a situation of a builder saying to a salesperson “go and maximise our sales in any way you want, using whomsoever you wish”.

[44] Even so, the evidence records occasions on which a second person, Mr Tyler’s son, was brought to the relationship with JG King Homes as an employee of Realty Listing. However on the uncontradicted evidence of Mr Tyler, that was 15 years previously. In addition the evidence records that Mr Tyler from time to time engaged sales hostesses as referred to above. However the evidence does not show how extensive such engagement may have been.

[45] Overall, and particularly on the basis of the relationship in the most recent years, I find that consideration of this criterion would result in favour of Mr Tyler being an employee.

Rights to suspend or dismiss

[46] The consideration of this question relates to whether there is a right to have a particular person do the work, or the right to suspend or dismiss the person engaged. Such rights can suggest a contract of service rather than a contract for services. 33 The analysis furthers a consideration of whether the person is working in the business of another, rather than in the business of their own.34

[47] The evidence discloses that Mr Penna met with Mr Tyler on 16 February 2015 and communicated to him a decision to terminate the contract of services Realty Listing had with JG King Homes. In the course of that discussion, Mr Tyler was invited to receive and sign a “services agreement termination acceptance” couched as the firm writing to him “to confirm your decision to terminate your contract of services with J G King Homes Pty Ltd”. The letter was presented with a Deed of Release, and together the two documents held out to him that in return for the severing of the relationship, JG King Homes would ensure payment to Realty Listing for 100% of the commission otherwise due on 2 sales, and 75% of commission due on another 11 sales. 35 Mr Tyler refused to sign the document. JG King Homes in any event gave notice to Mr Tyler and Realty Listing that it was terminating the arrangement between them.

[48] The evidence is unclear as to whether or not JG King Homes had the right to suspend or dismiss Mr Tyler himself, as the delegate of Realty Listing, when it might otherwise have allowed the relationship with the company itself to continue as a contractor for services, however, it would appear likely in all circumstances that it did. However, because of the uncertainty of the evidence, I find this to be a neutral factor in my consideration.

Whether the worker held out as an emanation of the business

[49] The evidence indicates that Mr Tyler was held out to customers as part of JG King Homes. His business cards were branded as JG King Homes, and on them he was referred to as a “New Homes Consultant” for JG King Homes, with contact details entirely of that company. 36

[50] On some occasions Mr Tyler would wear a uniform, being that of JG King Homes. 37 In contrast the Respondent’s witnesses say that Mr Tyler was never made to wear the uniform; however he would occasionally wear one of the polo shirts provided to him.38 Another of the company’s witnesses, Mr Penna, gave evidence that although he was not aware Mr Tyler was required to wear a uniform from time to time, it was his belief that “a uniform was required of contractors at all times”.39 In contrast, Mr Tyler’s evidence included showing to the Commission a substantial amount of clothing that had been provided to him, which included business shirts and polo shirts, trousers and a parka; each with JG King Homes branding.

[51] This appears to be from a desire on the part of JG King Homes to advertise its business as much as to identify Mr Tyler as a member of its own working staff. 40

[52] In all, I consider this factor to resolve in favour of the Applicant being an employee of JG King Homes. To the world at large, he was an emanation of JG King Homes.

Income tax

[53] The consideration of income tax in the matter of French Accent is a consideration of whether income tax is deducted from remuneration paid to the worker.

[54] In Mr Tyler’s case invoices were presented to JG King Homes by Realty Listing making a claim for services rendered, upon which GST was payable by JG King Homes. The invoices were prepared by Realty Listing and the GST appears to have been deducted and withheld by JG King Homes to be remitted to the ATO without question.

[55] The predicament that arises in relation to consideration of the import of income tax arrangements in determining whether a worker is or is not an employee was considered by the Full Court in the matter of Ace Insurance v Trifunovski in which it was said;

“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.

Insurance and any necessary statutory permits or licences may need to be arranged. There is a miscellany of other obligations (and benefits) which are imposed upon (or which apply to) those who are in business on their own account, rather than being engaged as employees. I mention all these matters to highlight the potential difficulties of attempting to retrospectively undo what parties have chosen to adopt as the basis of their relationship, whatever it may be. However, 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.

It is also difficult, in my view, to give much independent weight to arrangements about taxation, or even matters such as insurance cover or superannuation. These are reflections of a view by one party (or both) that the relationship is, or is not, one of employment. For that reason, in my view, those matters are in the same category as declarations by the parties in their contract (from which they often proceed). They may be taken into account but are not conclusive. These matters are less important than the adoption by the parties (where this occurs) of rights and obligations which are fundamentally inconsistent with basic requirements of a contract of employment, such as the ability to delegate the discharge of obligations under a contract to another person, or where there is a lack of control over how work is done.” 41

[56] Since this is a consideration of whether or not there has been payment to the worker of remuneration without deduction for income tax, this is a factor which must resolve in favour of JG King Homes. Realty Listing held out to JG King Homes that it was a contractor, and one registered for the GST at that, and JG King Homes acted and relied upon that representation without demur.

Remuneration

[57] The assessment of this criterion turns on the proposition that employees tend to be paid a periodic wage or salary, whereas independent contractors are often paid by reference to the completion of certain tasks, although, it is said, obviously “in the modern economy this distinction has reduced relevance” 42.

[58] The evidence shows that Mr Tyler was paid a periodic retainer on the basis of slightly less than $1000 per week. These payments were constructed as a payment of $909.09 upon which GST was then paid. Further, it was the case that any commission paid to Mr Tyler would be offset with amounts paid through these regular payments. That is the principal earnings of Mr Tyler were on the basis of commission attributable to the sales he achieved, from which were deducted the payments made through the periodic retainer payments, with Ms Brennan explaining the arrangement in this way;

“Why, to your knowledge, would there be payments pretty regularly of $1000, including GST, to Mr Tyler?---Our contractors often would like a retainer paid to them each week, or monthly, depending on what their basis is on, and then we pull that amount off them when we do their commission claim itself. So then that $1000 would be subtracted off that monthly claim.” 43

[59] After consideration of all the evidence on this matter I consider it more likely than not that the intention of the arrangement between the parties was that while Mr Tyler was to be remunerated in accordance with a commission arrangement, an arrangement was made for him to be paid a fixed amount each week. In effect, a mechanism was agreed not only for the sake of his own certainty of payment, but also to ensure he would be always available to JG King Homes. What results is an arrangement that is virtually indistinguishable from what might be expected of an employee involved in a high-value sales industry.

[60] Accordingly this criterion resolves in favour of Mr Tyler being an employee.

Holidays or sick leave

[61] The consideration in this criterion is whether a worker was provided with paid holidays or sick leave. 44

[62] Mr Tyler was entitled to take time off for annual leave or sick leave or other purposes, but he was expected also to make arrangements to cover his absences. He continued to be paid the retainer during such absences, with those payments being offset against his total sales commission earnings. It is noted that the entitlement provided in the National Employment Standard for payment of paid annual leave and paid personal leave is at one’s “base rate of pay”, 45 which is defined in s.16 as the rate of pay payable for the employee’s ordinary hours of work, but does not include any incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates or any other separately identifiable amounts.

[63] In substance, Mr Tyler did not have a base rate of pay, since any payments he received were incentive-based payments. Mr Tyler appears to have been provided during times of leave with what would have been his if he had been an employee, that is a weekly retainer. However, since what he was “paid” is entirely derived from his efforts when not on leave, this factor is either one that resolves in favour of Mr Tyler, or is a neutral consideration.

Distinct profession, trade or calling

[64] French Accent makes the point that persons engaged in a distinct profession, trade or calling tend to be engaged as independent contractors rather than as employees. 46 It follows the consideration given in Hollis to whether the workers were providing skilled labour or labour requiring special qualifications.47

[65] There is no evidence about whether Mr Tyler’s duties fall into the category that would be considered as being a distinct profession, trade or calling.

[66] Accordingly this is a neutral factor in my consideration.

Goodwill

[67] No goodwill has been developed by Realty Listing in respect of the services provided to JG King Homes. 48

[68] In Kimber, it was found that the absence of a goodwill or saleable asset is a factor that weighs in favour of a finding that the worker was an employee. 49 As a result, in Mr Tyler’s case, I consider that this factor is in favour of him being an employee.

Business expenses

[69] The consideration as articulated in French Accent in relation to business expenses was whether the worker under consideration spent a significant portion of his remuneration on business expenses.

[70] Against the Applicant on this criterion is the evidence about his tax affairs.

[71] Mr Tyler’s evidence about payments received from JG King Homes included that;

“Given my commission only arrangement my income was unpredictable. For example:

a. in the financial year 2012 to 2013 I earned $96,893;

b. in the financial year 2013 to 2014 I earned $113,217; and

c. from 1 July 2014 to 15 February 2015 I earned $95,164.” 50

[72] Mr Tyler provided to the Respondent and the Commission, in response to an Order to do so, a copy of his most recent personal tax return. That tax return indicates that Mr Tyler’s total income in the financial year 2012/13 was $42,622, an amount of less than half that disclosed as the total commission payments in his witness statement for the same year. His only source of income is shown in that tax return is from Realty Listing of Australia Pty Ltd, both in the form of salary or wages, and dividends.

[73] This circumstance would lead to the view that what was being paid by JG King Homes to Realty Listings was the subject of considerable and, no doubt legitimate, tax minimisation. However, there is nothing within the evidence that shows whether any significant portion was attributable to what might properly be regarded as business expenses directly relating to the company’s generation of business income from JG King Homes.

[74] Against the Respondent on this criterion is that, as referred to above;

there is no evidence that Mr Tyler provided any significant equipment or tools, or capital investment to the relationship with JG King Homes;

there is no evidence to suggest that other business expenses, such as the periodic engagement of sales hostesses or others were significant expenses.

[75] In the absence of evidence about the extent of significant, if any, business expenses being incurred by Realty Listing, the evidence before me would lead to a finding that this factor does not resolve in favour of the Respondent.

[76] Having given consideration to all of the relevant criteria, and having found that many resolve as characteristic of an employee, it is evident that, at least in the most recent years of Mr Tyler’s engagement, he was an employee for the purposes of the Act, and I so find.

Whether the Applicant was a person protected from unfair dismissal

[77] The next question for determination is whether Mr Tyler was a person protected from unfair dismissal at the time of his dismissal

[78] The Respondent argues he was not, for reason of the high income threshold. JG King Homes contended that Mr Tyler’s earnings were greater than the high income threshold, as defined in s.333 of the Act. In response, Mr Tyler contends either that his earnings were beneath the threshold, or that he is not barred from making an unfair dismissal application because his employment was subject to an award, namely the Real Estate Industry Award 2010. 51

[79] Having considered the material before the Commission regarding Mr Tyler’s earnings, I am satisfied that his earnings are beneath the high income threshold, irrespective of whether or not an award applies to his employment. For that reason it is not necessary for me to resolve the question of award coverage.

[80] In relation to Mr Tyler’s earnings, the Respondent tabled in its evidence a schedule of payments made to him for a period including all of 2014. There are some ambiguities associated with the data, principally for the reason that it does not specify with sufficient particularity the dates on which payments were made, instead grouping them into monthly periods. Notwithstanding, the schedule refers to a string of payments made in the amount of $909.09, net of GST, which was deducted on the presumption that Mr Tyler was a contractor.

[81] The evidence of Ms Brennan, the JG King Homes’ Human Resources Manager, is that those payments were made weekly. 52 Once allowance is made for those payments to be grossed up to include GST, each payment is in the amount of $999.99. Further there are six other payments made at irregular intervals and of differing amounts. The evidence of Ms Brennan is that those payments were the difference between the total commission payments to which Mr Tyler was entitled and the weekly retainer payments made to him.53 The six irregular payments made to him were as follows (all net of GST);

14/03/2014 $9,090.91

15/04/2014 $24,142.75

14/05/2014 $3,636.36

15/07/2014 $6,990.29

16/10/2014 $16,808.77

14/11/2014 $24,404.43

[82] The Act defines “earnings”, and the matters to be taken into account or excluded, in the following way;

332 Earnings

(1) An employee’s earnings include:

(a) the employee’s wages; and

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

(d) amounts or benefits prescribed by the regulations.

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

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

(b) reimbursements;

(d) amounts prescribed by the regulations.

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

[83] The reference in s.332(2)(a) to “payments the amount of which cannot be determined in advance” is elaborated upon in the Explanatory Memorandum to the Fair Work Bill 2008 as follows;

“1327. An employee’s earnings do not include payments for which a value is not ascertainable in advance (such as variable performance bonuses). This means that payments made, but which were not anticipated or agreed to in advance (either because the type of payment was not anticipated, or the value of the payment was not agreed), will not be included. A legislative note provides examples of payments that cannot be determined in advance. These payments include overtime (unless the overtime is guaranteed), commissions and incentive-based payments and bonuses.”

[84] The circumstances of the payments made to Mr Tyler include that he was entitled to be paid a commission percentage for settled sales. For practical purposes the retainer was an advance on the total commission payments paid because “contractors often would like a retainer paid to them”. 54 As a result, because the whole payments are derived from the commission arrangements, I regard all payments made to Mr Tyler to fall into the category dealt with in s.332(2)(a), namely “payments the amount of which cannot be determined in advance”.

[85] Accordingly I find that Mr Tyler’s annual rate of earnings were not in excess of the high income threshold.

[86] It follows therefore, and because of the other evidence before me about his length of employment and the size of the Respondent’s business, that Mr Tyler was at the time his employment was terminated, a person protected from unfair dismissal.

LEGISLATION

[87] The legislative provisions which are relevant to this matter are set out in s.387 of the Act, which is as follows;

387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.

CONSIDERATION

[88] In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account the legislative factors set out above.

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees)

[89] The Respondent argues that Mr Tyler was dismissed for poor performance, with it being said that Mr Tyler’s responsibility “was to introduce new sales. The number of new sales had significantly decreased in the months prior to the date of termination. There were discussions with him about that in November, about his poor performance, and there had been no improvement from that date until the date in February when the termination took effect.” 55

[90] Mr Tyler’s dismissal was communicated to him in a meeting on 16 February 2015 by Mr Penna, the companies Group Services Manager, and Mr Tim Woodward, the new Sales General Manager. While Mr Penna gave evidence in these proceedings, Mr Woodward did not.

[91] Mr Tyler’s evidence, which I accept, is that he was informed by the other two that his services were being terminated and that they presented him with a Deed of Release and told that if he refused to sign the Deed then commission payments owed to him would be withheld. Mr Tyler’s evidence is that he refused to sign the Deed and at the time of the hearing had not received commission payments, which he estimates to be in the order of $50,000. Mr Tyler’s evidence is also that he asked the reason for his termination, but that no reason was given.

[92] Mr Penna’s evidence is that the decision to terminate Mr Tyler’s contract was made around the end of January. 56 His evidence about the termination meeting is broadly consistent with that of Mr Tyler’s, with his statement indicating following;

“I requested that the applicant read the letter and the deed or release and advised him that we were providing two options. The first option was that if he signed the deed of release we would pay Realty Listing of Australia Pty Ltd the commissions in respect of the jobs that were listed subject to the job is becoming unconditional. In the event that Realty Listing of Australia Pty Ltd did not wish to sign the deed of release then it would only be entitled to commissions on jobs that were presently unconditional. The applicant advised that he would consider the options that were put to him. I have not heard any further from the Applicant in that regard.” 57

[93] Mr Jones, JG King Homes’ Central Area Manager Regional Victoria, was not involved in this meeting, but gave evidence about some of the matters that led to the termination of Mr Tyler. His evidence was that at the time of the discussion he had with Mr Tyler in November 2014, Mr Tyler’s performance dropped off to the point where continuation of the relationship was in his view unsustainable, with this evidence being given;

“Mr Jones, I want to ask you some questions in relation to the discussions you had with the applicant in November 2015 in relation to the reason why you decided to no longer continue with the services of Reality Listings of Australia Pty Ltd. Why did you come to that conclusion that you no longer wished to continue with those services?---It was based on performance.

Can you explain what had happened in regard to the performance?---Performance had dropped off. The quantity of sales per month is three. He was averaging less than or approximately 1.5 per month for that financial year.

From your perspective, did you come to the conclusion that that was, as far as a salesperson, unsustainable as far as continuing the relationship with Reality Listings of Australia Pty Ltd?---Yes.” 58

[94] Mr Tyler’s evidence regarding the discussion with Mr Jones in November 2014 included that he had been unhappy with a reduction in the Respondent’s sales commission arrangements. Having approached Mr Jones, the two went to see John King Senior, and Mr Tyler’s evidence is that he put to Mr King that he should be put on as a “staff member”, or an employee. He says that while Mr King agreed to that change in status, it never occurred. His evidence is also that he did not recollect Mr Jones having said to him on that occasion that JG King Homes had not been happy with his performance since the start of the financial year;

“And from your understanding, what was the purpose of that meeting?---The purpose of that meeting was that I had approached Wayne Jones and by stealth or deception they reduced my commission. Would you like me to explain how that happened?

No, I just want to know the purpose of the meeting?---Okay, they reduced my commission from that previous to a flat 2.5 per cent from the 3, 3.5 so on and so forth back to a flat 2.5 per cent, which I was not happy with, because it was sort of underhanded. So Wayne said, basically, "Come with me." So we went upstairs to John Senior. We sat in with John Senior and we had the discussion about that. When Wayne explained it, John said, well, that wasn't his understanding so the commission was as it stood. At that stage of the game I raised the proposition that I'd like to be put on as a staff member, on the same basis that Dean Thompson was and John basically said he couldn't see any reason why that shouldn't happen and he said, "What I will do is I'll have an agreement, a proper agreement made up for you and present it to you as at basically 1 January" - we didn't come back until after that, but it was as at 1 January, "for your approval." That didn't happen. I spoke to Wayne Jones about it on our return and he said he didn't know what was going on with the agreement, and that was pretty much it and I was finished up in February.

Do you remember Mr Jones saying to you at that meeting that they weren't happy with your performance since the start of the financial year?---No, Wayne Jones did not say that, no.

You say that that was never said?---That was never said.

You're suggesting that Mr Jones' statement in that regard is falsehood?---Yes, it is.” 59

[95] In relation to his sales performance, Mr Tyler agrees that the general objective was for two sales per month. 60 He believes that his sales had not decreased and that instead they were at a consistent level with other sales consultants, being on the whole about the same number of sales and of the same value.61 Mr Tyler’s evidence is also that he was the top or equal top sales performer for the whole company in January 2015.62

[96] Although Mr Tyler puts forward that he was dismissed because he either challenged or drew attention to the fact that he was not being treated properly as an employee, 63 which I take to be a reference to the complaint he made about changes to the JG King Homes sales commission arrangements, or that he sought to become an employee,64 there is not sufficient evidence that would allow a finding on the balance of probabilities that that was the Respondent’s reason for his termination.

[97] The reason I am left with about the termination of Mr Tyler’s services is inadequate performance, as highlighted in Mr Jones’ evidence referred to above.

[98] However, the evidence also does not allow a finding on the balance of probabilities that his sales performance was, in fact, inadequate. While there is an undertone about such in some of the material put forward by the Respondent’s witnesses, and principally in the evidence of Mr Jones referred to above, it is a very small undertone and insufficiently demonstrated for a finding to be made that it was a valid reason for his termination. While it may have been the reason for his termination, JG King Homes have not demonstrated that it is well founded or supported by the facts.

[99] The evidence also does not allow a finding that, as put forward by Mr Jones, that Mr Tyler’s performance “had dropped off”, or that “the number of new sales had significantly decreased in the months prior to the date of termination”, as was stated by the Respondent in its opening submissions.

[100] Mr Tyler’s evidence is that in financial year 2012 - 2013 he earned $96,893; in financial year 2013 - 2014 he earned $113,217; and in the period 1 July 2014 - 15 February 2015 he earned $95,164.” 65 No contrary evidence was brought forward on this subject by the Respondent, other than the general comments of sales dropping off, referred to above. Although I accept there might be a lag between the time that sales were recorded as having been made, and the eventual date on which the sales settled unconditionally, there is no evidence before me that would support the Respondent’s contentions about a reduction in sales.

[101] Accordingly I find that the Respondent had no valid reason for Mr Tyler’s dismissal that was related to his capacity or conduct (including its effect on the safety and welfare of other employees).

(b) whether the person was notified of that reason

[102] The evidence shows that Mr Tyler was not told of the reasons for his termination. When he asked for reasons from Mr Penna and Mr Woodward in the meeting on 16 February 2015 he was not given any reason.

[103] JG King Homes’ reticence in this regard continued through the making of Mr Tyler’s unfair dismissal application with its response to the application merely restating that Mr Tyler had never been employed; that there was no dismissal and if there was then he was paid more than the high income threshold. Neither did the material filed by the Respondent in preparation for these proceedings address the subject of the reason held for termination.

[104] It was left until the Respondent’s opening in the hearing before the Commission for JG King Homes to finally say that the reasons for Mr Tyler’s termination were poor performance and that in particular the poor performance upon which the company relied was that “the number of new sales had significantly decreased in the months prior to the date of termination”. 66

[105] Accordingly, I find that Mr Tyler was not notified of the reason held by JG King Homes for his dismissal at any time proximate to the dismissal.

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person

[106] Concomitant with the circumstances in which Mr Tyler was not told the reason for his dismissal, it is also the case that he was not given an opportunity to provide a response to that reason.

[107] I note, however, that in relation to the criterion of whether an employee has been given an opportunity to respond to the reason for dismissal, strictly speaking such consideration by the Commission is consequential to a finding there is a valid reason for dismissal, which I have not found. 67

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal

[108] There is no evidence that Mr Tyler sought to have a support person in attendance at the meeting at 16 February 2015, or that one was refused.

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal

[109] While Mr Jones’ evidence is that in November 2014 he had said to Mr Tyler that there was dissatisfaction with his sales performance, Mr Tyler denies that such conversation ever took place. In any event the evidence is insufficient to allow a finding in favour of Mr Jones’ contention. There is no documentary corroboration of the conversation which also involved Mr John King Senior, who did not give evidence in these proceedings.

[110] The evidence put forward by Mr Jones is unlikely when viewed in the context of it being a discussion that included Mr Tyler’s unhappiness with changes to the sales commission structure and with being a contractor, and in which Mr King gave a commitment that Mr Tyler could become an employee. Mr King’s commitment was not denied in Mr Jones’ evidence.

[111] In all, it seems highly unlikely that on the one hand a person would be told their performance was inadequate and that the conversation amounted to a warning about their continued engagement, but that in the same conversation a commitment was given to an ongoing relationship, albeit one that was to be subject to different terms and conditions.

[112] As a result I cannot accept Mr Jones’ evidence on this point and find that Mr Tyler was not warned about unsatisfactory performance before his dismissal.

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal

[113] The JG King Homes response to Mr Tyler’s unfair dismissal application indicates that at the time he was dismissed the Respondent employed about 350 people. Oral evidence was drawn from Mr Penna, presently the Group Services Manager but who previously held the position of the company’s Human Resources Manager. Evidence was also drawn from Ms Brennan who is the company’s current Human Resources Manager.

[114] There is no evidence before me to suggest that the size of JG King Homes’ enterprise reasonably had any impact on the procedures followed in effecting Mr Tyler’s dismissal. Likewise there is no evidence that the Respondent’s arrangements in respect of human resource management specialisation or expertise reasonably had an impact on the procedures it followed.

(h) any other matters that the FWC considers relevant

[115] I do not find any other matters that are relevant and which require being taken into account.

REMEDY

[116] The sections of the Act dealing with remedy once a finding of unfair dismissal has been made are set out in ss.390, 391 and 392, and include reinstatement or compensation.

[117] Pursuant to s,390(3) an order for the payment of compensation to a person must not be made unless the Fair Work Commission “is satisfied that reinstatement of a person is inappropriate” and also that the Commission “considers an order for payment of compensation is appropriate in all the circumstances of the case.”

[118] Mr Tyler submits that in all the circumstances it would be inappropriate to reinstate him, and especially in view of the fact that he commenced employment with a new employer on 1 June 2015.

[119] The Respondent submits about the possibility of reinstatement that, if it occurred “it would end up being a very difficult situation taking into account the amount of time that has passed and the circumstances in which the termination was brought about in the first place”. 68

[120] The issue of when reinstatement is inappropriate and the related question of the need for trust and confidence between the parties was recently considered at length by the Full Bench of the Commission in Nguyen and Le v Vietnamese Community in Australia t/a Vietnamese Community Ethnic School South Australia Chapter. 69

[121] I am satisfied that in all the circumstances that it would be inappropriate to reinstate Mr Tyler and that instead I should give consideration to an order for the payment of compensation. In assessing an appropriate amount of compensation, I must have regard to the provisions of s.392 and in particular the requirement that I take into account all the circumstances of the case including the criteria specified in s.392(2), to which I now give consideration;

(a) the effect of the order on the viability of the employer’s enterprise

[122] There is nothing before me which would indicate that an order of compensation in and of itself would negatively affect JG King Homes’ viability.

(b) the length of the person’s service with the employer

[123] Mr Tyler’s service with JG King Homes goes back many years, to September 1990.

(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed

[124] In matters in which compensation is a consideration, the Commission ordinarily makes an assessment of remuneration the employee lost through dismissal, which in turn requires a finding in relation to “anticipated period of employment”. The Full Bench of the Australian Industrial Relations Commission has observed the following in relation to these matters;

“[33] The first step in this process - the assessment of remuneration lost - is a necessary element in determining an amount to be ordered in lieu of reinstatement. Such an assessment is often difficult, but it must be done. As the Full Bench observed in Sprigg:

". . . we acknowledge that there is a speculative element involved in all such assessments. We believe it is a necessary step by virtue of the requirement of s.170CH(7)(c). We accept that assessment of relative likelihoods is integral to most assessments of compensation or damages in courts of law."

[34] Lost remuneration is usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment. We refer to this period as the "anticipated period of employment". This amount is then reduced by deducting monies earned since termination. Only monies earned during the period from termination until the end of the "anticipated period of employment" are deducted. An example may assist to illustrate the approach to be taken.” 70 (endnotes omitted)

[125] Mr Tyler was successful in obtaining employment with another firm commencing on 1 June 2015, which means that he was without employment for slightly more than 15 weeks, being the period between 16 February 2015 and 1 June 2015. In that time Mr Tyler’s loss as a result of his dismissal was the 15 weeks of commission earning, which included being paid a retainer $1000 at weekly intervals. The total amount of those earnings are unable to be determined in advance, as detailed above.

[126] Within Ms Brennan’s evidence there is a schedule of the payments that were made to Mr Tyler from 1 December 2013. That schedule shows six payments, apparently for the purposes of sales commission. Those payments are at irregular intervals and of irregular amounts. The payments were made in March 2014, April 2014, May 2014, July 2014, October 2014 and November 2014 and range between $3,636.36 and $24,404.43 (all without GST, which as discussed previously was presumed to be required to be deducted).

[127] In addition, it is Mr Tyler’s evidence that having been dismissed on 16 February, it was put to him that if he was prepared to sign a Deed of Release then JG King Homes would pay to him certain sales commissions that had accrued to that point. While the Respondent’s material does not quantify those payments, Mr Tyler estimates the sales commissions foregone as being around $50,000. 71

[128] As the relationship stood in February 2015, I estimate that the “anticipated period of employment” remaining for Mr Tyler was a period of perhaps no more than six months. While it is possible that it may have continued further, that seems unlikely.

[129] There are potentially two matters that give rise to that uncertainty. In November 2014, when Mr Tyler met with Mr Penna and Mr King Senior, he obviously had concerns about changes to his remuneration that worked against him. Whether those concerns could be satisfactorily alleviated is unclear. In addition, the engagement of a new Sales General Manager, Mr Woodward, appears to have brought with it the prospect of further change that might work against Mr Tyler. It is likely that Mr Tyler would have had his working arrangements changed at the direction of JG King Homes, and in all likelihood also faced having different performance requirements imposed on him.

[130] These factors combined would reasonably suggest a parting of the ways of Mr Tyler and JG King Homes at some point in the months following February 2015.

[131] As a result, I consider it more likely than not that the relationship would not extend beyond six months, and perhaps only as far as the 15 weeks it took for Mr Tyler to gain alternative employment.

[132] Given where the parties stood in February 2015, I consider it likely that Mr Tyler’s employment with JG King Homes would not have continued beyond a period of 4 months from that time.

(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal

[133] The evidence includes that Mr Tyler made efforts to find alternative employment after being terminated by JG King homes. While there is not significant evidence before the Commission about the extent of Mr Tyler’s activities in obtaining further employment, he was ultimately successful in those endeavours being employed by another company on 1 June 2015, albeit subject to different and potentially less beneficial arrangements.

(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation

[134] Mr Tyler was successful in obtaining employment elsewhere on 1 June 2015. Instead of being paid entirely on the basis of sales commission, the arrangement, as advised in correspondence to my Chambers after the completion of the hearing, is that Mr Tyler was to be paid on the basis of $40,000 per year, with access to a commission arrangement of a flat 1.5% of sales achieved, presumably of settled sales.

[135] Several payslips were provided from Mr Tyler’s new employer which confirm these payments and that he appears also to be entitled to public holiday penalty payments and the payment of the superannuation guarantee. In addition, the payslips indicate that Mr Tyler will, in his new employment, have access to paid annual leave and personal leave, which stands in contrast with the arrangements with JG King Homes where neither was paid.

[136] In the 2 ½ weeks to 17 June 2015, Mr Tyler earned from his new employer $1,846.

[137] In view of my finding about the anticipated period of employment being 4 months from 15 February 2015, I consider any deduction from compensation for post-employment earnings should only be for his new employer earnings to 17 June 2015, and that it is not appropriate to take into account his new employer earnings after that date. Accordingly, I will deduct the amount of $1,846 from the compensation ordered.

(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation

[138] In relation to this criterion, I take into account that it is likely that Mr Tyler will be paid the same arrangements referred to above between the date on which the order is made and the date on which compensation is paid.

(g) any other matter that the FWC considers relevant.

[139] I am not aware of any other considerations which might be relevant to the order of compensation, and have considered all of the circumstances of the case in determining an appropriate remedy.

CONCLUSION AND ORDERS

[140] After consideration of the foregoing issues, I find that the Applicant was dismissed and that it was unfair within the meaning of the Act.

[141] I find that reinstatement is not an appropriate remedy in this case.

[142] I find that compensation is appropriate.

[143] The approach by the Fair Work Commission in these matters, and which I follow here, is to estimate the remuneration the employee would have received if they had not been dismissed (usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment); deduct any remuneration earned by the employee since their dismissal until the end of the anticipated period of employment; deduct an amount for contingencies; consider the impact of taxation and adjust the figure accordingly; and assess the figure against the compensation cap set by s.392(5). 72

[144] The Full Bench in the Haigh v Bradken Resources Pty Ltd 73 has recently clarified the assessment of compensation and connected issues that require dealing with, including the deductions of amounts for misconduct, and consideration of the compensation cap. So far as is relevant to this matter, the Full Bench found;

“[10] The frequently quoted case on compensation calculations is Sprigg v Paul Licensed Festival Supermarket in which a Full Bench of the Australian Industrial Relations Commission (AIRC) confirmed the following steps in determining compensation under the unfair dismissal provisions of the Workplace Relations Act:

“1. Estimate the amount the employee would have received or would have been likely to receive if the employment had not been terminated,

2. Deduct monies earned since termination,

3. Deductions for contingencies,

4. Calculate any impact of taxation,

5. Apply the legislative cap.”

...” 74 (references omitted)

[145] As referred to above, I consider that Mr Tyler may have continued working for JG King Homes for a further 4 months from February 2015 and base my estimate of the amount he would have received if his employment had not been terminated upon that period.

[146] The fact that Mr Tyler’s remuneration was entirely based upon sales commissions and that he was advanced from those commissions a weekly retainer, later settled-up against the total, means it is difficult to estimate with any precision the amount of remuneration that Mr Tyler would have received in the six month period after 15 February 2015.

[147] The additional commission payments, or “settling-up” payments, Mr Tyler received in the six months prior to termination, as set out in the Respondent’s material, are not a great indicator, for the reason that the amounts were made irregularly and are different. There are only two such payments in the prior six months; firstly an amount of $16,808 on 16 October 2014, and an amount of $24,404 on 14 November, both amounts being net of GST.

[148] Whereas Mr Tyler estimates that at the time he was dismissed he was due a further $50,000 in commission payments, I have no evidence that would support that proposition.

[149] Such evidence as is available to me would indicate that Mr Tyler was consistently generating sales commission earnings at more than twice the rate of the retainer payment to him. If the Respondent’s material about payments to Mr Tyler is to be relied upon it can be inferred that there were payments to Mr Tyler, net of GST, of more than $63,000 in the 26 weeks prior to his termination. Given the irregularity of the commission payments to him and their quantum, I do not consider it appropriate to rely upon an estimation at that level. However I consider that the evidence would show Mr Tyler could be expected to earn not less than $35,000 in the 4 months I have set as the “anticipated period of employment”.

[150] Because I have had to estimate forward earnings, in a manner with greater uncertainty than usual, I do not consider it appropriate to make a deduction from the amount to be awarded for contingencies.

[151] Therefore in accordance with the authorities on the assessment of compensation, I estimate that Mr Tyler, had he not been dismissed, would have received a further $35,000. I deduct from that $1,846, in recognition of the amounts he has earned since termination since those earnings commenced very near to, or after, the anticipated period of employment to which I have referred. That deduction leaves the amount of $33,154.

[152] The above amount does not exceed the “compensation cap” applying at the time of dismissal.

[153] My order for compensation will be for an amount of $33,154, from which tax will be deducted according to law.

[154] An order to the above effect will be issued in conjunction with this decision.

COMMISSIONER

Appearances:

Mr A Bell (Counsel) for the Applicant

Mr M Caldwell (solicitor) for the Respondent

Hearing details:

2015

Melbourne

17 June

1 [2015] FWCFB 3704

2 Ibid, at [40] – [42]

3 [2011] FWAFB 8307, (2011) 215 IR 235, at [30]

4 (1986) 160 CLR 16

5 [2001] HCA 44, (2001) 207 CLR 21, 106 IR 80, at [58]

6 Abdalla v Viewdaze (2003) AIRCFB, 121 IR 215, at [33]

7 Ace Insurance v Trifunovski (2013) 235 IR 115, at [93]

8 Ibid, at [66]

9 Ibid, at [75]

10 (2003) 121 IR 215, at [34]

11 [2011] FWAFB 8307, (2011) 215 IR 235, at [30]

12 Transcript, PN 944

13 Ibid, PN 946

14 Ibid, PN 954 – 956

15 Ibid, PN 965

16 Exhibit A3, para 5

17 Abdalla v Viewdaze (2003) AIRCFB, 121 IR 215, at [47] – [48]

18 Exhibit A3, para 28; Transcript, PN 1224 – 1225

19 Transcript, PN 685 – 688

20 Ibid, PN 549 – 550

21 Exhibit R4, para 18

22 Transcript, PN 696 – 697

23 Ibid, PN 925 - 926

24 Ibid, PN 700

25 French Accent, [2011] FWAFB 8307, (2011) 215 IR 235, at [30]

26 Exhibit A3, para 17; Transcript, PN 199 – 208

27 Transcript, PN 209

28 Ibid, PN 528 - 535

29 Ibid, PN 528

30 Ibid, PN 681 – 688

31 Exhibit A3, para 30

32 Transcript, PN 1225 - 1227

33 Stevens v Brodribb Sawmilling, (1986) 160 CLR 16, p.36, per Wilson, Dawson JJ

34 Ace Insurance v Trifunovski (2013) 235 IR 115, at [93]

35 Exhibit R5, Attachment KP-1

36 Exhibit A3, Attachment TT-4

37 Transcript, PN 194

38 Ibid, PN 513 – 515

39 Ibid, PN 798

40 Hollis v Vabu [2001] HCA 44, (2001) 106 IR 80, at [52], per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ

41 [2013] FCAFC 3, 235 IR 115, at [34] – [36]

42 [2011] FWAFB 8307, (2011) 215 IR 235, at [30]

43 Transcript, PN 657

44 [2011] FWAFB 8307, (2011) 215 IR 235, p.247

45 See Fair Work Act 2009, s.90 and s.99

46 215 IR 235, p.247

47 [2001] HCA 80, at [48], per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ

48 Exhibit A3, para 13; Transcript, PN 1207 - 1211

49 [2015] FWCFB 3704, at [50]

50 Exhibit A3, para 34

51 MA000106

52 Transcript, PN 660

53 Ibid, PN 661 - 662

54 Ibid, PN 657

55 Ibid, PN 65

56 Ibid, PN 743

57 Exhibit R5, para 4

58 Transcript, PN 97 - 99

59 Ibid, PN 1231 -1235

60 Ibid, PN 1302

61 Ibid, PN 1307

62 Ibid, PN 1309 – 1311

63 Exhibit A2, para 9

64 Transcript, PN 1232

65 Exhibit A3, para 34

66 Transcript, PN 63 – 65

67 Chubb Security Australia Pty Ltd v Thomas (2000), Print S2679, at [41].

68 Transcript, PN 1658

69 [2014] FWCFB 7198

70 Ellawala v Australian Postal Corporation, AIRCFB (2000), Print S5109, at [33] and [34].

71 Exhibit A2, para 8

72 See Sprigg v Paul’s Licensed Festival Supermarket (1998) 88 IR 21, 32, and Ellawala v Australian Postal Corporation (2000) Print S5109 [33].

73 [2014] FWCFB 236

74 Ibid, at [10]

Printed by authority of the Commonwealth Government Printer

Mr Tom Tyler v JG King Homes

[2015] FWC 6352

18 SEPTEMBER 2015