[2014] FWC 5896

FAIR WORK COMMISSION

DECISION

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

Mr Wayne Millar
v
Bin Maintenance Australia Pty Ltd
(U2013/14942)

DEPUTY PRESIDENT ASBURY

BRISBANE, 26 AUGUST 2014

Application for unfair dismissal remedy - Arbitration.

BACKGROUND

[1] Wayne Millar applies for an unfair dismissal remedy under s.394 of the Fair Work Act 2009 (the Act). The Respondent - Bin Maintenance Australia Pty Ltd - asserts that Mr Millar was engaged as an independent contractor and objects to the application on the basis that he was not an employee and is not entitled to make an application for an unfair dismissal remedy.

[2] The Respondent provides services to the Gold Coast City Council in accordance with a contract under which it collects, repairs, maintains and delivers plastic waste bins throughout the contract area. The Respondent has maintained that contract for 15 years and it has been renewed every five years.

[3] The Respondent contends that it engaged an entity that was a partnership between the Applicant and his wife which later became Jim’s Bookkeeping Northern Gold Coast, to administer its contract with the Gold Coast City Council and ensure that the contract was performed as required. The Respondent contends that the partnership and later Jim’s Bookkeeping had an Australian Business Number (ABN) and provided monthly tax invoices and charged GST for administrative services. The Applicant contends that he was employed by the Respondent in or around December 2007 and that he provided invoices only because this was required by the Respondent.

[4] The Applicant further contends that he disputed the basis upon which the Respondent paid him and the failure to deduct PAYG taxation or to pay superannuation contributions on his behalf, throughout the period he worked for the Respondent. The Applicant made a complaint to the Australian Taxation Office in October 2013 which made a ruling to the effect that he was entitled to superannuation contributions on the basis that he was employed by the Respondent.

[5] The invoices tendered in the hearing are from a pre-printed invoice book which allows the original to be torn along a perforated line and a carbon copy to be retained. The heading is “Tax Invoice/Statement (delete as appropriate)”. Neither the term “Tax Invoice” nor the term “Statement” has been deleted from the top of the documents. For ease of references these documents are referred to in this Decision as invoices. The invoices also have a box which can be filled in to indicate the amount of GST that is included in the invoice total. Some of the invoices tendered have GST amounts set out on them. Whether the Applicant wrote all of the invoices and whether he wrote the amounts of GST on the invoices is disputed. The issue of how GST was dealt with in whatever relationship existed between the Applicant and the Respondent is also in dispute.

[6] The Applicant contends that his role with the Respondent was Logistics Co-ordinator, Administration Officer, Truck Driver and Labourer and that 80 - 90% of his work was performed in the capacity of Truck Driver and Labourer. This work was said to involve driving trucks and a utility provided by the Respondent, for the purpose of collecting bins and removing dead animals from roads.

[7] On 20 November 2013, the owner of the Respondent Mr Dudley Monement wrote to the Applicant, terminating his “Administration Services” with effect from that date, on the basis that Mr Monement had decided to use another administrative service due to its ability to serve him better. In his evidence to the Commission Mr Monement said that he terminated the contract with Jim’s Bookkeeping because the Applicant had engaged in misconduct by inviting a senior manager of a competitor onto his business premises. The Applicant disputes this allegation and maintains that he was unfairly dismissed.

[8] It was determined to hold a hearing in relation to the application taking into account the views of the parties and my view that a hearing would be the most effective and efficient way to resolve the matter. It was also decided, with the agreement of the parties and in the interests of efficiency, that the hearing would deal with both the Respondent’s jurisdictional objection, and the question of whether if that objection was not upheld, the Applicant was unfairly dismissed. Permission for the Respondent to be legally represented was granted on the basis that it would enable the matter to be dealt with more efficiently taking into account its complexity. The Respondent also gave an undertaking that it would not seek costs against the Applicant in the event that its jurisdictional objection was upheld.

THE ISSUES IN DISPUTE

[9] It is not in dispute that if the Applicant is found to have been employed by the Respondent, he was a person protected from unfair dismissal and that he has been dismissed. It is also not in dispute that the Respondent is a small business employer and the question of whether the dismissal was consistent with the Small Business Fair Dismissal Code will be relevant in the event that the Applicant is found to be an employee and it is necessary to determine whether the Applicant was unfairly dismissed.

[10] The issues in dispute can be summarised as follows:

1. Was the Applicant a national system employee as defined in s.13 of the Act;

2. If the Applicant was a national system employee, was the Applicant’s dismissal consistent with the Small Business Fair Dismissal Code; and

3. If the dismissal was not consistent with the Code was it unfair on the basis that the dismissal was harsh, unjust or unreasonable, when considered against the criteria in s.387 of the Act.

WAS THE APPLICANT AN EMPLOYEE?

Approach to determining whether Applicant was an employee

[11] It is axiomatic that a prerequisite to making an application for an unfair dismissal remedy is that the person making the application must have been an employee. In Abdallah v Viewdaze Pty Ltd 1 (Abdallah) a Full Bench of the Australian Industrial Relations Commission (AIRC) extensively reviewed the authorities setting out principles relevant to determining whether an employment relationship exists. The starting point is an analysis of the totality of the relationship2 including the nature of the work performed, the manner in which it is performed3 and the terms and terminology of the contract4. However, as Justice Gray observed in Re Porter; Re TWU:5

“A court will always look at all the terms of the contract, to determine its true essence, and will not be bound by the express choice of the parties as to the label to be attached to it….the parties cannot create something which has every feature of a rooster, but call it a duck and insist that everybody recognises it as a duck.”

[12] It is also necessary to make findings about what have variously been referred to as principles, criteria, tests or indicia of the relationship. These were summarised by the Full Bench in Abdallah as follows:

• whether the putative employer exercised or has the right to exercise control over the manner in which work is performed including the place of work, hours of work and similar matters;

• whether the worker performs work for others, or has a genuine and practical entitlement to do so;

• 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;

• whether the work can be delegated or subcontracted;

• 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;

• 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;

• 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;

• whether the worker creates good will or saleable assets in the course of his or her work; and

• whether the worker spends a significant portion of his remuneration on business expenses. 6

[13] In carrying out this exercise, not all of the indicia will be relevant, and it will be necessary to weigh or balance them. Some will be given more weight than others based on the nature of the work performed and the manner in which it is to be performed. 7 The Full Bench in Abdallah also said that the list is not exhaustive and that features of a relationship that do not appear in the list may be relevant to the determination of the ultimate question.

[14] It was also the view of the Full Bench in Abdallah that if, after weighing these indicia, the result is still uncertain, then the determination should be guided by the notions referred to in the judgment of the majority in Hollis v Vabu 8 including the statement that the distinction between an employer and an independent contractor “is rooted fundamentally” in the difference between a person who serves his or her employer in the employer’s business with little or no independence in the conduct of operations as distinct from a person who carries on his or her own trade or business.9

Evidence in relation to whether Applicant was an employee

The terms of the contract

[15] The Applicant and his wife were partners in an entity named M.F. Millar & W.K. Millar. Historical details obtained from an ABN lookup undertaken by Mr Monement, and tendered as an annexure to his witness statement, indicate that an ABN for that entity was registered from 22 November 2004 and is current. The relevant ABN number is 81 821 751 598. The entity is said to be a family partnership and was registered for goods and services tax for the following periods:

• 1 January 2010 to (current)

• 1 December 2005 to 12 April 2007.

[16] The registration of the partnership for goods and services tax was cancelled for the period from 13 April 2007 until 31 December 2009. From 21 February 2012, the trading name of the entity was changed to Jim’s Bookkeeping North Gold Coast. The ABN was cancelled from 31 December 2013.

[17] It appears that the partnership was originally formed to enable the Applicant and Mrs Millar to operate a number of businesses including a hairdressing salon and a hotel. The ABN for the partnership was used by the Applicant to invoice the Respondent when he started to perform work for the Respondent with respect the Gold Coast City Council contract. Mrs Millar said that she purchased a Jim’s Bookkeeping franchise on or around February 2010 with a proposed start date of 1 March 2010. The franchise was surrendered on 31 October 2012. Mrs Millar tendered documentation received from ASIC in relation to these matters.

[18] Mr Monement said that the Applicant was known to him by virtue of having been employed as a driver in companies previously operated by Mr Monement or his family. According to Mr Monement the Applicant approached him to see whether an administration and bookkeeping service run by the Applicant and his wife as a partnership, might be contracted to undertake all logistical, despatch, administrative, customer liaison, recruitment and training services associated with the Respondent’s contract with the Gold Coast City Council.

[19] According to Mr Monement, the partnership constituted by the Applicant and his wife was subsequently contracted to undertake that work. It was also agreed that the Applicant, on behalf of the partnership would undertake interviews and administer the hiring or contracting of drivers required to perform the work under the contract. This arrangement continued until early 2010 when Mr Monement was advised that the partnership had developed into a formal business - Jim’s Bookkeeping North Gold Coast (Jim’s Bookkeeping). The Applicant requested that Jim’s Bookkeeping assume the role of service provider using the same ABN as had been previously used by the partnership and Mr Monement agreed to that request.

[20] There was no written contract between the Applicant and the Respondent or the partnership and the Respondent. Mr Monement maintained that the contract with the Gold Coast City Council was shown to the Applicant and it was agreed that this contract would represent the basic framework for the scope of work for Jim’s Bookkeeping. Mr Monement said that he made it clear to the Applicant that he wanted no further input at all in respect of the duties and that Jim’s Bookkeeping was to handle every aspect, only consulting him where there were problems and concerns. This allowed Mr Monement to operate the business and deal with the Gold Coast City Council as required, which was itself a full time role.

[21] The Applicant maintained that he was employed by the Respondent and that there was no approach to Mr Monement that included his wife and no agreement that the partnership or Jim’s Bookkeeping would contract with the Respondent for the provision of administration or any other services. Mrs Millar said that she had never entered into an agreement with the Respondent either under the auspices of the partnership or Jim’s Bookkeeping. Mrs Millar also said that at the time the Applicant met with Mr Monement to discuss working for the Respondent, Mrs Millar was working as a full time employee for Classic Holidays. Mrs Millar held a position in debt collection with that company from 18 July 2005 until 4 March 2010.

[22] Mrs Millar further stated that under the terms of Jim’s Bookkeeping protocol and requirements relating to her membership of the Institute of Certified Bookkeepers, Jim’s Bookkeeping would have formalised an agreement with the Respondent including a confidentiality agreement and a schedule of fees and services. Any fees for Jim’s Bookkeeping would have been required to be billed through MYOB accounting software. Further, Mrs Millar said that she cancelled the business name of Jim’s Bookkeeping North Gold Coast Franchise with ASIC on 7 November 2012 and would have been required to formally advise the Respondent of this fact if there had been a contractual relationship between Jim’s Bookkeeping and the Respondent.

[23] The Applicant also maintained that he had never been shown the contract between the Respondent and the Gold Coast City Council, but said that there were verbal discussions about what the requirements of the Council were.

The manner in which work was performed

[24] Mr Monement said that the Respondent did not impose working hours on Jim’s Bookkeeping and the Applicant and Mrs Millar decided when and where the required duties were to be provided. The Respondent did not impose any requirements other than that the duties necessary to perform its obligations under the contract with the Gold Coast City Council were performed.

[25] Mr Monement also said that it was agreed between the Respondent and Jim’s Bookkeeping that as long as duties were performed adequately and in accordance with the contract with the Gold Coast City Council and the sub-contract between the Respondent and Jim’s Bookkeeping, that there was no requirement for either the Applicant or his wife to be present at the Respondent’s premises at any set times and work could be performed at any time and externally.

[26] The Applicant said that his working hours were Monday to Friday from 5.00 am to 1.00 pm and he was required to be at the Depot between those hours other than when he was driving to collect bins or dead animals or other duties as required by the Respondent. The Applicant also said that he was required to be on call from 1.00 pm to 4.40 pm Monday to Friday to answer any queries from the Gold Coast City Council. The Applicant maintained that he worked on a continuous basis for the Respondent for a period of six years, at an average of 38 hours per week, plus an additional 10 – 15 hours taking into account the time that he was required to be on call.

[27] The Applicant also maintained that he spent a significant proportion of his time driving and undertaking labouring work. Mr Monement said that this type of work would have been performed by the Applicant for no more than two or three hours per week. Mr Monement also said that the Applicant might have used the utility vehicle he was provided with to work in distant areas where the Respondent did not run a truck.

[28] The Applicant agreed under cross-examination that during a period when his wife was recovering from surgery, he would go home in the morning to assist her to put on surgical stockings. The Applicant maintained that he did this while driving to various locations to perform work for the Respondent and that it took a very short period of time.

[29] Mr Monement disputed that the Applicant worked a 38 hour week and said that he could work whatever hours he wanted to work during daylight hours, to perform his duties. Mr Monement agreed that the Applicant was required to be on call between 1.00 pm and 4.40 pm to answer any queries from the Council.

[30] In an attempt to establish that there was a contract with Jim’s Bookkeeping, Mr Monement tendered documents said to be examples of Mrs Millar performing work for the Respondent under the auspices of Jim’s Bookkeeping. These documents comprised two emails sent by Mrs Millar under her Jim’s Bookkeeping signature block to the Applicant. There are invoices from the Respondent attached to one of those emails which were prepared by Mrs Millar and forwarded to third parties for payment.

[31] In relation to these documents the Applicant said that his duties included preparing two invoices for the Gold Coast City Council each month on behalf of the Respondent. The Applicant said that he is not computer literate and the Respondent did not have accounting software. He would put raw data needed to calculate the amount to be invoiced to the Council into a spread sheet, and his wife would assist him by generating the invoices on her computer and emailing them to the Applicant. The two emails tendered by the Respondent were explained on the basis that on those occasions Mrs Millar inadvertently sent the invoices from her Jim’s Bookkeeping email address. Mrs Millar said that she spent approximately ten minutes of her time each month preparing these invoices, and did this simply to assist the Applicant.

[32] Under cross-examination, Mr Monement agreed that this was the only work that Mrs Millar performed in relation to the contract between the Applicant and the Respondent. Mr Monement also agreed that he had never entered into an agreement of any kind with Mrs Millar to do any work for the Respondent. In response to questions from the Commission, Mr Monement said that he referred to Jim’s Bookkeeping and the partnership being engaged, only because those entities had the ABN that was included on invoices supplied by the Applicant.

Method of payment and taxation issues

[33] Mr Monement said that it was agreed that Jim’s Bookkeeping would invoice the Respondent on a monthly basis and that payment would be made against tax invoices indicating the ABN for Jim’s Bookkeeping and the GST payable. The Applicant later requested that the amount of the monthly invoice be split into weekly payments and this was agreed. A CPI increase was to be applied to the contract payments on an annual basis. The initial monthly payment was $4000 per month plus GST, paid as $1000 per week plus $100 GST. Mr Monement also said that the Applicant was paid for unscheduled services at an hourly rate which started at $76.00 per hour and then rose to $80.00 per hour during the contract term.

[34] Mr Monement tendered a bundle of invoices from the Applicant. 10 There are a series of invoices with sequential numbers from 56 to 65 covering the period from 31 January 2013 to 31 October 2013. Those invoices state that the amounts are wages for each month and are for four or five weeks at a rate of $1,253.00 per week. There are invoices for 2008 and 2009 which simply set out a weekly amount without designating that it is for wages. Some of the monthly invoices from 2009 and 2010 have amounts for GST inserted into a box on the invoice and others have an annotation stating that the amount is inclusive of GST written diagonally across the invoice.

[35] The Applicant contended that he had not included GST in the monthly amounts charged by him. The Applicant also contended that at the time he was working for the Respondent, the partnership with his wife was not registered for GST and could not charge for it. The Applicant further contended that Mr Monement would have known that this was the case. Mrs Millar said that she was aware that the Applicant was providing an ABN to the Respondent from 2007 to 2013 and said that he was required to do this in order to be paid. In relation to GST, Mrs Millar said that there is a benchmark of $75,000 per annum and below that amount there is no requirement to pay GST. The GST registration for the partnership was cancelled by Mrs Millar in 2007 and only reactivated in 2010 when she registered her Jim’s Bookkeeping franchise for GST.

[36] An original invoice book was tendered by the Applicant for the period 31 December 2008 until 25 December 2009. That book has missing invoices and there are several in 2008 where it appears that the Applicant has included an amount of GST on the invoice and whited it out using liquid paper. The Applicant was shown a number of invoices where entries had been whited out and agreed that he may have written an amount for GST on those invoices in error and deleted it. The Applicant said that he had not written the annotations in relation to GST on the invoices he had provided to the Respondent. The invoice book also contains invoices issued in the names of other persons. The Applicant was not cross-examined about these.

[37] Mr Monement agreed that his Accountant had made the handwritten diagonal annotations on the invoices in relation to GST. In response to the proposition that a simple search would have established that the partnership between the Applicant and his wife was not registered for GST, Mr Monement questioned why the monthly rate paid to the Applicant was not reduced to $1,000.00 rather than being charged as $1,000.00 plus $100.00 GST.

Leave

[38] The Applicant said that Mr Monement allowed a week of leave each year and that he took leave on a number of occasions while working for the Respondent. The Applicant said that he was paid for those periods. The Applicant also said that on one occasion in 2009 he was hospitalised but nonetheless continued to receive his weekly payments.

[39] Mr Monement said that his daughter would go and fill in for the Applicant on the occasions he was absent from work and that the Applicant should have been paying Mr Monement’s daughter to fill in for him. Mr Monement agreed that when the Applicant was absent on these occasions nothing was deducted from his weekly pay.

Delegation or sub-contracting of work

[40] Mr Monement put evidence before the Commission in an attempt to establish that the Applicant performed work for third parties and that he engaged persons to do work on his behalf. It appears from that evidence that the normal work undertaken pursuant to the contract with the Gold Coast City Council was performed Monday to Friday. In addition, there were special events – for example the Gold Coast Boat Show. For these events, the Applicant would provide a quote to a third party and use the Respondent’s trucks to take bins to that event. Mr Monement said that the Applicant would pay the Respondent for the hire of the trucks and would split the payment he received for doing the job with the Respondent. The Applicant said that he did this work on behalf of the Respondent and gave most of the money he was paid to the Respondent.

[41] There was also evidence of a system under which bins were washed after these events. It appears from the evidence that the Gold Coast City Council paid Mr Monement an amount of $2.00 per bin washed. Mr Monement retained $1.00 of the amount paid for each bin. According to Mr Monement, he paid the Applicant $1.00 per bin washed and the Applicant would arrange for other persons to do this work and pay them $0.50 per bin while retaining $0.50 per bin for himself. Mr Monement tendered invoices for bin washing which stated that they were from the Applicant and included the ABN for the partnership/Jims Bookkeeping. Mr Monement also tendered cheque butts indicating that amounts matching those invoices were paid to the Applicant. Further, Mr Monement tendered witness statements from two persons who stated that they had washed bins and been paid by the Applicant for performing that work. Neither of those persons were available for cross-examination.

[42] The Applicant denied that he had prepared the invoices for bin washing and Mr Monement agreed that the Applicant had not prepared them. The Applicant also denied that he had received the amounts of money evidenced by the cheque butts. According to the Applicant, Mr Monement would write out cheques and the Applicant would cash those cheques and pay employees of the Respondent or persons who worked for the Respondent $1.00 per bin to wash bins. On some occasions friends of persons who worked for Mr Monement and who wanted to make some extra money would also wash bins. Mr Monement would also include amounts for petty cash in the cheques for bin washing. The Applicant agreed that he sometimes washed bins and received $1.00 per bin for each bin he washed, the same as the rest of the persons who did this work.

[43] There was evidence that the Applicant performed work loading bins onto a truck owned by a company known as Q Waste Consultancy. The Applicant agreed that he earned approximately $1000.00 per quarter from this work. The work of loading the truck belonging to Q Waste Consultancy was done at the Respondent’s premises and I can only assume that the bins that were loaded onto the truck were the property of the Respondent. The Applicant said that Q Waste Consultancy is owned by Mr Monement’s son. The Applicant also said that this work was done outside his working hours for the Respondent. The Applicant was shown invoices from Q Waste Consultancy that included GST and was not aware of whether he had paid the GST.

[44] The Applicant was also cross-examined about a sale he made on his own account in November 2010 of 50 bins to a company called Superior Walls and Ceilings. Under cross examination the Applicant agreed that he sold the bins to this company for an amount of $1,950 which he retained and split with another unidentified person. The Applicant conceded that the bins he sold were the Respondent’s property but maintained that he did this on only one occasion. The Applicant further conceded that Mr Monement was not aware of the transaction but said he would have approved of it if he got his cut. In response to a question from the Commission, the Applicant confirmed that Mr Monement did not get a cut of the money the Applicant was paid in respect of the transaction.

[45] An invoice prepared by Mrs Millar with respect to this transaction was tendered by Mr Monement. The invoice is numbered 1013 and has a purchase order number. Set out in this invoice are contact telephone numbers for the Applicant and the same ABN that he used to invoice the Respondent. The invoice also contains the Applicant’s bank account details for payment of the amount invoiced and is said to include GST of $175.00. The bank account is in the name of the Applicant and his wife. For reasons not explained, Counsel for the Respondent focused his attention on this transaction as evidence that the Applicant had contractual relationships with third parties, rather than whether the transaction was dishonest, and did not cross-examine the Applicant about this aspect.

Other relevant matters

[46] There is no evidence that the Applicant provided any tools or equipment for the performance of his work for the Respondent. The Respondent provided the Applicant with a utility vehicle to carry out duties. The Respondent also paid all insurances on the basis that it was contractually required to do so under the terms of its contract with the Gold Coast City Council.

[47] The Applicant tendered a business card and contended he was required by the Respondent to obtain it. The Applicant also said that he was provided with a work shirt that had the Respondent’s logo embroidered on it. He had a base location to work from and was not required to pay any rent or contribute to amenities. Insurances were provided by the Respondent and the Applicant was not required to hold any insurances on his own behalf. The Applicant also tendered his 2013 Tax Return to indicate that he claimed only accounting, laundry and protective clothing as deductions and did not spend a significant proportion of his income from the Respondent on business expenses. The Respondent provided the Applicant with equipment, tools of trade, plant and vehicles to do his work.

[48] Mr Monement disputed that the business card was provided by the Respondent and said that the Applicant had it made up on his own account. Mr Monement also tendered statements from persons indicating that the Applicant was their point of contact in dealings with the Respondent. There is no indication that the Applicant generated good will or saleable assets in the course of his work for the Respondent and he did not appear to have any specialist skills.

Conclusion in relation to whether Applicant was an independent contractor

[49] I did not find either the Applicant or Mr Monement to be particularly credible or compelling witnesses. The Applicant was evasive in relation to some matters, and appeared to be putting a spin on the responses he gave under cross-examination to support his contentions about being an employee rather than simply answering the questions he was being asked. The Applicant’s evidence about the sale of bins belonging to the Respondent to a third party was particularly incongruous. However this matter is not determinative of the nature of the relationship between the Applicant and the Respondent.

[50] The evidence of Mr Monement was equally incongruous, as was his propensity to put a spin on various aspects of his evidence. Despite his insistence that he had engaged the partnership and/or Jim’s Bookkeeping, Mr Monement had no discussion at all with Mrs Millar about this fact and conceded that the only involvement on her part was the preparation each month of two invoices to assist the Applicant. Mr Monement’s evidence that the work the Applicant performed for Q Waste Consultancy indicates he was conducting his own business is another example of putting a spin on evidence. The facts of the matter were that Q Waste Consultancy was owned by Mr Monement’s son and the Applicant was paid to load bins owned by Mr Monement onto the truck owned by his son’s business. Those facts are not suggestive of the Applicant operating his own business or contracting with third parties. The fact that the Applicant was paid for his time doing this by Q Waste Consultancy is also not determinative.

[51] Notwithstanding my reservations about the credit of both the Applicant and Mr Monement, on balance, I am satisfied that the relationship between the Applicant and the Respondent was an employment relationship. In reaching this conclusion I have weighed all of the evidence. When the indicia of the relationship are considered, the balance favours a finding that it is an employment relationship. There was no written contract between the Applicant and the Respondent.

[52] Regardless of the presence or absence of Mr Monement at the Respondent’s business premises, he exercised control over the Applicant by virtue of requiring him to administer the contract between the Respondent and the Gold Coast City Council. The Applicant was at work for the first part of each day on which he performed work, and on call for the latter part of the day. That the Applicant went home on some occasions during the day to care for his wife who was recovering from surgery, is not an indication that he was an independent contractor. The Applicant’s uncontested evidence was that he went home for this purpose on his way to collect bins for the Respondent.

[53] For the reasons set out above, the work the Applicant performed for Q Waste Consultancy is not a sufficient basis for me to find that the Applicant performed work for others and had a genuine and practical entitlement to do so. The Applicant was simply facilitating the provision of bins that were the property of Mr Monement’s company to his son’s company and was being paid for the additional time he spent loading those bins.

[54] There is no basis upon which I could be satisfied that the Respondent engaged the partnership of the Applicant and his wife or Jim’s Bookkeeping. That the Applicant used the partnership’s ABN and that his wife prepared two invoices a month for the Respondent was explained by the evidence of the Applicant and his wife. The Applicant used the ABN in order to be paid and his wife prepared the invoices to assist him to do his work for the Respondent.

[55] The Applicant did not have a separate place of work and did not advertise his services to the world at large. The Applicant worked out of the Respondent’s premises and paid no rent and made no contribution to the overhead or cost of those premises. The Applicant provided no tools or equipment, and was provided with a significant piece of equipment by the Respondent in the form of a utility vehicle to undertake his work.

[56] I am not satisfied that the Applicant could delegate or subcontract his work. The state of the evidence about the additional duties including bin washing, is such that it is equally probable that the Applicant was simply facilitating a system whereby the Respondent paid a flat hourly amount in cash to workers and their friends to undertake an additional task. The Applicant was not hiring those persons on his own behalf to conduct a business for him. He was hiring them to wash bins for the Respondent. Even if I accept that the Applicant retained $0.50 of every dollar that he received from Mr Monement for facilitating the performance of this work, the principal beneficiary of the arrangement was Mr Monement who received $1.00 for each bin washed by virtue of being paid $2.00 per bin by the Council. The fact that the Applicant’s wife assisted him by preparing two invoices a month for Respondent’s client is also an insufficient basis for a finding that he could delegate his work to others.

[57] Clearly the Respondent had the right to dismiss the Applicant, because Mr Monement exercised that right and terminated the arrangements which had been in place between the Applicant and the Respondent for some six years. It is also clear that the Applicant was presented to the world at large as an emanation of the Respondent’s business. The Applicant was the Respondent’s representative with respect to its contract with the Council.

[58] The Applicant’s remuneration was mainly paid periodically and the fact that he received additional amounts for special events and bin washing does not alter this fact. Those additional amounts could equally be seen as a bonus for work outside normal hours. Income tax was not deducted from the Applicant’s remuneration. However, in circumstances where the Applicant’s uncontested evidence was that the only way he could get paid for his work was by invoicing the Respondent, this is not a determinative matter.

[59] The Applicant was provided with leave. I do not accept the submission for the Respondent that the fact that there were no formal arrangements in this regard, and that this would clearly be required under the National Employment Standards (NES), is evidence that the Applicant was an independent contractor. The failure to provide leave in accordance with the NES may be a breach of the NES assuming that the Applicant was a weekly employee, although this is far from clear.

[60] The Respondent concedes that the Applicant did not have a profession, trade or distinct calling which would indicate that he was an independent contractor. The Applicant appears to have simply provided his labour and this is indicative of an employment relationship. There is no evidence that the Applicant created good will or saleable assets in the course of his work. Further, it is clear that the Applicant did not spend a significant portion of his remuneration on business expenses.

[61] There are no other relevant features of the relationship that outweigh the fact that the indicia point to a finding that there was an employment relationship between the Applicant and the Respondent. It is relevant, but not determinative, that the Australian Taxation Office (ATO) appears to have reached the same conclusion. On balance, the proposition that the Applicant was carrying on his own business while performing work for the Respondent is intuitively unsound and I do not accept that this was the case.

WAS THE APPLICANT UNFAIRLY DISMISSED?

The Small Business Fair Dismissal Code and relevant legislative provisions

[62] By virtue of s. 385 of the Act, a person has been unfairly dismissed if the Commission is satisfied that:

(a) the person has been dismissed;
(b) the dismissal was harsh, unjust and unreasonable; and
(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and
(d) the dismissal was not a case of genuine redundancy.

[63] The Small Business Fair Dismissal Code is provided for in s.388 of the Act, as follows:

“388 The Small Business Fair Dismissal Code

(1) The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.

(2) A person’s dismissal was consistent with the Small Business Fair Dismissal Code if:

(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and

(b) the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.”

[64] The terms of the Small Business Fair Dismissal Code were declared by legislative instrument with effect from 1 July 2009. Those terms are as follows:

“Summary Dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal.

Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair, it is sufficient, though not essential, than an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other Dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

The employee must be warned either verbally, or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem having regard to the employee’s response.

Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Procedural Matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer may be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia. Evidence may include a completed check list, copies of written warning(s), a statement of termination or signed witness statements.”

[65] The Code provides for two kinds of dismissal - summary dismissal on the grounds of serious misconduct, and other dismissal on the basis of conduct or capacity to do the job. In determining whether a summary dismissal on the grounds of serious misconduct was consistent with the Code, the Commission must first consider whether the employer believed that the employee’s conduct was sufficiently serious to justify summary dismissal. The Commission must then consider whether the employer’s belief was based on reasonable grounds. 11 It is not necessary for the Commission to be satisfied that there was a valid reason for the dismissal or to make a finding that the employee actually engaged in the misconduct.12 It is also not consistent with the requirements of the Code for the Commission to determine whether summary dismissal was warranted.

[66] Consideration of whether the employer’s belief that an employee has engaged in serious misconduct was based on reasonable grounds, incorporates the concept that the employer has carried out a reasonable investigation into the matter, rather than that the employer’s belief was correct. 13 The requirement of reasonableness goes to the misconduct itself as well as the belief that the employee engaged in the misconduct.

[67] The terms of the Code make it clear that an employer contending that a dismissal was consistent with the Code cannot rely on knowledge acquired after the dismissal was effected in order to establish serious misconduct on the part of the employee. If an employer cannot establish a belief on reasonable grounds that an employee engaged in serious misconduct, or that the other requirements of the Code have been met, the dismissal is not consistent with the Code and the Commission is then required to consider whether it was harsh, unjust and unreasonable on the basis of the criteria in s. 387 of the Act. It is only in seeking to establish that there was a valid reason for a dismissal as provided in s. 387(a) of the Act that the employer can rely on after-acquired knowledge. 14

[68] Relevant to the consideration of whether an employee has engaged in serious misconduct are the examples of serious misconduct set out in the Code itself and in s.12 of the Act and Regulation 1.07 of the Fair Work Regulations 2009, which provide as follows:

“12 The Dictionary

serious misconduct has the meaning prescribed by the regulations.”

“1.07 Meaning of serious misconduct

(1) For the definition of serious misconduct in section 12 of the Act, serious misconduct has its ordinary meaning.

(2) For subregulation (1), conduct that is serious misconduct includes both of the following:

(a) wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;

(b) conduct that causes serious and imminent risk to:

(i) the health or safety of a person; or

(ii) the reputation, viability or profitability of the employer’s business.

(3) For subregulation (1), conduct that is serious misconduct includes each of the following:

(a) the employee, in the course of the employee’s employment, engaging in:

(i) theft; or
(ii) fraud; or
(iii) assault;

(b) the employee being intoxicated at work;

(c) the employee refusing to carry out a lawful and reasonable instruction that is consistent with the employee’s contract of employment.

(4) Subregulation (3) does not apply if the employee is able to show that, in the circumstances, the conduct engaged in by the employee was not conduct that made employment in the period of notice unreasonable.

(5) For paragraph (3)(b), an employee is taken to be intoxicated if the employee’s faculties are, by reason of the employee being under the influence of intoxicating liquor or a drug (except a drug administered by, or taken in accordance with the directions of, a person lawfully authorised to administer the drug), so impaired that the employee is unfit to be entrusted with the employee’s duties or with any duty that the employee may be called upon to perform.”

[69] Serious misconduct is not confined to the specific matters listed in Regulation 1.07 but is defined to include those matters and retains its ordinary meaning. Such ordinary meaning is found in the examples in the Small Business Fair Dismissal Code Checklist, which asks the person who effected the dismissal whether any of a number of statements apply including:

The employee was stealing money or goods from the business.

The employee defrauded the business.

The employee threatened me or other employees, or clients, with violence or actually carried out violence in the workplace.

The employee committed a serious breach of occupational health and safety procedures.

[70] If it is found that a dismissal is not consistent with the Small Business Fair Dismissal Code, it is then necessary to consider whether it was unfair on the grounds that it was harsh, unjust or unreasonable in accordance with the criteria in s.387 of the Act:

“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.”

Evidence in relation to whether Applicant was unfairly dismissed

[71] The evidence about the termination of what I have found to be an employment relationship between the Applicant and the Respondent can be summarised as follows. Mr Monement wrote to the Applicant on 20 November 2013 in the following terms:

“Dear Wayne Millar,

This letter is being written to confirm that as of today 20/11/2013, I will no longer need to use Your Administration Services. I have been pleased with our prior relationship and it is my wish that we part on good terms, I have decided to use another Administration service due to their ability to serve me better.

Please feel free to contact me with any additional issues you may have regarding this Administration termination letter.”

[72] Mr Monement’s evidence to the Commission about the reasons for termination is at odds with the reasons he provided in the letter to the Applicant. Mr Monement said that he became ill in mid 2013 and was in a coma for an extended time as well as spending a long period in intensive care. While Mr Monement was ill his daughter oversaw the operation of the Respondent and undertook some administrative duties. The services of another bookkeeper were also utilised. Upon his release from hospital, Mr Monement became aware of the following matters:

• The Applicant had indicated that he intended to find work in the mining industry;

• The Applicant had approached the Australian Taxation Office and enquired about superannuation and taxation liabilities; and

• The Applicant had invited a senior manager of a direct competitor into the Respondent’s Depot at a time when the Respondent was negotiating renewal of its contract with the Gold Coast City Council.

[73] Mr Monement said that he contacted the Applicant and told him that the visit to the Respondent’s premises by a manager of the Respondent’s competitor had come to his attention and may cause difficulties in the ongoing association between the Applicant and the Respondent. Mr Monement said that he told the Applicant that he would leave it to him to consider his position. When Mr Monement did not hear from the Applicant by late November, he decided that the services provided by his daughter and the other bookkeeper were sufficient for the Respondent’s requirements and provided notice to the Applicant in the form of the letter set out above. Mr Monement said that this decision was in no way related to the fact that the Applicant had approached the Australian Taxation Office, and while surprised, this approach did not upset Mr Monement.

[74] I do not accept the proposition that the Applicant only complained to the ATO after his relationship with the Respondent was terminated. The Applicant made the complaint in October 2013 and the relationship was not terminated until November 2013, after Mr Monement was made aware of the complaint.

[75] The Applicant said that he had been concerned about his situation and the status of his relationship with the Respondent for some time and disagreed with the fact that the Respondent deemed him to be a contractor. The Applicant said that he had a number of conversations in relation to the Respondent deducting PAYG taxation from payments to him to no avail. The Applicant also said that he tried to find other employment but was not successful and was forced to remain working for the Respondent so that he did not create financial hardship for his family. Within a month of his approach to the Australian Taxation Office to discuss his circumstances, the Applicant’s employment was terminated.

[76] The Applicant said that he received an aggressive telephone call from Mr Monement on 13 November 2013 while he was driving one of the Respondent’s trucks. During that call Mr Monement asked the applicant why he had made an inquiry to the ATO about superannuation, and that the last time someone had tried this it cost that person $16,000.00. Mr Monement asked whether the Applicant was going to resign and when advised that the Applicant would not resign said that he would give the Applicant a few days to think about it. Mr Monement telephoned the Applicant a few days later and when he was told that the Applicant would not resign, came to see him and handed him the termination letter.

Was the Applicant’s dismissal consistent with the Small Business Fair Dismissal Code?

[77] I do not accept that the Applicant’s dismissal was consistent with the Small Business Fair dismissal Code. Mr Monement asserts that he believed that the Applicant engaged in serious misconduct by inviting the manager of a competitor to visit the Respondent’s Depot. In his evidence to the Commission, the Applicant denied that the visit was at his invitation and that he had held any discussions with the person in question about working for the Respondent’s competitor.

[78] If Mr Monement believed that the Applicant did issue the invitation, I am unable to be satisfied that he held this belief on reasonable grounds. The basis of Mr Monement’s belief appears to be simply that the person visited the Depot while the Applicant was there. Other than a discussion about this matter between the Applicant and Mr Monement, conducted while Mr Monement was recovering from what were obviously serious health issues, there is no evidence of any investigation being conducted into this matter.

[79] In his evidence to the Commission, the Applicant denied that the visit was at his invitation and that he had held any discussions with the person in question about working for the Respondent’s competitor. The Applicant had worked for the Respondent for some six years and there is no evidence of any issues with his conduct or work performance during that time. On the evidence before me, I am unable to be satisfied that Mr Monement believed on reasonable grounds that the Applicant had engaged in serious misconduct.

[80] The Applicant was not dismissed on the basis of his conduct or capacity to do the job, and his dismissal is not consistent with the provisions of the Small Business Fair Dismissal Code relating to other dismissal.

[81] It is therefore necessary to consider whether the Applicant’s dismissal was unfair on the grounds that it was harsh, unjust or unreasonable, in light of the criteria in s.387 of the Act. The allegation that the Applicant invited a competitor’s manager into the Respondent’s premises was not a valid reason for his dismissal. There was insufficient evidence for me to make a finding about this matter, and I am not satisfied that the Applicant actually did what he was alleged to have done.

[82] There is evidence that the Applicant engaged in misconduct by selling bins that were the property of the Respondent, and keeping the money for himself. That the Applicant may have split the money with another employee is not to the point. He did not give the money from this transaction to Mr Monement. I am also of the view that the Applicant’s evidence that he did this on only one occasion is incongruous. One has only to look at the invoice the Applicant rendered to the company that bought the bins, to see the improbability that this invoice was in respect of a one off transaction.

[83] Even if it was a one off transaction, such misconduct would provide a valid reason for dismissal. For an employee, especially one in a position of trust, to take and sell the property of his employer without permission and to retain the money paid for that property, is serious misconduct. The difficulty in the present case is that the Applicant was not cross-examined about the transaction and whether it did constitute misconduct was not put to him. In those circumstances I am not prepared to draw a conclusion that it provided a valid reason for his dismissal.

[84] I am also of the view that there is a strong coincidence in terms of the timing of the Applicant’s complaint to the ATO about the Respondent’s failure to make superannuation contributions on his behalf, and the Applicant’s dismissal. In light of the lack of satisfactory evidence about the reasons for dismissal, it is equally probable that this matter played some part in the decision of Mr Monement.

[85] The Applicant was not notified of the reason for his dismissal or given an opportunity to respond to that reason. The opportunity to have a support person present at discussions about the dismissal is not relevant given there were no such discussions. The dismissal did not relate to unsatisfactory work performance and the matter of whether the Applicant got warnings is not relevant.

[86] The Respondent is a small business without access to dedicated human resource management specialists or expertise, and I have no doubt that this impacted on all of the Respondent’s dealings with the Applicant and not only the dismissal.

[87] I am also of the view that the Applicant’s conduct in selling property of the Respondent to a third party, and the improbability of his assertion that this was a one off event, should be taken into account. After weighing all of these criteria, I am satisfied that the Applicant was unfairly dismissed.

REMEDY

[88] As required by s.390 of the Act, I am satisfied that Mr Millar was protected from unfair dismissal and that he has been unfairly dismissed. Mr Millar should have a remedy for his unfair dismissal. Mr Millar does not seek reinstatement and on that basis I am satisfied that it is not appropriate and that an award of compensation should be made. The remedy of compensation is dealt with in s.392 of the Act in the following terms:

“392 Remedy—compensation

Compensation

(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.
Criteria for deciding amounts

(2) In determining an amount for the purposes of an order under subsection (1), FWA must take into account all the circumstances of the case including:

(a) the effect of the order on the viability of the employer’s enterprise; and
(b) the length of the person’s service with the employer; and
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(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; and
(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; and
(g) any other matter that FWA considers relevant.

Misconduct reduces amount

(3) If FWA is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, FWA must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.

Shock, distress etc. disregarded

(4) The amount ordered by FWA to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.

Compensation cap

(5) The amount ordered by FWA to be paid to a person under subsection (1) must not exceed the lesser of:

(a) the amount worked out under subsection (6); and
(b) half the amount of the high income threshold immediately before the dismissal.

(6) The amount is the total of the following amounts:

(a) the total amount of remuneration:

(i) received by the person; or
(ii) to which the person was entitled;
(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and

(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.”

[89] There is no evidence that an order for compensation will affect the Respondent’s viability. The Applicant has over six years service with the Respondent. Considering the circumstances of the case, including the factors in s.392 of the Act, I have determined that the Applicant should be compensated for his unfair dismissal by the payment of 12 weeks wages.

[90] Despite the unfairness of the Applicant’s dismissal I am not able to conclude that the Applicant would have remained in employment for a period of longer than 12 weeks from the date he was dismissed. In this regard, I have taken into account contingencies including the fact that the matter of the presence of the manager of a competitor in the Respondent’s premises was a matter that Mr Monement could properly have taken up with the Applicant. It is also possible that notwithstanding any explanation the Applicant might have provided that Mr Monement could have formed an adverse view about this matter. It is also the case that Mr Monement may have decided at any time that he wished the work performed by the Applicant to be done by his daughter and/or another bookkeeper and subject to providing appropriate notice to the Applicant could have terminated the Applicant’s employment.

[91] I am also of the view that Mr Monement may have discovered the sale of bins by the Applicant and taken a dim view of the fact that he did not receive the income from the sale. This matter, subject to a proper investigation could have provided a basis for the Respondent dismissing the Applicant.

[92] Further, I have also taken into account that the Respondent may have lost the contract with the Gold Coast City Council and terminated the Applicant’s employment as a result. Given that the Respondent is a small business, the Applicant would have been entitled to five weeks notice if this occurred and would not have had an entitlement to redundancy payments.

[93] At the point the Applicant was dismissed his weekly earnings were $1,253.00. The Applicant would have earned a further amount of $15,036.00 had he remained in employment for this period.

[94] In relation to mitigation, the Applicant has not been able to secure alternative employment and I accept his evidence that he has made reasonable attempts to do so, including attending a number of courses.

[95] Given that I am not satisfied that the Applicant engaged in misconduct sufficient to justify his dismissal, I make no adjustment on that account. I am also of the view that Mr Millar’s contribution to his dismissal has been adequately recognised by the fact that I have limited his compensation to a twelve week period on the basis of my view that his employment would likely not have continued past that period.

[96] The amount of $15,036.00 less taxation at the appropriate rate (on the basis that the Applicant was an employee of the Respondent) is to be paid to the Applicant within fourteen days of the date of this Decision. An Order to this effect will issue with this Decision.

DEPUTY PRESIDENT

Appearances:

Mr W. Millar on his own behalf.

Mr A. Stobie of Counsel on behalf of Bin Maintenance Australia Pty Ltd.

Hearing details:

2014.

Brisbane:

May 15; 16.

Final written submissions:

20 August 2014.

1 Australian Industrial Relations Commission PR927971

2 Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 29 per Mason J.

3 Abdallah v Viewdaze Pty Ltd op. cit. at [34](1).

4 Brodribb op. cit. at 37 per Wilson and Dawson JJ.

5 [1989] FCA 226; (1989) 34 IR 179.

6 Ibid at 185.

7 Op. cit at [21] – [33].

8 Op. cit. at 38 - 41

9 Marshall v Whittaker’s Building Supply Co (1931) 46 CLR 210 at 217 per Windeyer J.

10 Exhibit 6 Statement of Dudley Monement Annexure “Document 3”.

11 John Pinawan t/a RoseVi.Hair.Face.Body v Domingo [2012] FWAFB 1359.

12 Khammaneechan v Nankhon Pty Ltd ATF Nanakhon Trading Trust T/A Banana Tree Cafe [2010] FWA 7891.

13 [2012] FWAFB 1359 .

14 Metricon Homes v Bradley [2009] AIRCFB 374; Australia Meat Holdings v McLauchlan (1988) 84 IR 1.

Printed by authority of the Commonwealth Government Printer

Mr Wayne Millar v Bin Maintenance Australia Pty Ltd

[2014] FWC 5896

26 AUGUST 2014

DECISION