Mrs Dianne Guan v Essential Appliance Rentals Pty Ltd
[2011] FWA 383
•19 JANUARY 2011
[2011] FWA 383 |
|
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mrs Dianne Guan
v
Essential Appliance Rentals Pty Ltd
(U2010/13093)
COMMISSIONER GOOLEY | MELBOURNE, 19 JANUARY 2011 |
[1] Mrs Dianne Guan was engaged by Essential Appliance Rentals Pty Ltd (“EAR”) from 28 April 2009 until her engagement was terminated on 27 September 2010.
[2] On 8 October 2010 Mrs Guan lodged an application for relief pursuant to s394 of the Fair Work Act 2009 (“FW Act”) alleging that she was unfairly dismissed.
[3] EAR filed a response to the application and raised a jurisdictional objection to the application. EAR alleged that the applicant was engaged as an independent contractor and was not an employee of EAR.
[4] The matter was originally listed for conciliation but the respondent requested that the jurisdictional objection be dealt with prior to conciliation.
[5] The jurisdictional objection was heard on 26 November 2010. Mr David Sealey, the Managing Director of EAR, appeared on behalf of EAR and Mrs Dianne Guan appeared on her own behalf, accompanied by her husband Mr Brad Guan.
[6] Submissions were provided in accordance with directions but no witnesses appeared at the hearing to swear to the statements provided by EAR. Mr Sealey explained that this was an executive decision to ensure that the business could continue to operate in his absence and so as to ensure that the opinions expressed by the other Director did not prejudice his position in other ongoing matters.
[7] Mr Sealey presented oral submissions from the bar table on behalf of EAR. Mrs Guan then presented her submissions from the bar table. Neither party appeared as witnesses; thus there was no cross-examination. Neither party objected to me receiving evidence from the bar table. Mr Sealey was provided with an opportunity to respond to Mrs Guan’s oral submissions.
The submissions of EAR
[8] EAR is an appliance rental business which targets low-income households. It seeks to provide appliances to clients through a “rent-to-own” payment scheme. 1 The repayment plans are generally for one year and there is an arrangement in place with Centrelink to cover the repayments.
[9] Mr Sealey said his business involved marketing and signing up rental agreements. Marketing occurs by letter boxing and advertising. The brochures and advertising have EAR’s telephone number as the contact number. When a client contacts EAR the application is taken over the telephone and the agreement documents are sent to an agent who is responsible for going to the client’s home and getting the client to sign the agreement. Agents are given areas in which they had exclusive rights to market and sell. 2
[10] Mr Sealey said that agents were able to sell their business which included their trailing commissions and “effectively a customer data base.” When it was put to him that they could not sell the client lists Mr Sealey then submitted that the agent could sell their rights under the contract. 3
[11] Mr Sealey said that EAR set the price of the goods and developed the marketing material and that the agents had no hours of work and could employ someone else to do the work. 4
[12] Mr Sealey said that agents could work for others provided there was no conflict of interest. For example they could market goods not provided by EAR to the EAR customers. He further said that while agents worked from home they could use EAR’s office if they wished. 5
[13] Mr Sealey said that EAR provided their agents with printers and, in Mrs Guan’s case, with a computer. From July 2010 EAR also provided Mrs Guan with a car and from late 2009 with a telephone. 6
[14] Mr Sealey said that from 1 July 2010 the arrangement was restructured and, because EAR was meeting the operating costs of the agents, EAR commenced paying superannuation for the agents. 7
[15] Mr Sealey said that the agents were not indispensible to the delivery of the business. 8
[16] Mr Sealey submitted that Mrs Guan was an independent contractor. 9
[17] In support of this submission he stated that she:
- was paid for each task completed and not for time worked;
- did not receive paid leave;
- was initially responsible for providing her own materials and equipment including motor vehicle, fuel, phone costs, printing costs. However, he submitted that over time EAR contributed towards some expenses and from 1 July 2010 provided a motor vehicle and fuel card;
- had the absolute discretion to accept or refuse tasks assigned to her;
- provided personal services but she was operating a personal services business;
- had no set hours of work;
- was not part and parcel of EAR’s business. Her services, it was submitted, were for a secondary and supporting elements of the overall business;
- carried a commercial risk as her income was dependent on the number of tasks that were issued to her;
- was free to delegate the work to other entities;
- could choose how, when, where and the manner in which tasks were completed; and
- performed work for her husband’s tennis coaching business and needed approval of EAR if she offered her services to other business with which there may be a conflict of interest.
[18] Mr Sealey submitted that Mrs Guan never objected to the role being a contractor role. Further she was offered a full time salaried position in September/October 2009 and she rejected the offer as she wished to remain an independent contractor.
[19] Mr Sealey submitted that Mrs Guan refused to sign the contracts presented to her and that no final agreement was ever reached. He said that “we’ve paid according to the schedules of payment that related to each agreement but we’ve not considered that any of these agreements have actually been finalised and concluded.” 10
[20] Mr Sealey submitted that it was arguable that Mrs Guan became an employee from 1 July 2010 when EAR agreed to take over all the operating costs and, as he described it, took over the risks. He submitted that if the Tribunal found that an employment relationship came into existence on 1 July 2010 then Mrs Guan was excluded from unfair dismissal as this was a small business and she had not had twelve months service at the date of her dismissal.
Mrs Guan’s submissions
[21] Mrs Guan’s submissions 11 set out how her relationship with EAR started and finished.
[22] Mrs Guan submitted that she was an employee because EAR set the charges for contracts/deliveries/fuel etc and controlled all aspects of her work and how it was carried out. She said EAR decided if they would get paid or not. For example if a client was not at home when she had arranged an appointment and attended the home EAR decided if she got paid or not. She invoiced EAR for the work that was sent to her by EAR and expenses were only claimable after 1 July 2010. 12
[23] Ms Guan was offered the job by Mr Tim McKenzie and Mrs Guan said it was Mr McKenzie who “convinced [her] that it was [her] business to build up.” 13
[24] Mrs Guan then set about building up her business. Mrs Guan said she was given an Agreement to sign by Mr Sealey and Ms McKenzie but she did not sign it because it did not include what she considered to be the key parts of her agreement with Mr McKenzie namely the defined areas of Melbourne that were hers to cover and that every contract that fell into that area would be sent to her to service as her client, and that she had a saleable business. 14
[25] Mrs Guan said she worked under the Agreement and she was paid in accordance with the Agreement. 15
[26] Mrs Guan said that she was told by Mr Sealey that she could employ someone else if the number of contracts became too great for her to service and because it was her business she had to cover the expenses that went along with starting up your own business. 16
[27] Mrs Guan said that in the 2009-2010 financial year her expenses exceeded her income. Mrs Guan accepts that she was offered employment with EAR which she rejected. 17
[28] Various discussions occurred about the terms and conditions of her ongoing engagement and on 31 May 2010 Mrs Guan along with another agent put a new proposal to EAR. In that proposal it was proposed that they get paid $45,000 per year with trailing commissions. All expenses would be paid by EAR. They would invoice on a weekly basis and they would take four weeks holidays per year. If it was necessary to employ another agent then they would continue to receive the trailing commissions for that area. Further they would keep their current areas. This proposal was rejected by EAR. 18
[29] In June 2010 a meeting was held with Mr McKenzie, Ms McKenzie, Mr Sealey, Mrs Guan and her husband. At the meeting Mrs Guan was told that EAR would not being paying her monthly commission anymore and that marketing was to be taken in house. Ms Guan was told she would become the National Marketing Manager and that she would be paid 1% commission on Company turnover. It was agreed that all her expenses would be paid and she would be provided with a car, Etag and fuel card. She was directed to get Marketing Manager business cards organised and she did. 19
[30] This agreement was not reduced to writing but Ms Guan said she commenced this new position on 4 June 2010.
[31] A subsequent meeting with Mr McKenzie was held at the end of July 2010. Mrs Guan was told that she was to invoice EAR for contracts signed only and they would supply the car. There was to be no National Marketing Manager position. 20
[32] Mrs Guan attended a training meeting on 20 September 2010 and at the end of this meeting she was presented with a new contract. It was an agency agreement. Mrs Guan was told that the contract had to be signed and returned by 25 September 2010. 21
[33] Mrs Guan said that on 25 September 2010 she asked for an extension of time to consider the contract and this was rejected. She was told by Ms McKenzie to have the contract signed and returned by the next day. On 27 September 2010 Ms Guan received an email from Mr Sealey advising her as she had not signed the contract that he had concluded that she was unwilling to work for EAR or accept work from EAR and asked her to return all EAR property.
[34] Mrs Guan said that EAR never paid superannuation on her behalf.
[35] Mrs Guan submitted that she never had control of what came into EAR. In answer to my questions Ms Guan said she could choose when she worked 22 and she invoiced EAR for the contracts she got signed.23
[36] Mrs Guan said she was paid her retainer over the Christmas break and when she had ten days off in October. 24
[37] Mrs Guan said she could have delivered other brochures to letterboxes as the same time as she delivered EAR’s brochures but she never did. 25
[38] There have been a number of contracts presented to the Tribunal, none of which were signed. The one which was said to be the relevant contract was dated September 2009 (“the 2009 contract”). Though it was never signed it appears from the statements of Mr Sealey that the schedules were the basis of the engagement until September 2010 when a new contract was drafted but not signed (“the 2010 contract”).
Employee or independent contractor?
[39] In Abdulla v Viewdaze Pty Ltd 26the Full Bench of the Australian Industrial Relations Commission set out the common law approach to determine whether or not a person was an employee. I adopted this approach in my decision in Barrett v Create (Geelong) Inc27 and will apply the same approach now.
1. Was Mrs Guan conducting a business of her own?
[40] Mrs Guan distributed brochures for EAR which advertised EAR’s business and had EAR’s phone number as the contact number for enquiries. Customers contacted EAR who entered into an agreement with the customer. EAR then drafted the contract and sent it to Mrs Guan who was required to go to the customer’s home and get the contract signed. On occasion Mrs Guan delivered the goods to the customer. Ms Guan was paid to deliver the brochures and paid a commission depending on the number of contracts she had signed. She also received trailing commissions from the contracts. While it was suggested that Mrs Guan had exclusivity in dealing with customers in her areas, it was her evidence that delivery drivers also got customers in her areas to sign contracts.
[41] It is therefore difficult to see what business Mrs Guan was conducting. Mr Sealey submitted that she was running a services business and a marketing business. I do not accept this characterisation of the relationship.
[42] Mrs Guan did not enter into the agency contract with EAR. She did not do so because it did not provide her with the elements that she considered essential for an agency arrangement namely, fixed areas and exclusivity. In the end the only terms agreed between Mrs Guan and EAR was that she would be paid a retainer of $250 per week and commissions. In addition she would be paid for small deliveries and an additional amount if she had to travel more than forty kilometres.
[43] Mrs Guan did not advertise her own business nor did she develop her own client base. The customers were EAR’s customers, the data base was EAR’s, and the business was EAR’s business. I find that Mrs Guan work in EAR’s business, she did not run her own business.
2. The nature of the work performed and the manner in which it is performed
[44] Mrs Guan did not require a special skill or qualification to perform this role. Her role involved delivering flyers and attending clients’ homes to confirm contracts and occasionally deliver goods. Mrs Guan had to arrange times to meet with clients. The nature of her role was one which did not lend itself to taking much initiative or demonstrating independence.
3. Terms of the contract
[45] Neither party submitted that I should treat the written contracts as binding. However EAR submitted that it was the intention of the parties that Mrs Guan be an independent contractor. I agree that this was the intention of the parties. It is clear from Mrs Guan’s submissions that she thought she had been given a business opportunity and that through her hard work she had the potential to make a significant income 28 and she would have a saleable asset.29 An employee does not anticipate that they will have a saleable asset as a result of their employment. While the intentions of the parties to the contract are an important consideration in determining if Mrs Guan is an employee or independent contractor, it is well understood that the parties’ intentions are not determinative of this question. 30
4. The indicia of an employment relationship including control and exclusivity
4.1 Did EAR exercise, or have the right to exercise, control over Mrs Guan’s work?
[46] Mrs Guan had little, if any, control over the work she performed. I accept that EAR did not dictate the hours she worked or where she marketed the business. I do not accept that this equates to Mrs Guan controlling her own work. She did not decide which contracts were emailed to her for signing. Mrs Guan was provided with contracts and was responsible for meeting clients at suitable times. She delivered flyers in areas which were determined by EAR and could be changed by EAR. The flyers were prepared by EAR and while she could supplement those flyers, any written material had to be approved by EAR.
4.2 Whether the applicant works for others (or has a genuine and practical entitlement to do so)
[47] Mr Sealey submitted that Mrs Guan could work for others provided there was no conflict of interest. Mrs Guan admitted that she could have delivered flyers for other businesses when she delivered EAR’s flyers. Mrs Guan did not in fact work for others.
4.3 Does the applicant have a separate place of work and/or advertises her services to the world at large?
[48] Mrs Guan primarily worked from home but had the option of working in the EAR office if necessary. She attended the EAR office in order to partake in meetings.
4.4 Whether the applicant provides or maintains significant tools or equipment
[49] Until August Mrs Guan had to maintain and use her own vehicle but all other essential equipment was provided by EAR.
4.5 Whether the work can be delegated or subcontracted
[50] Mrs Guan was entitled to delegate or subcontract but she did not do so. I do not accept the notion that Mrs Guan would have been able to employ someone given the relatively low volume of work provided to her by the company.
4.6 Did EAR have the right to suspend or dismiss the person engaged?
[51] As there was no written agreement EAR had rights at common law to terminate the contract. It had no right to suspend Mrs Guan.
4.7 Did EAR present Mrs Guan to the world at large as an emanation of the business?
[52] Mrs Guan was not required to wear a uniform. She had business cards printed when she was appointed Marketing Manager in June 2010 but until that date there does not appear to have been any obvious form of identification.
[53] However there is no doubt that when Mrs Guan attended customers she did so as part of EAR’s business. Further when she marketed to companies and organisations she did so for EAR and not for her own business.
4.8 Was income tax deducted from remuneration paid to Mrs Guan?
[54] Income tax was not deducted.
4.9 Was Mrs Guan paid a periodic wage or salary or by reference to completion of tasks?
[55] Mrs Guan was paid a retainer and additional commission in accordance with Schedule A of the 2009 contract. Mrs Guan was paid partly based on result and partly based on periodic remuneration.
4.10 Was Mrs Guan provided with paid holidays or sick leave?
[56] The submissions from both parties indicate that Mrs Guan prepared her own invoices as required. There were, however, times when she was asked to prepare invoices under the direction of the company. This involved claiming payment during the 2009 Christmas close-down period and for a holiday Mrs Guan took. Generally independent contractors are not provided with annual leave or any other form of remuneration for time not worked. Mr Sealey submitted that these extra payments were a demonstration of the company’s good nature.
4.11 Did the work performed by Mrs Guan involve a profession, trade or distinct calling on the part of the person engaged?
[57] There was no specific skill or qualification required by Mrs Guan in order to perform her role; knowledge of procedure was acquired as a result of experience.
4.12 Whether Mrs Guan created goodwill or saleable assets in the course of her work.
[58] Mr Sealey submitted that Mrs Guan and all EAR agents could use their interactions with clients to solicit further business for other personal business interests so long as it did not conflict with the interests of EAR. Mrs Guan had nothing to promote to clients other than EAR products. It appears that her interactions with clients were limited to single interactions in order to obtain a signature. I do not believe that she would have been able to develop any rapport with clients in order to generate goodwill. Mrs Guan had no saleable asset; the service she provided to EAR was labour.
4.13 Whether Mrs Guan spends a significant proportion of her remuneration on business expenses
[59] Mrs Guan said that she paid $12,000 for expenses in the financial year 2009-2010 and she received commission of $6094. From 1 July 2010 EAR met all Mrs Guan’s expenses.
Conclusion
[60] This is another in a long list of cases which evidence “the ill defined dividing line between employment and independent contract.” 31 The evidence discussed above demonstrates that there are some aspects of Mrs Guan’s engagement which suggest she was an employee and other aspects which suggest that she was an independent contractor.
[61] Despite Mr Sealey’s claim that agents are a non-essential part of EAR’s business I accept that the role Mrs Guan performed was a necessary part of the company’s operation; especially in the initial phase of the business. The fact that EAR has found a more efficient way to conduct its business does not support their submission that Mrs Guan was an independent contractor.
[62] Mrs Guan was subject to control by EAR because she visited clients as directed by EAR to get them to sign contracts prepared by EAR and worked in areas defined by EAR.
[63] I do not accept that Mrs Guan operated her own business. The fact that she could have performed a similar role for another company does not establish that she was an independent contractor. That she could have delivered flyers for more than one company or marketed more than one business would be akin to a person having two casual or part-time positions.
[64] I find that Mrs Guan was an employee. It appears that she was engaged on either a part time basis or a casual basis. If she was a casual employee her employment was on a regular and systematic basis and during her period of service as a casual employee she had a reasonable expectation of continuing employment by EAR on a regular and systematic basis.
The jurisdictional objection is therefore dismissed and the matter will be listed for conciliation of the substantive application.
COMMISSIONER
Appearances:
D Guan appeared on her own behalf.
D Sealey for Essential Appliance Rentals Pty Ltd.
Hearing details:
2010.
Melbourne:
November 26.
1 Transcript, 26 November 2010 at PN 30
2 Ibid PN 34-46
3 Ibid PN 53
4 Ibid PN 60-71
5 Ibid PN 73-77, 85
6 Ibid PN 87-93
7 Ibid PN 97
8 Ibid PN 121
9 Exhibit R1
10 Transcript PN 18
11 Submissions of the Applicant dated 15 November 2010
12 Ibid page 1
13 Ibid page 1
14 Ibid at page 2
15 Ibid at page 2
16 Ibid at page 2.
17 Ibid at page 3
18 Ibid at page 4 and attachment 4
19 Ibid page 4
20 Ibid page 7
21 Ibid at page 8 and 9
22 Transcript PN 230
23 Ibid PN 234
24 Ibid PN 240
25 Ibid PN 250
26 PR927971
27 PR999758
28 Submissions of the Applicant op cit at page 2
29 Ibid
30 Hollis v Vabu Pty Ltd [2001] HCA 44 at [58]
31 PR927971
Printed by authority of the Commonwealth Government Printer
<Price code C, PR506056>
0