Mrs Joanna Macdougall v Health Axis Pty Ltd T/A Raymond Hader Clinic

[2012] FWA 3058

[2012] FWA 3058

FAIR WORK AUSTRALIA

DECISION

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

Mrs Joanna Macdougall
v
Health Axis Pty Ltd T/A Raymond Hader Clinic
(U2011/2650)

COMMISSIONER ROE MELBOURNE, 11 APRIL 2012

Unfair dismissal - jurisdictional objection - whether worker was an independent contractor or employee.

[1] This is an application for an unfair dismissal remedy pursuant to Section 394 of the Fair Work Act 2009 (the Act). The Application for unfair dismissal remedy was made on 23 December 2011 by Joanna Macdougall (the Applicant) in respect of her dismissal by Health Axis Pty Ltd T/A Raymond Hader Clinic (the Respondent). It is not in contention that the Applicant provided services to the Respondent between August 2010 and 13 December 2011. The Respondent submitted that they employed 20 full time equivalent personnel.

[2] The matter was not resolved through conciliation on 31 January 2012. On 6 February 2012 the Respondent provided a response to the Application. In that response the Respondent made a jurisdictional objection that the Applicant was at all times an independent contractor and not an employee. Fair Work Australia issued directions to determine the jurisdictional objection on 13 February 2012. Those directions required the Respondent to provide any submissions and evidence by 24 February 2012. The Respondent did not provide any material despite a number of follow up communications between Fair Work Australia and the Respondent. The Applicant provided detailed submissions, 1 a witness statement from the Applicant and supporting evidence.2

[3] The Respondent failed to attend the proceedings on 30 March 2012. I granted leave for Mr Hulls to appear for the Applicant. A Notice of listing was sent on 9 March 2012 and 23 March 2012. My Associate had spoken to Mr Oppy for the Respondent on 29 March 2012 and was advised that he would be in attendance at the hearing the next day. When he failed to attend my Associate again contacted Mr Oppy who seemed unaware of the time and said he was unable to attend due to work pressures. After further conversation he said someone else would attend. In a subsequent conversation the Respondent advised no one was available to attend. I decided to proceed with this matter and the Respondent was advised prior to the commencement of the proceedings.

[4] I issued the following Directions at the conclusion of the proceedings:

• “The transcript of today’s proceedings will be provided to the Respondent and the Applicant. This is expected to be some time on Monday 2 April 2012. The transcript is brief.



• The Respondent is given the opportunity to provide any submission in to the Applicant’s case it may wish to provide within 24 hours of the transcript being provided to the Respondent by the fax and email addresses which have been successfully used for communication with the Respondent throughout the processes of this matter.



• The Applicant will be given the opportunity to provide any reply within 24 hours of the Respondent’s material. The Applicant has liberty to apply for an extension should the material of the Applicant be substantial.



• This material will be the basis on which a decision in respect to the jurisdictional objection of the Respondent will then be made.”

[5] On 30 March 2012 the Applicant gave sworn evidence and I heard some brief supplementary submissions.

[6] A recent decision of a full bench of Fair Work Australia in Jiang Shen Cai trading as French Accent v Michael Anthony Do Rozario (French Accent) has set out the approach to be taken in determining these matters as follows. 3

“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.”

[7] The Applicant worked for the Respondent as an alcohol and other drugs (AOD) support worker, and subsequently as a senior AOD support worker, for patients attending the Respondent’s drug and alcohol clinic, the “Raymond Hader Clinic.”

[8] The Applicant does not dispute that:

• She signed a document entitled “Contractor’s Service Agreement” dated 3 August 2011 on or about that date.



• She submitted tax invoices for payment for the work and was paid on these invoices.



• She was paid the gross amount she invoiced without any deduction or withholding for income tax.



• She did not receive any superannuation.



• She submitted regular BAS statements to the Australian Tax Office with respect to her earnings, as invoiced, for the work.

[9] Whilst the Applicant concedes the matters set out in paragraph 8 above, she says that she did those things because, initially at least, she had no choice. The Applicant gave evidence that when she was first engaged in May 2010 she was informed that, as was the case for all the support workers engaged by the Respondent, she had to provide tax invoices supported by time sheets for the work she performed. The issue of how the Applicant was to be paid was raised on or about August 2011 when she was promoted to the position of senior support worker. The Applicant gave evidence that around this time almost all the other employees were moved onto normal wage and salary arrangements. It is clear from the correspondence that these were full time or part time or casual support worker positions. 4 The Applicant gave evidence that she specifically asked if she would have access to annual leave and sick leave arrangements when she accepted and was promoted to the new position and she says that she was assured that this was the case by Ms Amanda Brown, a manager for the Respondent.

[10] On 3 August 2011 the Applicant received a letter headed “Re: Offer of Employment.” The letter read:

“Thank you for your application for employment with Raymond Hader. We would like to take this opportunity to thank you for your loyal and professional service with RHC to date. We value our working relationship with you and would like to continue to offer you employment with The Raymond Hader Clinic. At the recent interview you advised you would like to continue on in a Permanent Full time capacity. We are delighted to offer you the Position of Senior Support Worker and welcome you on board as a full time employee of The Raymond Hader Clinic., Attached are copies of employment contract and confidentiality contracts. These documents will be placed in your file. If you require copies don’t hesitate to ask me.” 5

[11] The Applicant gave evidence that she requested to continue to be paid on the basis of providing invoices as had occurred previously but also receive annual leave and other entitlements as a full time employee. The Applicant says that she did this because of arrangements she had with a leased vehicle. The Applicant was told this would be considered and was asked to provide evidence that she had other work. On 2 August 2011 Amanda Brown emailed the Applicant to say “RS says that if you provide a document that you are employed elsewhere then we can continue to pay on contract.” 6 The Applicant at no stage had other work and so she could not comply with this request. Nevertheless the previous arrangement of payment by invoice continued.

[12] The Applicant submitted that apart from the matters set out in paragraph 8 above, all aspects of the work bore the hallmarks of a contract of service.

• The Applicant was at all times subject to close supervision and control by the Respondent with respect to how, when, and where the work was to be performed.



• The nature and extent of the direction and control to which the Applicant was subject is clearly demonstrated by the provisions of the position description. 7 This position description was incorporated into the contract of employment or service.8



• The Applicant’s hours were determined by a roster in the ordinary manner that employees working in an establishment such as that operated by the Respondent are allocated their hours of work.



• The Applicant was paid on a hourly rate for the time she performed the work, together with an allowance for the occasions she was required to sleep over at the Respondent’s premises. The Applicant was not paid on a “results” basis or any such criteria.



• From August 2011 onwards the Applicant gave evidence that she was led to believe she was entitled to paid annual and sick leave.



• The Applicant did not supply any of her own equipment or materials; and was reimbursed for any expenses she incurred in the course of performing the work.



• When on duty the Applicant was required to dress in accordance with standards set by the Respondent which included wearing a “Raymond Hader” polo top.



• The Applicant was not entitled to engage anyone else to perform the work and this was explicitly provided in the contract of service or employment.



• The Applicant did not, and effectively could not, work for anyone other than the Respondent. She worked in a full time position, invariably was on duty for more than 38 hours per week and was regularly required to “sleep over” at the Respondent’s premises.



• The Applicant has not at any time held herself out as conducting a business providing support services for individuals receiving treatment and care for alcohol and drug use or for any other illness, injury or disability nor has she ever conducted any such business. The Applicant gave evidence that she had an ABN because of an earlier swim wear business she was involved in and hoped to revive at some stage in the future.



• The Applicant did not take out or maintain any insurance against workplace related injury or illness.



• The Applicant derived no ‘goodwill’ or other benefit from performing the work other than the wages and allowances she would have received had she been engaged and paid unambiguously as an employee.

[13] I also note the evidence of the Applicant that the role she performed is not a professional role requiring a high level qualification or membership of a profession or trade. The Respondent says that the qualification required is a Certificate level 4 in Alcohol and Other Drug Work. The Applicant was paid $25 per hour.

The Submissions of the Respondent.

[14] The Respondent was provided with a copy of the directions I issued at the conclusion of the hearing. The transcript was provided to the Respondent at 9:55 am on Monday 2 April 2012. In accordance with the directions the Respondent had until the morning of Tuesday 3 April 2012 to provide any further submissions in response. No response was received.

Conclusion

[15] I accept the evidence of the Applicant. The evidence was supported in the main by convincing documentary evidence. I accept the submissions of the Applicant in respect to the assessment of the various indicators of an employment relationship or a contract relationship in the circumstances of this case.

[16] The offer of employment of 3 August 2011 quoted earlier is a strong indicator that the essential character of the relationship was employment. The contractor service document signed at that time would normally be an important indicator of an independent contractor arrangement, however, the accompanying letter and the surrounding evidence provided by the Applicant makes it clear that the arrangement was in fact an employment relationship. I am satisfied that the contract for service and the payment by invoice arrangements were tax minimisation arrangements rather than indicators of the real character of the situation. I accept the evidence of the Applicant that she had no choice but to accept these arrangements prior to August 2011.

[17] The indictors referred to in the French Accent Full Bench decision quoted earlier strongly indicate an employment rather than a contractor relationship. I am satisfied this is not a situation of ambiguity where the documented contract might take precedence. It is a situation where looking at the arrangement as a whole and considering the various indicators I am satisfied it is clearly an employment relationship.

[18] The jurisdictional objection is dismissed and the matter will be allocated for a hearing concerning the merits of the Application.

COMMISSIONER

Appearances:

Mr Peter Hulls appeared on behalf of the Applicant.

The Respondent did not appear.

Hearing details:

2012
Melbourne
March 30

 1   Exhibit M1.

 2   Exhibit M2 and 12 Attachments.

 3   [2011] FWAFB 8307 at para 30.

 4   Exhibit M2, Attachment JM7.

 5   Exhibit M2, Attachment JM3.

 6   Exhibit M2, Attachment JM6.

 7   Exhibit M2, Attachment JM2.

 8   Exhibit M2, Attachment JM4.

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