Mrs Johanna Grace v The Bay Caravan Park Pty Ltd
[2023] FWC 2680
•13 OCTOBER 2023
| [2023] FWC 2680 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.365 - Application to deal with contraventions involving dismissal
Mrs Johanna Grace
v
The Bay Caravan Park Pty Ltd
(C2023/2663)
| COMMISSIONER P RYAN | SYDNEY, 13 OCTOBER 2023 |
Application to deal with contraventions involving dismissal
Introduction
This decision concerns an application by Mrs Johanna Grace (Applicant) for the Fair Work Commission (Commission) to deal with a dismissal dispute pursuant to s.365 of the Fair Work Act 2009 (FW Act) (Application).
In the Application, the Applicant states that she was employed by The Bay Caravan Park Pty Ltd (Respondent) from 16 November 2022 until 20 April 2023.
In its Form F8A Response, the Respondent stated that the Applicant was engaged under a contract for services and therefore the relationship between the parties was one of principal and independent contractor.
This raises the issue of whether the Applicant was dismissed. “Dismissed” is defined in s.386 of the FW Act as follows:
Meaning of dismissed
(1) A person has been dismissed if:
(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.
(2) However, a person has not been dismissed if:
(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or
(b) the person was an employee:
(i) to whom a training arrangement applied; and
(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;
and the employment has terminated at the end of the training arrangement; or
(c) the person was demoted in employment but:
(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and
(ii) he or she remains employed with the employer that effected the demotion.
(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person’s employment, to avoid the employer’s obligations under this Part.
The requirement that a person has been “dismissed” (within the meaning of s.12 and s.386 of the FW Act) is a jurisdictional prerequisite to the making of a valid application pursuant to s.365. Where the respondent to a s.365 application contends, in its response to the application or otherwise, that the application was not validly made because the applicant was not dismissed, this must be determined prior to the Commission exercising the powers conferred by s.368.[1]
I issued directions for the parties to file materials in support of, or in opposition to, the Respondent’s jurisdictional objection that the Applicant was not dismissed as she was not an employee.
The matter was heard on 8 August 2023. The Applicant was self-represented. The Respondent was granted permission to be represented by a lawyer as I was satisfied as to the matters set out in s.596(2)(a) of the FW Act. The Respondent was represented by Mr D Pratt.
Witness statements were tendered from the following persons, who also gave evidence at the hearing:
·Ms Ruth von Pein, a director of the Respondent (Exhibit R1 and Exhibit R2);
·The Applicant (Exhibit A1);
·Mr Peter Grace, the Applicant’s husband and a former employee of the Respondent (Exhibit A2).
For the reasons that follow, I have determined that the Applicant was an employee of the Respondent.
Applicable Legal Principles
The applicable legal principles to determine whether a person is an employee or an independent contractor were considered by the High Court in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd[2] (Personnel Contracting) and ZG Operations Australia Pty Ltd v Jamsek (Jamsek).[3]
In JMC Pty Limited v Commissioner of Taxation,[4] Wigney J summarised the fundamental principles established by Personnel Contracting and Jamsek as follows:
17. First, where the rights and duties of the parties are comprehensively committed to a written contract, the legal rights and obligations established by the contract are decisive of the character of the relationship provided that the validity of the contract has not been challenged as a sham, or that the terms of the contract have not been varied, waived or are subject to an estoppel: Personnel Contracting at [43], [44], [47], [59] (Kiefel CJ, Keane and Edelman JJ), [172] (Gordon J, Steward J relevantly agreeing at [203]). The task is to construe and characterise the contract made between the parties at the time it was entered into: Personnel Contracting at [174] (Gordon J).
18. Second, in order to ascertain the relevant legal rights and obligations, the contract of employment must be construed in accordance with the established principles of contractual interpretation: Personnel Contracting at [60] (Kiefel CJ, Keane and Edelman JJ), [124] (Gageler and Gleeson JJ), [173] (Gordon J). In that respect, regard may be had to the circumstances surrounding the making of the contract, as well as to events and circumstances external to the contract which are objective, known to the parties at the time of contracting and which assist in identifying the purpose or object of the contract: Personnel Contracting at [174]-[175] (Gordon J); Jamsek at [61] (Kiefel CJ, Keane and Edelman JJ), referring to Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352. The nature of the specific job that the putative employee applied for and the nature and extent of any tools or equipment they have to supply for that job may also be relevant: Personnel Contracting at [175] (Gordon J). It is, however, generally not legitimate to use in aid of the construction of a contract anything which the parties said or did after it was made: Personnel Contracting at [176] (Gordon J).
19. Third, and flowing from the first two principles, the characterisation of the relationship between the parties is not affected by circumstances, facts or occurrences arising between the parties that have no bearing on their legal rights: Personnel Contracting at [44] (Kiefel CJ, Keane and Edelman JJ), [173]-[178] (Gordon J); Jamsek at [109] (Gordon and Steward JJ). A “wide-ranging review of the entire history of the parties’ dealings” is neither necessary nor appropriate: Personnel Contracting at [59] (Kiefel CJ, Keane and Edelman JJ); see also [185]-[189] (Gordon J). For a “matter to bear upon the ultimate characterisation of a relationship, it must be concerned with the rights and duties established by the parties’ contract, and not simply an aspect of how the parties’ relationship has come to play out in practice but bearing no necessary connection to the contractual obligations of the parties”: Personnel Contracting at [61] (Kiefel CJ, Keane and Edelman JJ) (emphasis added).
20. It follows that the fact that the parties’ subsequent conduct may not have precisely aligned with their contractual rights and obligations, or the fact that a particular contractual right may have never been exercised or utilised, will generally be irrelevant when it comes to characterising the relationship. That is so unless the manner in which the parties conducted themselves after entering into the contract was such as to establish that the contract was a sham, or that the contract had been varied, or that certain rights under the contract were subject to an estoppel.
21. Fourth, the contractual provisions that may be relevant in determining the nature of the relationship include, but are not limited to, those that deal with the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work, the provision for holidays, the deduction of income tax, the delegation of work and the right to exercise direction and control: Personnel Contracting at [113] (Gageler and Gleeson JJ); [174] (Gordon J), referring to Brodribb at 24 (Mason J); see also 36-37 (Wilson and Dawson JJ).
22. In Brodribb, Wilson and Dawson JJ said (at 36-37) that the indicia which suggested an employment relationship included “the right to have a particular person do the work, the right to suspend or dismiss the person engaged, the right to the exclusive services of the person engaged and the right to dictate the place of work, hours of work and the like”, whereas those that suggested a contract for services included “work involving a profession, trade or distinct calling on the part of the person engaged, the provision by him of his own place of work or of his own equipment, the creation by him of goodwill or saleable assets in the course of his work, the payment by him from his remuneration of business expenses of any significant proportion and the payment to him of remuneration without deduction for income tax”. Their Honours were, however, careful to note (at 37) that “any attempt to list the relevant matters, however incompletely, may mislead because they can be no more than a guide to the existence of the relationship of master and servant”. It should also be emphasised that the list of possible indicia must now be approached on the basis that the focus is on the parties’ contractual rights and obligations relevant to those matters, at least where the contract is wholly in writing, not on the way in which the work was actually carried out.
23. Fifth, the characterisation of the relationship as one of service or employment involving an employer and employee, as opposed to a relationship involving an independent contractor providing services to a principal, often hinges on two considerations. The first consideration is the extent to which the putative employer has the right to control how, where and when the putative employee performs the work: Personnel Contracting at [73]-[74] (Kiefel CJ, Keane and Edelman JJ); [113] (Gageler and Gleeson JJ); see also Brodribb at 24 (Mason J) and 36-37 (Wilson and Dawson JJ). The second is the extent to which the putative employee can be seen to work in his or her own business, as distinct from the business of the putative employer – the so-called “own business/employer’s business” dichotomy: Personnel Contracting at [36]-[39] (Kiefel CJ, Keane and Edelman JJ); [113] (Gageler and Gleeson JJ); cf [180]-[183] (Gordon J). Neither of those considerations are determinative and both involve questions of degree.
24. As for the element of control, “the existence of a right of control by a putative employer over the activities of a putative employee serves to sensitise one to the subservient and dependent nature of the work of an employee, so as to assist in an assessment of whether a relationship is properly to be regarded as a contract of service rather than a contract for services”: Personnel Contracting at [73] (Kiefel CJ, Keane and Edelman JJ).
25. As for the “own business/employer’s business” dichotomy, it also “usefully focusses attention upon those aspects of the relationship generally defined by the contract which bear more directly upon whether the putative employee’s work was so subordinate to the employer’s business that it can be seen to have been performed as an employee of that business rather than as part of an independent enterprise”: Personnel Contracting at [39] (Kiefel CJ, Keane and Edelman JJ); cf [180]-[182] (Gordon J). Another way of framing the question, which focusses more directly on the terms of the contract, is whether the person “is contracted to work in the business or enterprise of the purported employer”: Personnel Contracting at [183] (Gordon J) (emphasis in original). One consequence of answering that question in the negative may be that the person is not an employee.
26. Sixth, a “label” which the parties may have chosen to describe their relationship is not determinative of the nature of the relationship and will rarely assist the court in characterising the relationship by reference to the contractual rights and duties of the parties: Personnel Contracting at [63]-[66] (Kiefel CJ, Keane and Edelman JJ); [127] (Gageler and Gleeson JJ); [184] (Gordon J). The parties’ “legitimate freedom to agree upon the rights and duties which constitute their relationship” does not “extend to attaching a ‘label’ to describe their relationship which is inconsistent with the rights and duties otherwise set forth” – to permit otherwise would elevate the freedom to “a power to alter the operation of statute law to suit ... the interests of the party with the greater bargaining power”: Personnel Contracting at [58] (Kiefel CJ, Keane and Edelman JJ).
27. The characterisation of a relationship as being either one of employer and employee, or one involving the engagement of an independent contractor, is ultimately an evaluative judgment that takes into account the totality of the parties’ contractual rights and obligations. The exercise may not necessarily be straightforward because, in some cases at least, the parties’ contractual rights and obligations may point in different directions. The evaluative exercise also should not be approached on the basis that there is some checklist against which ticks and crosses may be placed so as to produce the right answer. Some degree of uncertainty is unavoidable, particularly in the case of many modern-day work or service contracts.
In Chambers and O’Brien v Broadway Homes Pty Ltd[5] (Broadway Homes), a Full Bench of the Commission provided the following summary of the key propositions in Personnel Contracting:
(1) When characterising a relationship regulated by a wholly written, comprehensive contract which is not a sham or otherwise ineffective, the question is to be determined solely by reference to the rights and obligations under that contract. It is not permissible to examine or review the performance of the contract or the course of dealings between the parties (Personnel Contracting at [40]-[62], [172]-[178] and [203]).
(2) The subsequent conduct of the parties may be considered to ascertain the existence of variation of contractual terms (Personnel Contracting at [42], [45], [177]-[178], [188]-[190] and [203]).
(3) The multifactorial approach only has relevance in respect of the required assessment of the terms of the contract (Personnel Contracting at [33]-[34], [47], [61], [174], [186] - [189] and [203]).
(4) It is necessary to focus on those aspects of the contractual relationship which bear more directly upon whether the worker’s work was so subordinate to the employer’s business that it can be seen to have been performed as an employee of that business rather than as part of an independent enterprise. The question is: whether, by the terms of the contract, the worker is contracted to work in the business or enterprise of the purported employer (Personnel Contracting at [39], [180]-[186] and [203]).
(5) Existence of a contractual right to control the activities of the worker (including how, where and when the work is done) is a major signifier of an employment relationship (Personnel Contracting at [73]-[74], [113]-[114] and [121]).
(6) The label or characterisation placed on the relationship by the contract is not relevant even as a “tie breaker”, or at least it is not determinative (Personnel Contracting at [58], [63]-[66] and [79], [127], [184] and [203]).[6]
The summary in Broadway Homes was adopted by a Full Bench of the Commission Deliveroo Australia Pty Ltd v Diego Franco[7] (Deliveroo). The Full Bench in Deliveroo added the following further proposition to the above summary:
…that a contractual freedom on the part of the party performing the relevant work to accept or reject any offer of work and to work for others is not necessarily a contraindication of employment and may rather be consistent with casual employment.[8]
The approach taken in Personnel Contracting and Jamsek applies regardless of the whether the contract is wholly written, wholly oral, or partly written and partly oral.[9]
Background and Contract
The Respondent operates The Bay Caravan Park (Bay Caravan Park), which is located in Kawungan, Queensland.[10] The Bay Caravan Park is predominantly a long-term residential park, with only a small proportion of its total occupancy derived from short term tourists.[11]
Some of the long-term residents of the Bay Caravan Park reside in their own accommodation, while others reside in accommodation owned by the Respondent.[12]
In October 2022, the Applicant was staying at another caravan park operated by a related entity of the Respondent when several discussions took place between Ms Von Pein, the Applicant, and Mr Grace regarding the possibility of the Applicant and Mr Grace being engaged to manage the Bay Caravan Park.[13]
It is not in dispute that the Applicant was advised that she would be required to provide an Australian Business Number and certificates of insurance.[14]
After being provided with a copy of the proposed contract, the Applicant was given a limited opportunity to review it, during which she consulted an insurance broker.[15]
On 8 November 2022, the Applicant and Mr Grace entered into separate contracts with Respondent to provide services as “Live in caretakers/managers.”[16]
The Applicant’s contract was annexed to the witness statement of Ms Von Pein dated 12 July 2023 (Contract).[17]
The Contract is described (or labelled) as a ‘Contractors Agreement’ and states that the “Contractor” (defined as the Applicant) will provide services to the “Company” (defined as the Respondent) as a ‘live in caretaker/manager’ on the terms and conditions of the Contract.
In the section titled ‘Background’, the Contract states:
A. The Company has requested the Contractor to provide the Services described in Item 6 of the Schedule to the Company.
B. The Contractor has agreed to provide the Services of Manager to the Company on the terms and conditions of this Agreement.
C. The Contractor will provide the Services of a live in caretaker/manager of The Bay Caravan Park, 1-9 McLiver Street, Kawungan, Qld. The services will include all services reasonably required for the safe, efficient and commercial operation of the Park. In an emergency or as required the contractor can engage their own relief managers which are approved by the Company.
Section 2 of the Contract is titled Contractor’s Obligations. The clauses contained within section 2 are numbered as clauses 3.1, 3.2 and 3.3. These clauses state:
3.1 Services
(a) The Contractor shall provide the Services to the Company as set out in Item 6 of the Schedule.
(b) The Contractor shall perform the Services on the days and during the hours specified at Item 10 of the Schedule.
(c) The Contractor must procure that the Services are carried out by the Contractor’s Nominated Personnel. The Contractor must not permit any other person to carry out the Services without the prior written approval of the Company.
(d) The contractor is permitted to obtain necessary items for office supplies, general repairs and renovations.
3.2 Responsibility for benefits and entitlements
The Contractor:
(a) Agrees that it is not entitled to claim payment for any benefits or entitlements of the Company’s employees, including but not limited to seek long service leave;
(b) Agrees that it is solely responsible for the payment of taxes, including payroll and income tax, and any other liability associated with the provision of the Services;
Will make provision for and meet the cost of all long service leave, in respect of the Contractor and all of its Personnel engaged to perform the services; and
Will fully comply with the laws of the Commonwealth of Australia in respect of the matters raised at (a) and (b) above.
(c) The Company has agreed to pay 4 weeks annual leave to the Contractor at $965.38 per week. Annual leave to be taken at a mutually suitable time as discussed with the contractor. Christian festival periods and other mutually suitable time.
The Company:
Agrees to pay government regulated superannuation payments to the contractor is allocated superannuation fund.
3.3 Engagement in Other Activities
The Contractor is free to engage in other business activities at any time or times when the Services are not required to be performed under this Agreement provided that the provision of the Services by the Contractor under this Agreement is not affected or prejudiced in any way.
Clause 4.2 of the Contract states:
4.2 Site Rental
The Contractors and Company have agreed to rent the upstairs area of the house at 1-9 McLiver Street, Kawungan for $200 per week including services as per General Tenancy Agreement (Form 18a) signed 9/11/22, $100 per week will apply to Jo Grace and $100 per week to Peter Grace. The applicable rent to be deducted from the contract fee before payment of the contract fee. Rent is to be paid at all times including holiday periods. The Contractor and Company have agreed the rent of the accommodation runs concurrently with the agreement and will terminate when this agreement terminates. The Contractor has agreed to bond to clean the house and to steam clean and disinfect the tiles and tile grout when vacating.
The Schedule to the Contract provides as follows:
Item 1 Start Date of Agreement 16 November 2022.
Item 2 Fee Details $50,200 pa ie $965.38 pw gross less rent
$100 pw.
Item 3 Payment Terms 7 days after receipt of a valid invoice
and/or no later than the Company’s normal payroll processes.
Item 4 Director/Secretary Ruth Von Pein
Item 5 Contractor Johanna Grace
Item 6 Description of Services Type of services as follows:
· Assisting the directors of the Company to oversee Park operations in all aspects as required at The Bay Caravan Park.
· Process all office and online bookings, daily answer email, Facebook and Gumtree enquiries and emails.
· Liaise with residents and company maintaining records, forwarding all notices for unpaid rent, processing 10 applications, preparing documents as needed.
· Answer all phone enquiries and email enquiries every day.
· Cash transaction report and batch total on eftpos are to balance at the end of every day and a copy of both reports and the cash transaction for banking and banking deposit slip to be emailed to Ruth Von Pein.
· All policies and procedures, booking and cancellation conditions, RTA rules and procedures, tariff charges to be followed, any variation is to be requested from Ruth.
· Take a proactive approach with marketing to increase occupancy of the park, regular posts of park on Facebook and marketplace adverts for vacancies, Gumtree adverts for vacant accommodation.
· Maintain float at $200.
· Assist Peter with weekly report and advise details of Facebook followers and marketing promotions.
· Maintain bond clean amenities, bond clean cabins and clean accommodation as needed (Contract cleaner can be arranged to do amenities and laundry with Contractor to bond clean in addition. At any time a contract amenities cleaner is not available the Contractor is to keep the amenities and laundry clean).
· Assist with maintaining the park, maintenance and renovations.
Item 7 Term Twelve (12) month with the option of an
additional twelve (12) months
Item 8 Further Term Ongoing, in accordance with this
agreement.
Item 9 Insurance Public Liability Insurance
The Contractor must obtain and maintain a policy of public liability insurance with a reputable insurer with a limit of liability not less than $20 million for the duration of this Agreement, however caused, of this Agreement, which shall be extended to indemnify the Company for all amounts which it becomes legally liable to pay as compensation in respect of personal injury and/or property damage in connection with an resulting from the execution by the Contractor of its obligations under this Agreement.
Workers Compensation
Not required as the Contractor is not required or expected to employ persons. Casual workers in the park are expected to have their own ABN and work as contractors.
The Contractor must obtain and maintain for the duration of this Agreement a workers’ compensation and employer’s liability insurance policy covering liability for loss, damage, claims, and all direct or indirect costs and expenses arising at common law or under workers’ compensation or employer’s liability legislation in respect of persons employed or deemed to be employed by the Contractor.
Item 10 Ordinary hours of work Monday, Tuesday, Wednesday, Thursday,
and Friday. Sunday maybe worked in lieu of weekdays.
Saturday for emergency only
Item 11 Notice 4 weeks
Item 12 Address for Notices [Redacted]
Email address for notices [Redacted]
Although the contract provided for a commencement date of 16 November 2022, the Applicant and Mr Grace commenced providing services from 14 November 2023.
Office opening hours
In addition to the written terms set out in the Contract, there was no dispute that the Applicant was required to ensure the office at the Bay Caravan Park was open from 10:00am to 11:00am each weekday for the purposes of residents paying rent, purchasing washing machine tokens and reporting maintenance issues.[18]
Accordingly, I find that requirement was a term of the arrangement between the Applicant and the Respondent.
Out of hours telephone enquiries
The parties were in dispute about the extent to which the Applicant was required to respond to out of hours telephone enquiries.
Item 6 of the Schedule to the Contract states ‘Answer all phone enquiries and email enquiries every day’.
The Applicant stated that during negotiations with Ms Von Pein she was advised that the role would require some ‘on-call after-hours work’ in relation to telephone enquiries from residents.[19]
Ms Von Pein disputed this and stated that the Applicant was only required to respond to emergency services calls (e.g. police, ambulance, fire brigade) out of hours if they required access to the Bay Caravan Park. Ms Von Pein stated that the caller ID on telephone provided to the Applicant would identify whether the caller was a resident and there was no obligation to answer the telephone from a resident outside of the ‘ordinary hours.’ Ms Von Pein stated that Item 6 of the Schedule refers to ‘everyday Monday to Friday.’[20]
Item 6 of the Schedule requires the Applicant to ‘answer’ all telephone enquiries every day. While clause 3.1(b) requires the services to be provided on the days and during the hours specified at Item 10 of the Schedule, those hours are not expressed as a strict requirement, but rather an expectation of the time range within which the services will be provided. Moreover, they are expressed as ‘ordinary hours.’
Having regard to the evidence of circumstances surrounding the making of the contract,[21] I so find, that a term of the arrangement between the parties included the requirement to answer telephone enquiries every day, including beyond the range of the ‘expected hours’ in the Contract.
Requirement to Live On-Site
Although the Contract states that the Contractor will the provide the services of ‘a live in caretaker/manager’ and that the parties ‘agreed’ to rental premises and the amount of rent, the Contract does not include a term that the Applicant must live on-site.
However, such a term must have been discussed between the parties, or at the very least implied, as it is necessary for the reasonable and effective operation of the arrangement between the parties, including the requirement to answer telephone enquiries and allowing access to emergency services after hours.
Accordingly, I find that a term of the arrangement was the requirement for the Applicant to live on-site at the Bay Caravan Park.
Tools and Equipment
There is no term in the Contract requiring the Applicant to provide her own tools and equipment. However, it is clear on the evidence that the Respondent provided all tools and equipment necessary for the Applicant to perform the role. This included a mobile telephone; computer; access to the internet; computer software, including social media accounts; stationery; cleaning equipment; cash float; handyman/maintenance tools, including an electric drill and pressure cleaner; and a utility vehicle.[22]
Directions
The Applicant stated that she and Mr Grace were subject to constant direction from Ms Von Pein as to the tasks they were required to complete and how they were to complete those tasks. This included directions regarding the engagement of other contractors, the disposal of palm fronds, and the renovating of cabins.[23] I deal with this further below.
Termination of Arrangement
The relationship between the Applicant and the Respondent became strained in late March/early April 2023.
On 19 April 2023, the Applicant and Mr Grace advised the Respondent that they were being harassed and threatened by residents. The Applicant and Mr Grace did not provide specific details when requested, advising the Respondent that the details will be provided as part of an ‘anticipated’ investigation.
On 20 April 2023, Ms Von Pein became aware that the Applicant and Mr Grace had closed the office until ‘further notice’. This prompted Ms Von Pein to send correspondence to the Applicant and Mr Grace advising that their respective arrangements were terminated. That correspondence stated:[24]
Hi Jo and Peter,
Park tenants have been visiting the office to pay rent and cannot do so because you have not been in the office, as the office has been closed with an unauthorised sign saying ‘Office Closed due to unforeseen circumstances until further notice”. This sign we are led to believe has been displayed since at least Wednesday morning.
The above is having a substantial and detrimental impact on our business which needs to be kept operating. I understand the moral and Christian aspect has no bearing on the non performance of the Agreement conditions but I never thought you would treat our business like this as we have been during the time you have been at the park. We worked around your holidays even when we were in emotional turmoil with sickness and death in the family.
The fourth dot of the schedule in your agreement states you are to answer all phone enquiries and emails every day. Item 10 of your agreement states you are to work Monday to Friday.
It is apparent that your perceived perceptions of park conditions seemingly is preventing you from abiding by the Agreement conditions to enable you to operate our business or live in the park. Your employment is terminated immediately and could you please vacate the park and residence by Sunday 23rd April 2023. Can you please give all keys including the ute, gas and office to Bert tomorrow. I will let Bert know. Do not put any other notices on the office leave sign as is for now. George and I will come to the park.
We appreciate what you have down until you finished working on Tuesday this week and wish you all the best for the future.
Regards,
Ruth and Jason.
Ms Von Pein stated that the reference to ‘employment’ was a mistake and that she has never considered the Applicant’s engagement to be an employment relationship.[25]
Summary of the Respondent’s Submissions
The Respondent submitted that it is clear that the Contract was a wholly written comprehensive contract which overwhelmingly points to the conclusion that the relationship was one of principal and contractor.
The Respondent submitted that the most obvious provisions within the Contract are the express provisions that refer to contractor rather than employee.
The Respondent submitted that the arrangements dealing with leave entitlements, taxation and insurance all point towards an arrangement of principal and contractor rather an employment relationship.
The Respondent submitted that while the inclusion of “4 weeks annual leave” points towards an employment relationship, that provision is very much at odds with the express provisions disentitling the Applicant to any form of leave or other employment entitlements and was intended to provide the Applicant with a break.
The Respondent rejected any contention that the contract was a sham, submitting that there is no evidence to suggest that both parties held a common intention that the contract be a disguise for some purpose other than that of constituting the whole of the arrangement between the parties.
The Respondent also rejected any contention that the arrangement was partly oral, submitting that the terms are clear and unambiguous, and the contract clearly states that the services are provided on the terms and conditions of the Agreement.
The Respondent submitted that any directions given by the Respondent after the commencement of the Contract do not amount to a variation, rather they the actions of the Respondent exercising its rights under the Contract – specifically, the requirement that the Applicant’s obligation to assist the directors of the Respondent to oversee all aspects of the operations of the Bay Caravan Park.
The Respondent submitted that the Application is not one that can be dealt with under s.368 of the FW Act because it is not a matter involving the dismissal of an employee. The Respondent submitted that the Application should be dismissed.
Summary of the Applicant’s Submissions
The Applicant submitted that the Contract does not clearly state that the relationship is one of principal and contractor.
The Applicant submitted that in addition to the Contract there were various oral terms and that the terms and conditions of the arrangement were partly oral and partly written.
The Applicant accepted that she has been engaged as a contractor in prior arrangements and entered into this arrangement believing that she was a contractor. However, the Applicant submitted that from the outset it was clearly an employment relationship.
The Applicant submitted that the volume of out of hours work was much higher than represented by Ms Von Pein and that she was subject to continual directions and micromanagement by Ms Von Pein either directly or through Ms Vanessa Velt, a relief manager who worked in various roles for the Respondent.
The Applicant submitted that ‘misrepresentation’ about the volume of out of hours work and the level of direction and micromanagement had the effect of varying the terms of the Contract and demonstrated that the arrangement was a sham.
The Applicant submitted that she was subject to a ‘master’ and that the Contract was a mask to the real relationship.
Consideration
The terms of the arrangement between the Applicant and the Respondent comprised the written terms as set out in the Contract, the oral terms relating to the office opening hours and the requirement to answer out of hours telephone enquiries, and the requirement to live on-site at the Bay Caravan Park.
I do not accept the Applicant’s submission that the arrangement between the parties was a sham. In Equuscorp Pty Ltd v Glengallan Investments[26], the High Court said that “sham” refers to “steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences”. The important point is that the requisite intention must be that of both parties to the ostensible contract, usually, if not always, with the objective of deceiving a third party.
The Applicant did not lead any evidence in support of her submission that the arrangement was a sham. Indeed, the Applicant accepted that she entered into the arrangement believing that she was a contractor. In the absence of any evidence that both parties intended to enter into a sham contract, this submission cannot be accepted.[27]
I also do not accept the limited evidence of subsequent conduct by the Respondent in the form of the directions issued was such as to establish that the terms of the arrangement between the parties had been varied, or that certain rights under the contract were subject to an estoppel.
It follows that the analysis of the question of whether the Applicant was an employee of the Respondent at the time of her termination must proceed by reference to the terms of the written terms set out in the Contract, the oral terms relating to office opening hours and answering telephone enquiries out of hours, and the requirement that the Applicant live on-site.
I now turn to a consideration of those contractual provisions that are relevant to determining the nature of the relationship between the parties.[28]
Control: whether the putative employer has the right to control how, where and when the putative employee performs the work
The terms of the arrangement provide for the Respondent to control when the office must be open, that the Applicant must reside on-site and perform the services unless the Respondent agrees otherwise, and the days and time ranges within those days when (most of) the services are expected to be performed.
These matters indicate the Respondent has substantial control over how, where and when the Applicant performs the work. This aspect weighs strongly in favour of the conclusion that the Applicant was an employee.
Own business/putative employer’s business
This aspect focuses attention on the extent to which the putative employee can be seen to work in his or her own business, as distinct from the business of the putative employer and whether the putative employee’s work was so subordinate to the employer’s business that it can be seen to have been performed as an employee of that business rather than as part of an independent enterprise.[29]
In Personnel Contracting Gordon J, with whom Steward J agreed, stated:
[183] The better question to ask is whether, by construction of the terms of the contract, the person is contracted to work in the business or enterprise of the purported employer. That question is focused on the contract, the nature of the relationship disclosed by the contract and, in this context, whether the contract discloses that the person is working in the business of the purported employer. It invites no inquiry into subsequent conduct. A consequence of a negative answer to that alternative question may be that the person is not an employee.[30]
(emphasis in original)
The terms of the arrangement required the Applicant to live on-site and manage the day-to-day administration of the Respondent’s business, as well as overseeing/undertaking renovations, maintenance, and cleaning.
While the Applicant had the right to engage in other business activities, that was subject to the provision of the services not being affected or prejudiced.
Having regard to the terms of the arrangement, and, in particular, the requirement to live on-site and the description of services at Item 6 of the Schedule to the Contract, I consider the work performed by the Applicant was so subordinate to the Respondent’s business that it can be seen to have been performed as an employee of the Respondent. Accordingly, the better question posed by Justice Gordon in Personnel Contracting must be answered positively.
Tools and Equipment
The arrangement between the parties relates to the provision of services as a live-in caretaker/manager. The services to be provided include cleaning accommodation and amenities and assisting with maintenance and renovations.
In Jamsek, Gageler and Gleeson JJ, stated:
Where work contracted for, actually performed by an individual, and paid for, involves use of a substantial item of mechanical equipment for which the provider of the work is wholly responsible, the personal is overshadowed by the mechanical. That was recognised by this Court in Humberstone v Northern Timber Mills and again in Wright v Attorney-General for the State of Tasmania. Those cases were cited as authorities for that proposition in Neale v Atlas Products (Vic) Pty Ltd; they support what has become the “conventional view” that “owners of expensive equipment, such as [a truck], are independent contractors”.[31]
Despite the nature of services the Applicant was to provide pursuant to the arrangement between the parties, there are no terms which require the Applicant to provide any tools or equipment. This factor points towards a conclusion that the Applicant was an employee.
Delegation
The Contract requires personal service by the Applicant. The Applicant does not have the right to engage employees and/or sub-contractors to perform any of the services unless prior written approval is obtained from the Respondent (Clause 3.1). This factor weighs in favour of the conclusion that the Applicant was an employee.
Payment
The Contract provides for the Applicant to be paid on a weekly basis upon the submission of a valid tax invoice. I consider this factor points more towards the Applicant being an independent contractor than an employee. However, it is not determinative on its own.
Taxation and Insurance
In many cases involving the issue of whether a person is an employee or independent contractor, the terms of the contract dealing with taxation and insurance are merely reflective of the label given to the arrangement by the parties, rather than the substance of the arrangement.[32]
The terms of the arrangement which deal with the taxation and insurance arrangements are consistent with a principal and independent contractor relationship. While these matters are relevant to the totality of the relationship between the parties, I do not place significant weight on them.
Holidays and entitlements
The Contract states that the Applicant is not entitled to claim payment for any benefits or entitlements of the Respondent’s employees such as sick leave or long service leave.
The Contract also provides for the Respondent to contribute compulsory superannuation, which the Respondent submitted was required pursuant to s.12 of the Superannuation Guarantee (Administration) Act 1992.
While those matters point more towards the Applicant being an independent contractor than an employee they are not determinative and similarly to the issues of taxation and insurance, they are usually reflective of the label applied by the parties to the arrangement.
However, the Contract also provided for the Applicant to receive four weeks paid annual leave each year. This factor weighs in favour of the conclusion that the Applicant was an employee.
Labels
The Contract was clearly labelled as a ‘Contractors Agreement’ and the Applicant was defined throughout the Contract as a Contractor. While labels are not determinative, they should not be disregarded and are part of the overall assessment of the relationship.[33]
Uniform and livery
The Applicant was not required to wear a uniform or other clothing bearing the Respondent’s name or logo, nor do they require the Applicant to use any signage or other designation of Respondent on her person or any vehicle. I consider this a neutral factor.
Profession, trade or distinct calling
I accept that the work involved is not unskilled. However, it is not a profession, trade or distinct calling. This factor points towards an employment relationship.
Evaluative Judgment
Having regard to the totality of the relevant contractual rights and obligations of the arrangement between the Applicant and the Respondent, my evaluative judgment is that the Applicant was an engaged as an employee of the Respondent.
The factors pointing towards a conclusion that the Applicant was an employee significantly outweigh those pointing towards an independent contractor, particularly the issues of control, delegation and tools and equipment.
Furthermore, and as stated above, the work performed by the Applicant under the terms of the arrangement was so subordinate to the Respondent’s business that it can be seen to have been performed as an employee of the Respondent.
Conclusion
For the reasons set out above, I find that the Applicant was an employee of the Respondent. The Respondent’s jurisdictional objection is dismissed.
COMMISSIONER
Appearances:
Ms J Grace, Applicant.
Mr D Pratt, of counsel for the Respondent.
Hearing details:
2023.
Sydney (via Microsoft Teams video-link):
8 August
<PR767240>
[1] Coles Supply Chain Pty Ltd v Milford [2020] FCAFC 152 at [67], [74]-[75].
[2] [2022] HCA 1.
[3] [2022] HCA 2.
[4] [2022] FCA 750.
[5] [2022] FWCFB 129
[6] Ibid at [74].
[7] [2022] FWCFB 156 at [34].
[8] Deliveroo at [35] applying Personnel Contracting at [84] (per Kiefel CJ, Keane and Edelman JJ) and [196] (per Gordon J).
[9] Secretary, Attorney-General’s Department v O’Dwyer [2022] FCA 183 at [29]-[33].
[10] Exhibit R1 at [1].
[11] Exhibit R1 at [2]; Exhibit A1 at [5].
[12] Exhibit R1 at [2].
[13] Exhibit A1 at [6]-[8].
[14] Exhibit A1 at [9]; Transcript dated 8 August 2023.
[15] Exhibit A1 at [10]; Transcript dated 8 August 2023.
[16] Exhibit R1 at [3].
[17] Exhibit R1 at [4], Annexure RVP1.
[18] Exhibit R1 at [14]-[15].
[19] Exhibit A1 at [7].
[20] Transcript dated 8 August 2023.
[21] Personnel Contracting at [174]-[175].
[22] Exhibit R1 at [9]-[10]; Exhibit A1 at [24], [29]
[23] Exhibit A1 (Email Communications Annexure).
[24] Exhibit A1.
[25] Exhibit R2 at [1].
[26] [2004] HCA 55 at [46].
[27] Deliveroo at [55].
[28] See Personnel Contracting at [73]-[74] (Kiefel CJ, Keane and Edelman JJ); [113] (per Gageler and Gleeson JJ); [174] (per Gordon J), referring to Brodribb at 24 (Mason J); see also 36-37 (Wilson and Dawson JJ).
[29] Personnel Contracting at [36]-[39] (per Kiefel CJ, Keane and Edelman JJ); [113] (per Gageler and Gleeson JJ); cf [180]-[183] (per Gordon J).
[30] Personnel Contracting at [183] (per Gordon J); [203] (per Steward J).
[31] Jamsek at [88] (per Gageler and Gleeson JJ).
[32] ACE Insurance Ltd v Trifunovski [2013] FCAFC 3 at [37] (per Buchanan J, whom Lander and Robertson JJ agreed).
[33] Personnel Contracting at [66] (per Kiefel CJ, Keane and Edelman JJ); [184] (per Gordon J).
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