Mrs P v The Employer
[2009] FWA 953
•12 NOVEMBER 2009
[2009] FWA 953 |
|
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
v
The Employer
(U2009/11814)
SENIOR DEPUTY PRESIDENT O'CALLAGHAN | ADELAIDE, 12 NOVEMBER 2009 |
termination of employment – jurisdiction – not an employee – extension of time.
[1] This decision refers to conciliation proceedings involving the parties. Section 398 of the Fair Work Act 2009 (the Act) requires that if Fair Work Australia conducts a conference, it must do so in private. As this decision deals extensively with information provided in conference proceedings, I have not disclosed the names of the parties in this decision.
[2] On 4 September 2009 Mrs P lodged an application for an unfair dismissal remedy pursuant to section 394 of the Act. Mrs P’s application was made on the basis that she asserted that her employment with The Employer was unfairly terminated. On the basis of the information contained in her application, Mrs P’s application was made some 22 days outside of the 14 day time limit specified in section 394(2)(a).
[3] On 21 September 2009 The Employer lodged a response to the application in which it asserted that Mrs P was an ABN contractor and not an employee. Further, The Employer asserted that Mrs P was advised that aspects of her performance as the Fitness Director at an Adelaide Club were inadequate on numerous occasions prior to the termination of the contracting relationship. The Employer also objected to the granting of an extension of time.
[4] Mrs P’s application proceeded to conciliation on 23 September 2009. It was not resolved through this process and was subsequently referred to me for determination.
[5] I issued directions on 2 October 2009. In these directions, I confirmed to the parties that Mrs P’s application would be the subject of a conference with me on 20 October 2009. The parties were advised that this conference was to provide a brief further opportunity to discuss the possibility of a settlement of the application. Secondly, in the event that an agreed conclusion to the application could not be reached, the parties were put on notice that I may proceed to hear evidence from both parties about the extension of time objection raised by The Employer and the objection that Mrs P was not an employee.
[6] On 19 October 2009 The Employer provided to me, correspondence in which it confirmed its position that Mrs P was not an employee and that her application was made outside of the 14 day time limit. This advice explained how The Employer understood the contracting arrangement with Mrs P operated. It provided advice of amounts received by Mrs P on specified dates. In this respect it referred to invoices which were not attached to the correspondence.
[7] Mrs P attended the conference in Adelaide on 20 October 2009 with her husband, Mr P. Ms W, the The Employer General Manager Human Resources represented The Employer by video-link from Sydney. Additionally, Ms T, The Employer Human Resources Manager and Mr W, The Employer National Fitness Manager appeared by video-link from Brisbane. Ms M, the State Manager for South Australia appeared in Adelaide.
[8] The requirement that Fair Work Australia initially consider Mrs P standing as an employee, and the delayed lodgement of the application arises from section 396 which states:
“FWA must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:
(a) whether the application was made within the period required in subsection 394(2);
(b) whether the person was protected from unfair dismissal;
(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;
(d) whether the dismissal was a case of genuine redundancy.”
[9] I do not consider this section requires that any of the four matters specified must necessarily be dealt with first. As a matter of convenience I have initially considered whether Mrs P was protected from unfair dismissal before considering the extension of time issue.
[10] The nature of the proceedings on 20 October 2009 deserves specific mention. These proceedings constituted a conference consistent with section 398 of the Act. This section states:
“(1) This section applies in relation to a matter arising under this Part if FWA conducts a conference in relation to the matter.
(2) Despite subsection 592(3), FWA must conduct the conference in private.
(3) FWA must take into account any difference in the circumstances of the parties to the matter in:
(a) considering the application; and
(b) informing itself in relation to the application.
(4) FWA must take into account the wishes of the parties to the matter as to the way in which FWA:
(a) considers the application; and
(b) informs itself in relation to the application.”
[11] The parties were advised of the conference process and no objection was taken to the opportunity given to both parties to provide evidence and submissions in support of their respective positions on 20 October 2009. The parties were advised that, after the discussions about a possible settlement, the conference proceedings would be recorded, and that whilst these proceedings would not be transcribed, either party could request a copy of the sound file.
[12] Evidence was given under oath by Mrs P and Mr W. The parties were each given the opportunity to address questions to the person giving evidence in a fashion which reflected traditional evidentiary arrangements.
[13] Section 399 states:
“(1) FWA must not hold a hearing in relation to a matter arising under this Part unless FWA considers it appropriate to do so, taking into account:
(a) the views of the parties to the matter; and
(b) whether a hearing would be the most effective and efficient way to resolve the matter.
(2) If FWA holds a hearing in relation to a matter arising under this Part, it may decide not to hold the hearing in relation to parts of the matter.
(3) FWA may decide at any time (including before, during or after conducting a conference in relation to a matter) to hold a hearing in relation to the matter.”
[14] On the basis of the approach adopted on 20 October 2009 I did not consider that a more formal hearing was appropriate or that it would be the most effective and efficient way to resolve the matter.
Whether Mrs P was protected from unfair dismissal
[15] Section 382 states:
“A person is protected from unfair dismissal at a time if, at that time:
(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and
(b) one or more of the following apply:
(i) a modern award covers the person;
(ii) an enterprise agreement applies to the person in relation to the employment;
(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.
Note: high income threshold indexed to $108,300 from 1 July 2009”
[16] Section 380 states:
“380 Meanings of employee and employer
In this Part, employee means a national system employee, and employer means a national system employer.”
[17] A national system employee is then defined in section 13, in the following terms:
“13 Meaning of national system employee
A national system employee is an individual so far as he or she is employed, or usually employed, as described in the definition of national system employer in section 14, by a national system employer, except on a vocational placement.
Note: Section 30C extends the meaning of national system employee in relation to a referring State.”
[18] I have also noted section 15 which states:
“15 Ordinary meanings of employee and employer
(1) A reference in this Act to an employee with its ordinary meaning:
(a) includes a reference to a person who is usually such an employee; and
(b) does not include a person on a vocational placement.
Note: Subsection 30E(1) extends the meaning of employee in relation to a referring State.
(2) A reference in this Act to an employer with its ordinary meaning includes a reference to a person who is usually such an employer.
Note: Subsection 30E(2) extends the meaning of employer in relation to a referring State.”
[19] The designation by The Employer of Mrs P as an independent or ABN contractor does not dictate that Mrs P was truly engaged on that basis. I have noted that there appears to be no dispute that Mrs P undertook various fitness class instructor duties outside of her role as a Fitness Director. It is common ground between the parties that in this regard Mrs P was only paid for the time that she worked. In this respect, the remedy claimed in this application is limited to the role of Fitness Director.
[20] The approach to the determination of whether a person is an independent contractor or an employee has been considered by the Courts and Tribunals on numerous occasions. I have applied the approach adopted by the High Court in Steven v Brodribb Sawmilling Co. Pty Ltd 1. This approach was applied by a Full Bench of the Australian Industrial Relations Commission in Abdulla v Viewdaze Pty Ltd trading as Malta Travel2(Abdulla)in the following terms:
“18. The advantage of the organization test, on this view of it, is that it avoids the complications associated with the employee/independent contractor test. But at what price? The test does no more than shift the focus of attention to the equally difficult question of determining when a person is part of an organization such that his wrongs may be imputed to that organization. I doubt that the suggested test moves any closer toward a clarification of the fundamental problems of vicarious liability - a view which seems to have been shared by Stephen J. in Federal Commissioner of Taxation v. Barrett, at p 402, and MacKenna J. in Ready Mixed Concrete (South East) Ltd v. Minister of Pensions and National Insurance (1968) 2 QB 497, at p 524. Moreover, on this approach, the organization test has the effect of imposing liability on the proprietor of the organization, whether he had the capacity to control the contractor or not. Whether the Court should impose vicarious liability on a proprietor in these circumstances is a very large question on which we have not had the benefit of argument.
19. The traditional formulation, though attended with some complications in its application to a diverse range of factual circumstances (Federal Commissioner of Taxation v. Barrett, at p 400), nevertheless has had a long history of judicial acceptance. True it is that criticisms have been made of it. It is said that a test which places emphasis on control is more suited to the social conditions of earlier times in which a person engaging another to perform work could and did exercise closer and more direct supervision than is possible today. And it is said that in modern post-industrial society, technological developments have meant that a person so engaged often exercises a degree of skill and expertise inconsistent with the retention of effective control by the person who engages him. All this may be readily acknowledged, but the common law has been sufficiently flexible to adapt to changing social conditions by shifting the emphasis in the control test from the actual exercise of control to the right to exercise it, "so far as there is scope for it", even if it be "only in incidental or collateral matters" (Zuijs v. Wirth Brothers Pty Ltd, at p 571).”
[21] The Full Bench in Abdulla also endorsed the approach applied by a Full Bench of the Australian Industrial Relations Commission in Sammartino 3 in the following terms:
“[23] In Sammartino the Full Bench of the Commission said:
"In considering whether Mr Sammartino is an employee we are obliged to apply what an earlier Full Bench has described as `the relatively well established body of law setting out tests for the existence of a contract of service. The determination of whether a contract of service has been entered into requires a finding of fact based on the application of certain tests or indicia' (Re Family Day Care Providers, per Boulton and Munro JJ and Donaldson, 5 April 1991, Print J7216 at 2-4). In that decision the approach and indicia extracted, in the main, from Stevens v Brodribb were stated in terms that may be summarised as follows:
It must first be established that work is being done by a person in performance of a contractual obligation to a second person. The possession by the second person of a right to exercise control over the way in which the work is carried out, and the degree of such control, are then to be examined and applied as prominent factors in distinguishing a contract of service from a contract for services.
It is also clear that the totality of the relationship must be considered in determining whether the relationship between the [parties] is one of employer and employee or not [Stevens v Brodribb Sawmilling Co Pty Ltd per Mason J at 24].
The characterisation of the relationship is made by assessing and putting in balance the relevant indicia. Consequently the decision making process requires reference to criteria for which no relative weight has been authoritatively determined [op cit; at 35-36 and 49]. ... (Re Family Day Care Providers at 3)
We have revised the list of the headings and matters to which that Full Bench had regard. In our view, the process for characterising any relevant contract between Mr Sammartino and Mayne Nickless requires findings to be made about the following matters as the basis for the overall assessment:
(1) the work performed;
(2) the existence of a contractual relationship and the identification of the main contractual terms;
(3) the indicia of an employment relationship;
(a) degree of control;
(b) mode of remuneration;
(c) provision and maintenance of equipment or resources;
(d) obligation to work;
(e) delegation of work by contractor or exclusivity of performance;
(f) hours of work and entitlements to leave;
(g) provision for holidays;
(h) deduction of income tax;
(i) characterisation of relationship for purposes of regulatory provisions such as superannuation and workers compensation."
[22] I have applied this approach to the information before me, on the basis that an overall assessment is required.
Work performed
[23] Mrs P worked as a Fitness Director for The Employer’s Adelaide facility. As such, her Job Description specifies that she is responsible for the following:
“The Fitness Director Job description contains the following performance steps:
1. Administration
2. Recruitment
3. Training & Development
4. Operations
5. Program Development
6. Lead Management
7. Minimum Performance Criteria
8. Evaluation
1. Administration | a. Hours of Operation • Fitness Directors are required to perform 10 hours of administration duties at their respective club per week for 10 trainers • 12 trainers = 12 hours • 15 trainings = 15 hours • 20 trainers = 20 hours • After this point negotiations will take place as to a further structure that suits both parties. • These hours are to be made up of two hours per day, Monday to Friday, preferably during off-peak times. • Fitness Directors are required to be present at the club whilst performing these duties. b. Remuneration • As a Fitness Director your hourly pay rate for administration duties will be $18.50 per hour. • $20 per week supervisory allowance. • You are required to invoice The Employer Health Clubs for these hours on a fortnightly basis, due Fridays. • Your invoices must be signed and approved by the State Fitness Director before being processed by Head Office. • Rental payments will start at $250/week and have the ability to become nil depending on your personal performance as a Fitness Director. You can achieve rent reductions for full-rent Personal Trainers working under you at your particular The Employer Health Club. (Refer MPC & Rental Payment Sliding Scale) • Refer Annexure 1 for Fitness Directors Rental Rate and Bonus Structure. c. CMS Systems • Fitness directors will be responsible for ensuring Personal Trainers and Gym Instructors are following the CMS Systems E.g, Personal Fitness Planner, First Consult and Program, 7 Day Report Cards, Filing Systems, Fit Checks & Call Boxes, Timesheets, Training Logs ….” |
Note: I have removed the references to the employer name.
[24] It is agreed between the parties that the rental arrangement specified in Mrs P’s contract was not implemented with respect to Mrs P.
[25] The work performed by Mrs P is more akin to an employment relationship than it is an independent contracting arrangement. Mrs P was responsible for recruiting, then training and monitoring personal trainers who are referred to as subcontractors and, who in turn, presumably invoice The Employer. Mrs P was paid an amount effectively determined by the number of personal trainers to whom she was responsible.
Existence of a Contractual Relationship and the main contractual terms
[26] Mrs P and The Employer signed and agreed the Letter of Engagement/Job Description for the Fitness Director position.
[27] This contractual arrangement specified reporting arrangements, educational and experience, skill and attitudinal requirements, together with performance expectations. These arrangements appear to more accurately reflect contract provisions relating to an employment arrangement rather than having the independent and outcome focused characteristics generally associated with an independent contracting arrangement.
[28] Mrs P referred to a new contractual arrangement proposed to her in June 2009, but not subsequently implemented.
Indicia of an Employment Relationship
[29] Degree of Control - Mrs P appeared to have limited control within the confines of her Fitness Director duties. She was required to work according to specified The Employer systems and procedures which determined the manner in which the work was performed.
[30] Mrs P also undertook work duties associated with periodic special health promotions to The Employer clients. This work involved the presentation of seminars and attendance on request at the Adelaide centre for client weight measurement purposes.
[31] On the evidence before me, Mrs P was also held accountable for the cleanliness of the fitness centre, which further indicates an administrative employment responsibility.
[32] The extent to which Mrs P had very limited control over the way in which her work was undertaken is inconsistent with an independent contracting arrangement and indicative of an employment contract.
[33] Mode of Remuneration - Mrs P’s evidence was that she was paid a minimum set weekly figure and additional hours approved by The Employer. These additional hours reflected payments for time spent on designated promotional activities and running other fitness classes.
[34] Mrs P agreed that she invoiced The Employer and that payments were made as a consequence of these invoices. She asserted that her base rate was $790 per fortnight on the basis of $18.50 per hour. She advised that she was unable to provide a copy of these invoices as the computer upon which they had been generated was the property of The Employer and was therefore now inaccessible to her. As I have already advised, The Employer did not provide copies of the relevant invoices.
[35] Mrs P also confirmed that she was paid commission payments which took into account the sales made by the personal trainers for whom she was responsible, in addition to the separate payments for her conduct of aerobics classes.
[36] The remuneration arrangements applicable to Mrs P appeared to reflect an employment arrangement rather than a contracting arrangement. In this respect I have noted that it appears that that there was no taxation deducted from payments made to Mrs P, but do not consider that this consequently defines the relationship as that of an independent contractor.
[37] Provision and Maintenance of Equipment and Resources - the evidence was that Mrs P worked for The Employer Adelaide facility and generally used the equipment and resources available at that facility.
[38] The evidence of Mr W of The Employer was that The Employer provided all equipment, uniforms and computing facilities, but that while Fitness Directors were able to bring in, and use their own equipment, this was generally limited to boxing gloves.
[39] As I have already noted, no charge was made on Mrs P for the use of the The Employer facilities and equipment.
[40] These factors also support the existence of an employment relationship.
[41] Obligation to Work and Hours of Work - the work arrangement with respect to Mrs P was quite specific in its expectation that she alone would undertake the duties of the Fitness Manager. There was no capacity for Mrs P to further subcontract the work. This further indicates an employment relationship.
[42] Mrs P was advised of broadly what part of the day she was required to work, although there appears to be some flexibility given to her in this respect. I am unable to conclude that this flexibility is such that it characterises the relationship as an independent contracting arrangement.
[43] Other factors - the parties did not provide evidence relative to holiday entitlements. This issue is not referenced in the contract provided to me.
[44] Additionally, information relative to the application of superannuation and worker’s compensation obligations has not been provided.
[45] I have concluded that this information does not support The Employer proposition that Mrs P is an independent contractor.
Conclusion - Protection from Unfair Dismissal
[46] For the reasons set out above, I have concluded that Mrs P was a national system employee who commenced employment in 2006 and is hence protected from unfair dismissal of virtue of section 382 of the Act.
Extension of Time
[47] Section 394 requires that an application for an unfair dismissal remedy must be made within 14 days of the termination of employment.
[48] The termination of Mrs P’s employment occurred on 30 July 2009. Mrs P’s application was lodged with Fair Work Australia on 4 September 2009, some 22 days outside of this statutory time limit.
[49] Subsection 394(3) states:
“(3) FWA may allow a further period for the application to be made by a person under subsection (1) if FWA is satisfied that there are exceptional circumstances, taking into account:
(a) the reason for the delay; and
(b) whether the person first became aware of the dismissal after it had taken effect; and
(c) any action taken by the person to dispute the dismissal; and
(d) prejudice to the employer (including prejudice caused by the delay); and
(e) the merits of the application; and
(f) fairness as between the person and other persons in a similar position.”
[50] In considering whether the time limit should be extended on the basis that there are exceptional circumstances, I have considered each of these factors.
[51] Mrs P advised that on 31 July or 1 August 2009 she sought on-line advice from Fair Work Australia relative to her capacity to make an application of this nature and that she subsequently accessed the Fair Work Australia telephone advisory service. Mrs P advised that she was told that, because she had an ABN, Fair Work Australia could not assist her.
[52] Mrs P then advised that she continued to make inquiries over the next fortnight relative to her employment status before again telephoning the Fair Work Australia telephone advisory service. On this occasion she was advised to talk with a lawyer. Mrs P saw a lawyer on 3 September 2009 and lodged an application on the following day.
[53] I have no reason to doubt Mrs P’s advice about the information provided to her by the Fair Work Australia telephone advisory service. Had this advice been such that it directed Mrs P to access legal advice at the outset, it would have been difficult for Mrs P to demonstrate that there was a proper reason for the delay.
[54] My understanding of the function of the Fair Work Australia telephone advisory service is that this service was not intended to provide determinative advice relative to workplace rights. However, in this situation, on the information available to me, the advice to Mrs P went to define her rights and hence went substantially beyond the provision of procedural advice. This advice clearly influenced Mrs P and resulted in the delay in the lodgement of the application. If Fair Work Australia provide advice of this nature it must be accepted that information which misleads a party may result in a delay if that person then needs time to access alternative information sources when they were entitled to rely on such a service. In this instance I am satisfied that Mrs P took reasonable steps during the period of this delay to clarify the advice provided to her by Fair Work Australia’s telephone advisory service. Had the delay been of any longer duration, I may well have arrived at a different conclusion.
[55] I am satisfied that there is no issue associated with when Mrs P became aware of the termination of her employment.
[56] Subsequent to the termination of employment, Mrs P attempted unsuccessfully to contact Mr W, on the basis that she sought to challenge this dismissal which was effected by the local The Employer management. Mr W was, at that time, overseas, and did not receive these messages.
[57] I have noted that the granting of an extension of time will represent a prejudice to The Employer but I do not consider this to be a significant prejudice in this instance. There is no suggestion that The Employer will be disadvantaged by an inability to access evidence to support its position.
[58] I have briefly considered the merits of Mrs P’s application. In particular, I have noted that shortly before the termination of her employment for performance reasons, her work performance was positively praised.
[59] Whilst I have drawn no conclusions about the extent to which the termination of Mrs P’s employment was unfair, the material before me does not support the dismissal of the extension of time application on the basis that the application demonstrably lacks merit.
[60] I have considered subsection 394(3)(f) on two bases. Firstly, there is nothing to indicate that anyone other than Mrs P was dismissed by The Employer around this time such that I should consider fairness issues on that basis. Secondly, I have noted the relatively small number of decisions of Fair Work Australia since this particular legislative provision came into effect and I do not consider that the granting, or otherwise of an extension of time in Mrs P circumstances has been addressed to date.
[61] Having considered these factors, I have concluded that the necessary exceptional circumstances exist for the allowance of an extension of time. The advice initially provided to Mrs P by the Fair Work Australia advisory service is, in my opinion, critical to this conclusion.
[62] An Order [PR990580] granting this extension of time and confirming that Mrs P is protected from unfair dismissal will be issued. Mrs P’s application will be listed for a further conference so that the future progression of the application can be determined.
SENIOR DEPUTY PRESIDENT
1 [1986] HCA1 ; [1986] CLR 16
2 [2003] 122 IR 215
3 [2000] 98 IR 168
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