Ms Carol Ray v Priority Erp Pty Ltd

[2020] FWC 3155

[2020] FWC 3155

FAIR WORK COMMISSION

DECISION

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

Ms Carol Ray
v
Priority ERP Pty Ltd
(U2020/3836)

COMMISSIONER MCKINNON MELBOURNE, 17 JUNE 2020

Application for an unfair dismissal remedy – jurisdictional objection – whether employee or contractor.

[1] Carol Ray and Gerard Unsworth have been in a relationship for approximately 7 years. Mr Unsworth is the Director of Priority ERP Pty Ltd, a business that sells and installs digital enterprise resource planning systems. Since at least January 2019, Ms Ray has been helping out in the business.

[2] On 22 and 23 March 2020, the two had a rather spectacular falling out. Ms Ray was upset about Mr Unsworth’s weekend activities and posted in a work group ‘whatsapp’ forum that she would not be coming in to work the next day. This in turn upset Mr Unsworth. Over a series of angry, offensive and at times pleading text messages, Ms Ray and Mr Unsworth progressively declared that each was ‘done’ with the other, that Ms Ray resigned, that her letter of resignation was expected, that she was “fired”, that the dismissal was invalid, that the decision was final, that Ms Ray was not permitted to attend the work premises and that she should take the matter to Court.

[3] Ms Ray says she was dismissed in the course of the text message exchange and has applied for an unfair dismissal remedy. Priority ERP says the claim is entirely without merit and a waste of time because Ms Ray was not an employee of the business.

[4] The question is whether Ms Ray was an employee of Priority ERP. For the reasons that follow, the answer is ‘Yes’.

Was Ms Ray an employee?

[5] Whether a person is an employee of a business or an independent contractor is commonly resolved by reference to a multifactorial test endorsed in Kimber v Western Auger Drilling Pty Ltd 1(Kimber). At the heart of the inquiry is whether, at the relevant time, the person was the servant of another in its business or was instead carrying on a business on their own behalf.

Control over the manner in which work is performed, place of work, hours of work and the like.

[6] There was no written contract between the parties. It was instead a verbal agreement by which Ms Ray performed tasks allocated her by Mr Unsworth on an ‘as required’ basis.

[7] The arrangement started when Ms Ray offered to clean Mr Unsworth’s house. It progressed to her coming in and cleaning the office, and then being offered the use of work office and computer facilities to do some work for a not-for-profit enterprise she was involved in known as ‘Mummabears’.

[8] The nature of the arrangement was that Mr Unsworth decided what he wanted Ms Ray to do in the office and if he was not physically present to give directions, he would often send her emails about what needed to be done. If she was not clear about a particular task or process, she would ask for further direction. Everything she did required approval from Mr Unsworth. Sometimes she performed work for Priority ERP at home if she had a medical appointment or another reason that made it difficult for her to attend the office. By March 2020, her usual working hours were 9am-5pm, Monday and Friday each week. The days of work were arranged to coincide with weekends spent at Mr Unsworth’s home, both because they frequently spent the weekend together and because Ms Ray lived some way away from the office.

[9] There is a difference of opinion about the work Ms Ray was actually required to perform. Mr Unsworth says it was things like cleaning, taking out the rubbish and buying coffees. He agrees that she also had access to the businesses’ bank accounts and was authorised to spend company money to pay for office expenses, process payroll, print out payslips and the like. For a lot of the time she had no particular duties to perform. She did what she felt was necessary and tried to help out where she could. She had no computer knowledge and it was a learning experience for her, which Mr Unsworth was happy to provide.

[10] In August 2019, Mr Unsworth conducted a performance review for all staff and also for Ms Ray. How the review came about is also in dispute. Ms Ray says she received a text message asking her to come into the office as everyone was having a review. Mr Unsworth says he told employees that they were having a review and took the opportunity to talk about the way the business was being run. Ms Ray was included in the meeting. Employees were asked to go away and think about how things operated. Ms Ray made a submission in writing after the meeting, listing allegations of bullying in the office and other matters she felt was appropriate. Her feedback was not well received. Ms Ray says it was “screwed up” and thrown in the bin. Mr Unsworth says he asked her to retract it and she did. He then gave appraisals to each of the staff including Ms Ray because she asked if she would get one. Her appraisal was based on the work she was doing for him. His intention was to give her a leg up into the business world by doing office work so that she could develop an understanding of business works.

[11] The review records Ms Ray as a “trustworthy and valuable member of the team” and “an important cog in the business” who works part-time one day each week. It says she is not familiar with the business or working in a business environment and that can lead to a lack of initiative in tasks required. It says Ms Ray sometimes considered the role as casual rather than part-time. It records Ms Ray as “reluctant to take an initiative” and someone who has a “tendency to do as she’s told” and “waits on instruction and direction”. It refers to the need for the Priority ERP team to support her when she asks “how” and “why”.

[12] The various comments in the performance review are consistent with Ms Ray’s account of the varied nature of work performed for Priority ERP. She says she was told to stop concentrating on cleaning and concentrate on other things such as ringing customers, organising events and occasional travel, coordinate tradesmen, undertake bank reconciliations, invoicing, processing of wages and superannuation and dealing with general documentation as required. By 2020, she was responsible for accounts receivable. I prefer the evidence of Ms Ray about the reason for the performance review and the nature of work she performed.

[13] Mr Unsworth was unimpressed when Ms Ray booked appointments on the days she was supposed to be working for Priority ERP. Ms Ray says sometimes it was unavoidable to book medical appointments on Mondays and Fridays when she would usually be working for Priority ERP because appointment times were dependent on the availability of specialists. She says she sometimes went in to make up time if she could not work a full day, including on the afternoon of her fathers’ funeral.

[14] The text message exchange on 22 and 23 March 2020 provides additional insight into the relationship. Mr Unsworth was forthright about his expectations on Ms Ray in terms of attendance at work and the nature of work required. He variously stated:

“I’ve told you for a month I need bills You order more shit on Officeworks and pay bills”

“You check up on what I spend”

“I pay you for 8 hours”

“You need to realise that in work you are an employee. You need to treat that with total respect. That is the way you should be always. When you say you will do things, do them.”

“I told you Friday self learn excel”.

“If you resign I expect a simple letter to confirm you choose not to work.”

“I didn’t get a letter I expect you in”

“We run a business here, you were supposed to be here to help run it.. and decide how to handle the upcoming issues.”

“I’m trying to do the job YOU should have been doing today. Contacting customers. Asking for money. Assuring them of support. Making sure that we have jobs.”

[15] All of the evidence points to a working relationship controlled by Mr Unsworth and carried out by Ms Ray at his direction. This factor resolves in favour of Ms Ray being an employee.

Work for others

[16] The right to exclusive services from a person can be characteristic of employment, while working for others or the entitlement to do so can indicate an independent contracting relationship. 2 According to Mr Unsworth, Ms Ray was free to do whatever she wanted to do. However, she was paid $160 for 8 hours and he expected her to turn up and do as many hours as were necessary. If Mr Unsworth went home early, Ms Ray went home early with him because of their relationship.

[17] Alongside her work for Priority ERP, Ms Ray has maintained her employment as a part-time teacher with the Department of Education and Training. It goes without saying that the work is different to the work she performed for Priority ERP.

[18] This factor is a neutral consideration. There is no reason why a part-time employee cannot hold two contemporaneous jobs. The work performed for each entity was not in competition and nor was it similar in nature.

Whether the worker has a separate place of work and/or advertises her services to the world at large or whether the worker held out as an emanation of the business

[19] Ms Ray had no separate place of work and did not advertise the services she provided to Priority ERP to anyone else. She did not have an ABN. She told people she was working both as a school teacher and for Priority ERP. When introduced to its customers, was described as a member of the team in ‘admin’. Her photo was displayed on the company’s Facebook page with Mr Unsworth and all other employees at the time.

[20] A company polo-shirt developed for promotional purposes was available to Ms Ray but not mandatory. Ms Ray chose not to wear it, as did most of the other employees. At company functions such as the launch of a new online system, Ms Ray was on site for the whole day, coordinating with the function area, organising catering and so on in her capacity as representative of Priority ERP.

[21] Ms Ray had a Priority ERP email address, [email protected] which Mr Unsworth says was necessary for her to access documents stored in the cloud. In the last 6 months of the arrangement, her email signature block described her role as Administrative Assistant. Ms Ray says that occurred in consultation with Mr Unsworth. Mr Unsworth denies it. I prefer Ms Ray’s evidence in this regard.

[22] When she rang customers, Ms Ray would introduce herself as “Carol Ray from Priority ERP”. She says most of the customers knew her, as well as many of its suppliers.

[23] In addition to teaching, Ms Ray separately has involvement in two other ventures:

1. Mummabears Inc., a not-for-profit community organisation matching an older mums with younger mums who need a mentor or friend. I accept Ms Ray’s account that she does not derive any income from this source.

2. Home sewing: Ms Ray has as hobby business making custom orders which usually earns a small income to supplement her other sources of income.

[24] On balance, the evidence in this regard has all the hallmarks of a traditional employment relationship with Priority ERP. It resolves in favour of Ms Ray being an employee.

Tools or equipment

[25] All the tools and equipment used for the performance of work by Ms Ray were provided by Priority ERP. All cleaning materials as well as a desk and work computer were provided. This factor resolves in favour of Ms Ray being an employee.

Delegation or subcontracting

[26] There was no capacity for Ms Ray to delegate or subcontract the work she performed for Priority ERP to any other party. From Mr Unsworth’s perspective, that would have been inappropriate and Ms Ray says it never came up.

[27] The tenor of the emails between them gives the strong impression that anything Ms Ray did for Priority ERP required the imprimateur of Mr Unsworth. I find that Ms Ray would have required his approval to delegate or subcontract her work to another party. Thisfactor resolves in favour of an employment relationship.

Rights to suspend or dismiss

[28] If Priority ERP had the right to have a particular person do the work under its contract with Ms Ray, or the right to suspend or dismiss her, this could suggest that the contract was one of service rather than a contract for services. 3 The analysis furthers a consideration of whether the person is working in the business of another, rather than in the business of their own.4

[29] According to the parties, the issue simply never came up. The performance review discussed earlier in this decision encouraged the prospect of Ms Ray focusing more and more on her role within Priority ERP. Both parties understood that their arrangement was ongoing, although it is likely both also expected it would come to an end if the relationship broke down. Certainly that was the understanding of Mr Unsworth. Conversely, Mr Unsworth says Ms Ray was free to leave if her teaching role picked up, including without notice.

[30] The arrangement relied on the strength of the personal bond between them. It was both personal and professional and the reality is neither turned their minds to what would happen if those bonds broke down. As Director of Priority ERP however, and just as Mr Unsworth assumed the right to issue directions to Ms Ray in relation to the performance of work, I find that he had the right to prevent Ms Ray from continuing to work in his business.

[31] This factor resolves in favour of Ms Ray’s status as an employee.

Income tax and superannuation

[32] No income tax was deducted from remuneration paid to Ms Ray by Priority ERP and no superannuation was paid on her behalf. Priority ERP says there was an understanding between them that Ms Ray would be responsible for her own taxes and superannuation. Ms Ray denies the existence of any such arrangement. She says she assumed Priority ERP would take responsibility for tax and superannuation.

[33] Ms Ray processed the paperwork relating to employee payroll and superannuation as well as her own invoices. She did not produce an invoice for payment for her services. Instead, she entered each day’s work in Priority ERP’s system which is capable of generating reports and invoices on demand. The data entry was incompetent in the sense that it resulted in a charge for GST that appears to have been in error. Until produced for the purposes of the hearing, neither Ms Ray nor Mr Unsworth had actually seen the Recipient Created Tax Invoices generated by the Priority ERP system in relation to the work performed by Ms Ray.

[34] Ordinarily, the circumstance of invoice for services rendered and payment on that account would tend in favour of a finding that the relationship was one of contract for services. In this case invoices were ‘system generated’ and not, I think, a true reflection of the arrangement between the parties which was for much more than “cleaning and catering”. However, the absence of any arrangement for the payment of income tax and superannuation by Priority ERP on behalf of Ms Ray weighs in favour of a contract for services.

Remuneration

[35] It has been said that employees tend to be paid a periodic wage or salary, whereas independent contractors are often paid by reference to the completion of certain tasks, although, “in the modern economy this distinction has reduced relevance”. 5

[36] Ms Ray was paid on a daily basis at the rate of $160.00 gross for 8 hours work or $20 per hour. The amount appears to be below the lowest rate of pay for an administrative employee under the Clerks – Private Sector Award 2020.

[37] The actual day of payment each week varied. Ms Ray was only paid when she worked. No payslips were provided. As Ms Ray was paid by reference to the completion of each day’s work, this factor points either to a relationship of casual employment or contractor.

Holidays or sick leave

[38] Ms Ray was not afforded or paid in lieu of any leave during her period of work for Priority ERP or at the end of the arrangement. This factor weighs in favour of Ms Ray being a contractor although it might just as easily signal that her status was that of casual employee.

Distinct profession, trade or calling

[39] Persons engaged in a distinct profession, trade or calling may tend to be independent contractors rather than employees. 6 It is not a matter that is relevant to the particular facts of this case.

Goodwill

[40] Generally speaking, a contractor will have an interest in establishing value in their business, while an employee will contribute to the goodwill of another’s business.

[41] Relationships developed (mostly over the phone) by Ms Ray while working for Priority ERP were relationships between the company and its customers or suppliers. People knew her by name but as “Carol from Priority ERP”. Ms Ray had no separate market presence in the “catering and cleaning” industry or any other industry relevant to the work performed for Priority ERP.

[42] The absence of any goodwill or saleable asset accruing to Ms Ray during the period of work for Priority ERP is a factor that weighs in favour of employment.

Business expenses

[43] This consideration relates to whether Ms Ray spent a significant portion of her remuneration on business expenses. The answer is clearly ‘no’. Priority ERP reimbursed Ms Ray for any expenses incurred in the course of her work in addition to occasional personal expenses.

[44] There is no evidence that Ms Ray brought any equipment or tools, or any capital investment, to the relationship with Priority ERP. Anything she needed to perform her work was provided and paid for by Priority ERP. This factor resolves in favour of employment.

Was Ms Ray a servant in the business of Priority ERP, or was she carrying on a business on her own behalf?

[45] In the end, parties to a contract cannot alter the true nature of their relationship by simply putting a different label on it. The observation is apposite here. On balance, the factors above weigh easily in favour of an employment relationship between the parties. I find that Ms Ray was a servant in the business of Priority ERP while working for the benefit of the business. The demands made by Mr Unsworth in relation to the work required, and his overt expectations as to how it was to be conducted, make that plain.

Disposition

[46] The jurisdictional objection is dismissed.

COMMISSIONER

Appearances:

C Ray on her own behalf.
G Unsworth for the Respondent.

Hearing details:

2020.
Melbourne (telephone hearing):
June 12.

Printed by authority of the Commonwealth Government Printer

<PR720246>

 1   [2015] FWCFB 3704. See also French Accent v Do Rozario [2011] FWAFB 8307; Abdalla v Viewdaze Pty Ltd t/a Malta Travel (2003) 122 IR 215; Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16; Hollis v Vabu (2001) 207 CLR 21.

 2   Jiang Shen Cai trading as French Accent v Michael Anthony Do Rozario[2011] FWAFB 8307; (2011) 215 IR 235, [30].

 3   Stevens v Brodribb Sawmilling (1986) 160 CLR 16, p.36, per Wilson, Dawson JJ.

 4   Ace Insurance v Trifunovski (2013) 235 IR 115, at [93].

 5   [2011] FWAFB 8307 at [30].

 6   [2011] FWAFB 8307 at [30].