Ms Judith Keilar v Hungry Hamper Catering Pty Ltd trading as Dynamic Education Catering

[2013] FWC 999

[2013] FWC 999

FAIR WORK COMMISSION

DECISION

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

Ms Judith Keilar
v
Hungry Hamper Catering Pty Ltd trading as Dynamic Education Catering
(U2012/11996)

DEPUTY PRESIDENT SMITH MELBOURNE, 14 FEBRUARY 2013

Jurisdiction; independent contractor/employee?

Introduction

[1] Ms J. Keilar believes that she was unfairly dismissed from her employment with Hungry Hamper Catering Pty Ltd Trading as Dynamic Education Catering (HHC). Ms Keiler made an application to Fair Work Australia (now the Fair Work Commission) on 2 August 2012. Ms Keilar argues that she was employed on 13 July 2009 and the termination of her employment took effect on 27 July 2012.

[2] HHC object to the application on the basis that it is not within the jurisdiction of the Fair Work Commission (FWC) as Ms Keilar was an independent contractor and not an employee. It is that matter to which attention must first be given.

Background

[3] HHC has a business which provides professional canteen management to educational institutions. In its submission, it sets out that its business model is to obtain a contract from a school and then sub-contract that to other parties to run the canteen as an independent business. HHC receive a management fee to provide management services and advice. The fee is said to also cover expenses relating to the site such as equipment, health registration and support and training. HHC also had approved supplies from which goods must be purchased. The person it subcontracts to is called a Manager Partner.

[4] It was submitted by HHC that the terms of the Agreement relevantly provided:

(a) that the Applicant would take over the canteen at the Galvin Park Secondary College which included a fully equipped, health registered and public liability insured kitchen;

(b) that HHC would provide strong backing support;

(c) that the Applicant was to purchase all ongoing stock from approved suppliers;

(d) that as a self-employed proprietor, the Applicant would need to obtain her own personal and/or WorkCover insurance if required;

(e) that it was the Applicant’s responsibility to ensure that all aspects of managing the business were performed in accordance with relevant regulations, i.e taxation, local government and health department;

(f) that HHC reserved the right to terminate the Agreement at any time without notice;

(g) that upon termination, among other things,

(i) a stocktake will be done;

(ii) any remaining stock will be purchased by HHC;

(iii) an up to date copy of the Applicant’s bookwork summary for the year to date figures is to be provided to HHC;

(iv) an exit performance report and a cleaning cost report is to be completed by the area supervisor; and

(v) keys are to be returned.

[5] There is no controversy over the terms of the Agreement [Exhibit A2 attachment JK1] nor that HHC purported to terminate the Agreement in accordance with its terms. HHC took the view that its contract was at risk with the particular school and terminated the contract between it and Ms Keilar.

[6] Ms Keilar argued that on a proper examination of the authorities [Jiang Shen Cia trading as French Accent v Do Rozario [2011 FWA 3003] and Stevens and Brodribb (Brodribb) [(1986) 160 CLR 16] she was not an independent contractor but an employee.

The Evidence

[7] As it was the application by HHC that needs to be considered first, it led evidence from Ms K. White—the Managing Director of HHC and Ms J. Reilly—the Area Supervisor of HHC but also the person who operated the business at the school and subsequently sold her company to HHC.

[8] Ms Keilar gave evidence on her own behalf.

[9] It was the evidence of Ms Reilly that she established the business known as Dynamic Catering in 1996. She employed Ms Keilar on a casual basis in 2000. This is consistent with the evidence of Ms Keilar. In 2008 Ms Reilly sold the business to HHC and Ms Keilar continued as a casual employee and Ms Reilly became the Area Supervisor for HHC.

[10] In around June 2009, HHC decided to change its business model and advised, in this instance Ms Keilar, that it would now contract the work to her to run as her own business. An Agreement to that effect was executed on 13 July 2009.

[11] It was the evidence of Ms Reilly that:

● she was told that if she didn’t take over the canteen someone else would;
● she was concerned for other employees of the canteen who may also lose their job;
● she did not have the authority to change or replace any equipment;
● she was not permitted to enter into contract with non approved suppliers;
● she was not permitted to advise the school about her contract with HHC;
● she was not permitted to deal with the school on business matters;
● she was not allowed to work for any other person or company;
● invoices sent to the school were in the name of Dynamic Education Catering;
● she was not entitled to any goodwill when the business was terminated by HHC.

[12] In addition, my attention was drawn to the constraints imposed upon Ms Keilar in the contract. Those were under the heading of Business Ethics.

[13] It was the evidence of Ms White that the approach by HHC was that the individuals who work as Manager Partner run the canteen as an independent business. Ms White relied upon the terms of the Agreement reached to demonstrate her view that Ms Keilar was an independent contractor. Ms White also went to what she said were the difficulties that Ms Keilar was having in running the business notwithstanding the support provided.

[14] Ms Reilly’s evidence went to the circumstances which led Ms Keilar to take over the canteen. Ms Reilly outlined the assistance given to Manager Partners and the fact that Ms Keilar employed her own staff under the name of Keilar, Judith Maree (ABN provided). It was the evidence of Ms Reilly that she was aware that that Ms Keilar was having difficulties with the canteen and made a number of suggestions about the management of costs. Her evidence dealt with the concerns of the school and the threat that unless matters improved with the canteen then HHC would lose the contract.

[15] In cross-examination, Ms Keilar was asked a number of questions. Matters which were properly conceded were that:

● she was aware when signing the Agreement she would no longer be paid wages;
● she prepared a BAS statement under the name Keilar, Judith Maree;
● she did not receive wages for the period of time that she was under the agreement;
● she paid for stock;
● she employed, paid staff and took out WorkCover for those staff.

The Law

[16] A Full Bench of the Commission in Jiang Shen Cai trading as French Accent
v Michael Anthony Do Rozario [(2011) FWAFB 8307] is the most recent exposition of the precedent that the Commission can rely upon. I propose to examine the present circumstances against the issues raid in that decision. That decision has regard to Brodribb and in particular Hollis v Vabu Pty Ltd (Vabu)[(2001) 207 CLR 21].

Conclusions

[17] I shall now turn to each of the relevant indicia outlined in the French Accent decision.

Whether the putative employer exercises, or has the right to exercise, control over the manner in which work is performed, place or work, hours of work and the like.

[18] There is little flexibility for Ms Keilar because of the place of work but she could decide when she worked and how work was performed by her or her staff.

Whether the worker performs work for others (or has a genuine and practical entitlement to do so).

[19] There was no restriction on Ms Keilar performing other work as she could determine her own hours provided the service was maintained in accordance with the contract.

Whether the worker has a separate place of work and or advertises his or her services to the world at large.

[20] In reality Ms Keilar did not have another activity other than the one she was running.

Whether the worker provides and maintains significant tools or equipment.

[21] The evidence is clear that HHC maintains significant tools and equipment.

Whether the work can be delegated or subcontracted.

[22] Given the business model, whilst the actual work can and is delegated by Ms Keilar to her own staff, there is little doubt that she is unable to subcontract the relationship she has with HHC.

Whether the putative employer has the right to suspend or dismiss the person engaged.

[23] HHC did not have the right to suspend or terminate Ms Keilar but it could contractually end its commercial relationship with her company.

Whether the putative employer presents the worker to the world at large as an emanation of the business.

[24] HHC required Ms Keilar to represent herself as a part of the HHC business.

Whether income tax is deducted from remuneration paid to the worker.

[25] There was no remuneration paid to Ms Keilar as her income was determined by the profitability or otherwise of her business.

Whether the worker is remunerated by periodic wage or salary or by reference to completion of tasks.

[26] Ms Keilar was not remunerated in any way other than the profit she made from the activities of the canteen.

Whether the worker is provided with paid holidays or sick leave.

[27] The answer to this question is no. Ms Keilar was totally responsible for hers and her staff’s award entitlements.

Whether the work involves a profession, trade or distinct calling on the part of the person engaged.

[28] This is not relevant to Ms Keilar.

Whether the worker creates goodwill or saleable assets in the course of his or her work.

[29] Given the business model of HHC there was no goodwill or saleable asset. HHC held the principle contracts with the schools and did not disclose that it was subcontracting the function of running the canteen.

Whether the worker spends a significant portion of his remuneration on business expenses.

[30] Again there was no fixed remuneration as the income of Ms Keilar was determined by the profitability or otherwise of the canteen.

[31] Whilst these are not exhaustive, nevertheless, it does give a good view of the relationship between HHC and Ms Keilar. In Vabu the Court asked whether or not “viewed as a practical matter” the person was running their own business? I am satisfied that Ms Keilar was running her own business. Whilst some of the terms of the Agreement are less than optimal, nonetheless, Ms Keilar was a subcontractor to HHC and it, being the principal contract holder wanted to ensure that its business was implemented consistently. With the possible exception of the concept of goodwill, the constraints are not unlike those placed on major franchise operators.

[32] It follows that I find that Ms Keilar was not an employee of HHC and therefore there is no jurisdiction for the Commission to deal with the matter. The application is dismissed.

DEPUTY PRESIDENT

Appearances:

C. M. Reichman for the applicant.

C. Centra on behalf of Hungry Hamper Catering Pty Ltd trading as Dynamic Education Catering.

Hearing details:

2012.

Melbourne:

November, 30.

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