Nayanakantha Kittanpahu Arachchige Don v ITG Payroll Pty Ltd
[2024] FWC 600
•8 MARCH 2024
| [2024] FWC 600 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.365—General protections
Nayanakantha Kittanpahu Arachchige Don
v
ITG Payroll Pty Ltd
(C2024/13)
| DEPUTY PRESIDENT DEAN | CANBERRA, 8 MARCH 2024 |
Application to deal with contraventions involving dismissal –employee v independent contractor – comprehensive written contract in place.
Mr Nayanakantha (the Applicant) has made an application to the Fair Work Commission under s.365 of the Fair Work Act 2009 (Cth) claiming that he was dismissed from his employment with ITG Payroll Pty Ltd (the Respondent) in contravention of the general protection provisions of the Act.
The Respondent asserts that the Applicant was not an employee. Instead, he was an independent contractor terminated by the Respondent on 19 December 2023 in accordance with the terms of a written contractor agreement between the parties dated 7 June 2023 (the Agreement). As a result, the Respondent submitted that the Applicant is jurisdictionally barred from bringing the application because he was not an employee.
The Applicant is only able to make a general protections claim if he is “a person who has been dismissed”. Relevantly to this matter, s.386 provides that a person is dismissed if the person’s employment with his or her employer has been terminated on the employer’s initiative.
In other words, unless the Applicant was an employee who was dismissed from their employment, this application cannot proceed.
For the reasons set out below, I find the Applicant was not an employee and as a result his application is dismissed.
Relevant law
In Salim v AFA Sheetmetal Components Pty Ltd (Salim)[1], Deputy President Easton summarised the relevant law as follows:
“[8] In Waring v Hage Retail Group Pty Ltd[2022] FWC 540 (Waring) Deputy President Anderson provided the following helpful summary of the significance of the High Court decisions in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 312 IR 1, [2022] HCA 1 (Personnel Contracting) and ZG Operations Australia Pty Ltd v Jamsek (2022) 312 IR 74, [2022] HCA 2 (Jamsek):
‘[52] In two judgements delivered on 9 February 2022 the High Court of Australia pronounced on the law that applies in determining whether, absent a specific statutory rule, a person is an employee or contractor. In doing so, the Court reviewed past decisions of the Court (and other courts) and set out afresh relevant legal principles.
[53] In important respects the law as expressed by the High Court in Jamsek and Personnel Contracting has modified, if not replaced, former approaches. In particular, the past approach of the Commission (itself based on past court authority) as outlined in the leading full bench case of [Jiang Shen Cai trading as French Accent v Rozario[2011] FWAFB 8307 at [30]] is, with some limited caveats, no longer good law.
[54] The High Court, via the combination of judgements in both Jamsek and Personnel Contracting, has largely rejected an approach whereby the relationship between parties across its life span is examined (including how the relationship operates in practice). The Court has stated that contractual terms and not performance, where those terms can be ascertained and where the contract is not a sham, will determine the true nature of the relationship. However, the Court has observed that the manner in which the relationship is worked in practice may be relevant for certain limited purposes, such as to find contractual terms where they cannot otherwise be ascertained or to determine the nature of any variation to agreed terms.
[55] Indicia (such as those identified in earlier cases in the Court) may be relevant but only insofar as the terms of the contract give voice to them. One approach, to be used as a guide, is to look at whether, under the contract, the worker is engaged to work in the business of another, though this may not necessarily be useful in all cases. The extent of a contractual right to control, as evident from the terms of the contract itself, remains a major signifier of an employment relationship. That an arrangement was brought about by the superior bargaining power of one party has no bearing on the meaning and effect of the contract.
[56] Amongst the caveats expressed by the Court, is that a mere label acting as a subterfuge to the true nature of the contractual relationship will not determine the status of the parties. In this respect at least, the law remains unchanged by these recent decisions.’
[9] The Deputy President’s summary was endorsed by the Full Bench in Azad v Hammond Park Family Practice Pty Ltd T/A Jupiter Health Warnbro[2022] FWCFB 66 at [14].
[10] In Chambers and O’Brien v Broadway Homes Pty Ltd [2022] FWCFB 129 at [74] a subsequent Full Bench provided this 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 (Personnel Contracting at [39]). 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 [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]); and
(6) The label or characterisation placed on the relationship by the contract is not relevant even as a “tie breaker” (Personnel Contracting at [58], [63]-[66] and [79]), or at least it is not determinative (Personnel Contracting at [127], [184] and [203]).’
[11] In Deliveroo Australia Pty Ltd v Franco [2022] FWCFB 156 at [34]-[35] (Deliveroo) the Full Bench endorsed the above summary and added a further point:
‘… 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.’
[12] The significance of the High Court’s decisions in Personnel Contracting and Jamsek are most apparent in the Full Bench decision in Deliveroo (at [53]-[54]):
‘In the circumstances described, the application of the Personnel Contracting decision has obliged us to ignore certain realities concerning way in which the working relationship between Mr Franco and Deliveroo operated in practice …
…
Had we been permitted to take the above matters into account, as the Commissioner did, we would have reached a different conclusion in this appeal. As a matter of reality, Deliveroo exercised a degree of control over Mr Franco’s performance of the work, Mr Franco presented himself to the world with Deliveroo’s encouragement as part of Deliveroo’s business, his provision of the means of delivery involved no substantial capital outlay, and the relationship was one of personal service. These matters, taken together, would tip the balance in favour of a conclusion that Mr Franco was an employee of Deliveroo. However, as a result of Personnel Contracting, we must close our eyes to these matters.’”
Brief background
The Respondent describes itself as is a professional payroll services company that provides payroll broker services between IT contractors and customers who require IT services. It has entered into a licensing agreement with Informatech, a company specialising in information and communications technology consulting. Under the licencing agreement, independent contractors engaged by the Respondent are placed with Informatech’s clients to perform information and communication technology services.
The Respondent says the Applicant was engaged by it as an independent contractor between 10 July and19 December 2023 for the provision of information and communication technology services pursuant to the Agreement. The Applicant provided those services on a project with the Australian Taxation Office (ATO), a client of Informatech’s.
In August 2023 the Respondent sent an email to a number of its contractors, including the Applicant, in essence offering an opportunity to ‘convert’ from independent contractor to employee. The Applicant did not respond to the email.
On or about 18 December 2023 the ATO informed Informatech that it did not want the Applicant to continue working on its project because he was not performing to the standard it required. As a result, the Respondent says it decided to terminate the Applicant’s engagement in accordance with the terms of the Agreement.
The Applicant now claims he was an employee who was dismissed because of his race.
Comprehensive written contract
There is no dispute that the parties freely entered into a written contract in the form of the Agreement.
What is clear from the decisions outlined earlier is that when characterising a relationship regulated by a wholly written, comprehensive contract which is not a sham or otherwise ineffective, the question of whether a person is an employee or independent contractor is to be determined solely by reference to the rights and obligations under that contract.
I am satisfied that the Agreement comprehensively records the legal rights and obligations of the parties. The Agreement, which comprises some 16 pages and 25 clauses, covers matters such as the nature of the relationship between the parties including an acknowledgement that the Agreement is not one of employment, fees and terms of payment, obligations of each party, how confidential information is to be managed, ownership of intellectual property, renewal and termination of the Agreement, non-exclusivity (ie either party can enter into similar arrangements with other parties), requirements around subcontracting, and how disputes are to be resolved.
Of particular note are the following clauses:
a.Clause 17 of the Agreement provides that the Contractor (ie the Applicant) will not, by virtue of the Agreement, or for any other purpose, be deemed to be an employee, partner or agent of the Principal (ie the Respondent);
b.Clause 14 acknowledges that the Agreement is a non-exclusive agreement and the Contractor may enter into similar agreements with other Principals to provide similar services; and
c.Clause 16 allows the Contractor to subcontract the performance of any part of the services with the prior written approval of the Principal.
The Applicant has not alleged that the Agreement is a sham, or the terms have been otherwise varied. I am satisfied it contains an accurate and comprehensive statement as to the parties’ rights and obligations. Accordingly, there is no need to look beyond the Agreement.
Further, had the Applicant genuinely wanted to be an employee of the Respondent, he could have explored the offer the Respondent made to a number of its contractors to ‘convert’ to an employee. However, he did not do so, presumably because the independent contractor arrangement suited him.
Applicant’s reliance on Commission website
The Applicant said he relied on the information located on the Commission’s website about the difference between an employee and an independent contractor.
Following the Personnel Contracting and Jamsek decisions of the High Court, a note was placed on the relevant page of the Commission’s website as follows:
IMPORTANT: Pages dealing with whether a worker is an independent contractor or employee are currently under review in light of the High Court decisions in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2. Please refer to these cases for the current approach to be taken in determining whether a worker is an independent contractor or employee.
The Applicant, however, reviewed the table on the same website page that is adapted from the summary of indicia provided in the French Accent decision which, as noted earlier, is with some limited caveats, no longer good law.
It is understandable that the Applicant may have been confused as to what information he should follow. However, that does not change the current state of the law.
Conclusion
For the reasons set out earlier, I find that the Applicant was not an employee and accordingly the application is dismissed.
DEPUTY PRESIDENT
Appearances:
N Kittanpahu Arachchige Don, on his own behalf.
S Hardy for ITG Payroll Pty Ltd.
Hearing details:
2024.
By video:
March 6.
[1] [2023] FWC 1834.
Printed by authority of the Commonwealth Government Printer
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