Patrick McInerney v Aplus I.T. Services Pty Ltd

[2013] FWC 9354

[2013] FWC 9354

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Patrick McInerney
v
Aplus I.T. Services Pty Ltd
(U2013/12140)

COMMISSIONER ROE MELBOURNE, 28 NOVEMBER 2013

Unfair dismissal - jurisdictional objection - whether worker was an independent contractor or employee.

[1] This is an application for an unfair dismissal remedy pursuant to Section 394 of the Fair Work Act 2009 (the Act). The Application for unfair dismissal remedy was made on 2 August 2013. The Application is made by Mr Patrick McInerney (the Applicant) in respect of his dismissal by Aplus I.T. Services Pty Ltd (the Respondent or Aplus).

[2] I have considered the submissions of the parties and the evidence of the Applicant and Mr Gellel for the Respondent. Mr Gellel is a Director of the Respondent and he is, like the Applicant, an IT technician who performs work for the State Government of Victoria Department of Education and Early Childhood Development (DEECD). I have also considered a number of the documents provided by the parties.

[3] The Applicant was engaged by the Respondent from October 2010 until 12 July 2013. On 12 July 2013 Mr Gellel Director of the Respondent advised the Applicant by letter that:

“I regret to inform you that DEECD have decided to terminate your TSSP contracts with Aplus I.T. Services Pty Ltd on the 12 July 2013 due to continual performance issues and breaches of your TSSP contractual requirements. We will therefore need to cease your employment with Aplus I.T. Services Pty Ltd as of 12 July 2013.”

[4] It is not in contention that the Respondent is a small labour hire company which was responsible for providing a number of technicians to DEECD. DEECD has in place policies whereby particular schools identify their IT maintenance and development needs and the associated technicians’ time, cost and visitation schedule is approved. To be able to perform this work a service technician (ST) and contract bodies (ST contractors and SDM contractors) are required to be registered as part of the Technical Support to Schools Program (TSSP). An ST Contractor can only utilise a registered and nominated ST. The Department can remove an ST from their list of approved persons. A ST must meet certain training, working with children and other requirements. The Technical Support to Schools Program Operating Procedures sets out detailed requirements for STs and for ST and SDM Contractors.

[5] I am satisfied that the Respondent is an ST Contractor and the Applicant is an ST. The work of the ST is recorded on timesheets which are approved by the Service Delivery Manager for DEECD and then provided to the ST Contractor. The ST Contractor then invoices DEECD for payment. DEECD then pays the ST Contractor. The ST Contractor then pays the ST. The ST Contractor has certain rights to replace an ST if the DEECD terminates the right of an ST to work in a school or schools.

[6] The work requirements of an ST are detailed in the relevant contracts and the day to day requirements are communicated to the ST during their specified visitations to particular schools by the affected schools and DEECD.

[7] It is not in contention that DEECD advised the Respondent on 12 July 2013 that it was terminating the Applicant’s right to work as part of the TSSP program for failure to meet a number of terms and contractual obligations of the program.

[8] It is also not in contention that the Applicant did operate his own business which had an accompanying Australian Business Number (ABN). That business did not operate in the area of IT maintenance and development but operated to sell computer hardware to students at particular schools. In 2012 DEECD was concerned at potential conflicts of interest which arose as a result of the operation of this business. The contracts held by the Respondent were under some threat as a result of this situation. The matter was resolved by the Respondent entering into an agreement with DEECD which limited the scope of work that the Applicant could undertake in selling computers to schools to two particular schools. The Applicant accepted this limitation.

[9] Prior to commencing his relationship with the Respondent the Applicant had worked for another ST contractor company, Essendon North Primary School. In that work the Applicant operated as a sub-contractor providing invoices which identified GST, and he was responsible for his own taxation, superannuation and insurance in respect to this work. Both prior to and after commencing his relationship with the Respondent the Applicant also worked part time as a direct employee of certain schools performing IT work. In that work he received a wage and other leave entitlements.

[10] Essendon North Primary School ceased to operate as an approved ST contractor and the Applicant then had correspondence with Mr Gellel for the Respondent in October 2010 about his desire to find a new company “to subcontract for” in order to keep the work. The Applicant gave evidence that Mr Gellel proposed a different sort of relationship to that which he had previously had with Essendon North Primary School. In particular Mr Gellel proposed that the Respondent would deduct taxation, would pay superannuation, would provide group certificates or PAYG certificates, would be responsible for workers compensation and would be responsible for other insurance. The Respondent would deduct from the payments received by the Respondent from DEECD an amount to cover these costs and to support the Respondent’s labour hire business before paying the Applicant. This was the arrangement entered into. The appropriate PAYG (Pay as you go) individual non-business Australian Taxation Office (ATO) documentation was prepared by both the Applicant and the Respondent which showed gross payments provided by the Respondent and the taxation deducted by the Respondent and remitted to the ATO. 1 Pay slips were also provided by the Respondent to the Applicant.

Mr Gellel says that he understood the arrangement between the Applicant and the Respondent to be an independent contractor arrangement. The Applicant says that he understood that because of the changed arrangements he was an employee.

[11] In giving their evidence and in various email exchanges both the Applicant and Mr Gellel were inconsistent in the manner in which they used the terms contractor and employee. I am satisfied that when regard is had to the evidence as a whole the Applicant used the term contractor in the sense that the work he performed was to meet the terms of specific contracts the Respondent had with DEECD and under those contracts he was an approved Service Technician listed in those contracts to perform specific work. In cross examination he agreed that he was a “contractor to Mr Gellel’s company Aplus.” However, I do not accept that the Applicant meant by this that he was an independent contractor rather than an employee of Aplus. The confusion in terminology is understandable given that Aplus is a labour hire company and given the detailed contracts under which DEECD utilised and controlled the labour supplied by Aplus to DEECD. Similarly when Mr Gellel used the term employment in his termination letter to the Applicant he was not necessarily accepting that the Applicant was his employee. I am satisfied that Mr Gellel believes that the Applicant was a labour hire independent contractor. Mr Gellel referred to his technicians as contractors on the annual returns he provided to DEECD as a contracting company. 2

[12] The Applicant and the Respondent completed a Tax File Number Declaration on 1 July 2011. 3 In response to the question “on what basis are you paid” the Applicant crossed the box “part time employment”. The Applicant signed the form and provided it to Mr Gellel. Without reference to the Applicant Mr Gellel altered the form so that the box “labour hire” was crossed. Mr Gellel says that he later told the Applicant that he had made the alteration, however, the Applicant says that he does not recall that occurring. I am satisfied that regardless of whether or not Mr Gellel advised the Applicant of the alteration, the sequence of events makes it clear that the Applicant believed that he was an employee and communicated this to the Respondent. There is no evidence that the Respondent took any further action in response to these events to formalise the nature of the relationship with the Applicant. Of course even if the box “labour hire” had been crossed it would not be evidence that the relationship was one as an independent contractor since many labour hire workers are employees.

[13] The Applicant had no ability to sub-contract his work for the Respondent to any other person. To do so would have been a clear breach of the contractual relationship between the Respondent and DEECD as well as being a breach of the conditions under which the Applicant was recognised as an ST by DEECD.

[14] In the main, equipment to perform his work was provided for by the schools. The Applicant did not have to provide specialised tools or hardware. The Applicant did do some limited work utilising his home computer and he was required to use his own vehicle to travel to work at the designated schools (the particular schools were fixed and limited by the particular contracts obtained by the Respondent). The Applicant utilised his own phone.

[15] There was no evidence of any goodwill or that the Applicant advertised or made himself known to the public as available to perform the work he performed for the Respondent for others.

[16] How parties characterise the relationship is important, however, in the circumstances of this case the true nature of the relationship between the Respondent and the Applicant will be best established by focusing on the objective facts about that relationship rather than by the terms utilised by the parties to refer to that relationship. There was no contractual document which establishes an independent contractor relationship between the Applicant and the Respondent. The documents which do exist such as the pay slips and the ATO documents suggest an employment relationship. The Respondent was obviously aware that the termination by DEECD of their approval for the Applicant to work as an ST for DEECD under their TSSP scheme did not result in the ending of the relationship between the Applicant and the Respondent. The Respondent provided a letter which terminated the employment of the Applicant with the Respondent.

[17] The Applicant had little control over when and where and how he conducted his work. This was tightly controlled by the contractual relationship between the Respondent and DEECD. The Applicant had no separate place of work for the conduct of his IT maintenance and development work for schools in Victoria. He had no ability to delegate the work. When there was a problem with his work as occurred on several occasions during the period of the relationship, including at its ending, DEECD raised these matters with the Respondent rather than dealing solely with the Applicant. The Applicant was paid on an hourly basis and he was not paid by results. The arrangements in respect to income tax, superannuation, workers compensation and other insurance were consistent with an employment relationship. The power to terminate lay with the Respondent. The relationship was one where the Applicant was primarily providing skilled labour. There was no goodwill attached to the position and there was no separate business being conducted in respect to this type of service. The business expenses met by the Applicant, that is car and phone and home internet, are ones which are quite commonly met in either an employment relationship or an independent contractor relationship. The absence of annual leave and personal leave entitlement is also commonly found in both casual employment relationships as well as in independent contractor relationships.

[18] Considering the relevant indicators there are some which are neutral and there are some that are strongly pointing to an employment relationship but there are none that strongly point to an independent contractor relationship. I am satisfied that the Applicant was not performing the work as an entrepreneur who owned and operates a business and in performing the work he was operating as a representative of the Respondent’s business not as a representative of his own business. The Applicant was economically dependent upon the Respondent. He was not the autonomous decision maker but he provided labour. He was not chasing profit but was working for an hourly rate. The risks were taken by the Respondent, including the risks associated with the termination of the relationship.

[19] I am satisfied that this is an unremarkable labour hire relationship which is well documented and regulated by DEECD.

[20] The Applicant was an employee of the Respondent. The jurisdictional objection is dismissed. The merits of the Applicant will now be listed for arbitration.

COMMISSIONER

Appearances:

Mr R Millar appeared for the Applicant.

Mr C Pollard appeared for the Respondent.

Hearing details:

2013

Melbourne

November 22

 1   See for example Exhibit A1.

 2   Exhibit T4.

 3   Outline of submissions of the Respondent, Attachment 2.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR545089>