Peter Kent v The Trustee for Hikri Family Trust T/A Office Fruit

[2013] FWC 7171

[2013] FWC 7171

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Peter Kent
v
The Trustee for Hikri Family Trust T/A Office Fruit
(U2013/8976)

DEPUTY PRESIDENT KOVACIC MELBOURNE, 19 SEPTEMBER 2013

Application for unfair dismissal remedy jurisdiction - minimum engagement period.

[1] On 29 April 2013 Mr Peter Kent (the Applicant) filed an application under s.394 of the Fair Work Act 2009 (the FW Act) alleging that the termination of his employment by the Trustee for the Hikri Family Trust trading as Office Fruit (the Respondent) on 21 April 2013 was harsh, unjust or unreasonable.

[2] The Respondent filed a response on 13 May 2013 which raised a jurisdictional objection. The Respondent asserted that it was a small business employer for the purposes of the FW Act 1 and that the Applicant had not been engaged as an employee for the relevant minimum engagement period of one year.2 The key determinant in whether or not the required minimum engagement period had been served in this case is whether, for the period 26 February 2012 to 5 August 2012 (a period of over five months), the Applicant was engaged as an independent contractor or as an employee of the Respondent. It was not disputed that the Applicant had been engaged by the Respondent as an employee from 5 August 2012 until his termination on 21 April 2013, a period of just over eight and a half months.

[3] The matter was referred for conciliation on 31 May 2013 but the matter was not resolved. A jurisdictional hearing was conducted on 30 August 2013.

[4] Mr Garry Dircks appeared with permission for the Applicant and Ms Rebecca Best appeared with permission for the Respondent.

[5] The Applicant gave evidence on his own behalf and Mr David Hikri, the Director of the Respondent, and Mrs Danielle Hikri, the Business Development Manager for the Respondent, gave evidence for the Respondent.

Background

[6] The Respondent operates a business which sells and delivers fruit, milk and other products to offices. 3 Between 26 February 2012 and 5 August 2012 the Respondent engaged the Applicant as a contractor to assist with packing fruit for delivery and delivering products to customers.

[7] It is agreed that there was no written contract of engagement for this period. It is further agreed that the Applicant was paid $150 for each day he worked for the Respondent, that the Applicant used vehicles provided by the Respondent for the purpose of carrying out his duties and that the Applicant did not receive holiday pay or personal leave and that no income tax was deducted and no superannuation was paid for the period.

[8] The Applicant acknowledged that the limited evidence available led to the conclusion that the Respondent was a small business employer for the purposes of the FW Act. 4

[9] There were, however, a number of areas where the evidence of the Applicant and the Respondent differed, in some cases quite markedly. These differences, to the extent that I consider them relevant to the jurisdictional objection, will be canvassed below.

The Respondent’s evidence

[10] Mr Hikri gave evidence that he met with the Applicant in the week leading up to 26 February 2012 to discuss his application for the position of Driver/Store Person which had been advertised on the SEEK website on 1 February 2012. 5 His evidence was that the Applicant had outlined at that meeting his recent work experience and described providing services to a company delivering fruit as well as indicating that he was at that time working for himself for another company selling books as well us doing other things.6 Under cross-examination, Mr Hikri conceded that the job advertisement did not explicitly indicate that the position was a contractor position.7

[11] Mr Hikri’s evidence was that it was the Applicant who suggested at that meeting that he be engaged as a contractor to provide services to the Respondent. 8 His evidence was that issue of the service fee had been discussed and agreed at that meeting.9 It was both Mr and Mrs Hikri’s evidence that the service fee was Goods and Service Tax (GST) inclusive.10 Mr Hikri denied under cross-examination that he had indicated to the Applicant that he could be engaged under an Australian Business Number (ABN) or as an employee, but that he would prefer the ABN arrangement.11 Mr Hikri further denied that there had been any mention of the engagement being for a three month trial period in his discussions with the Applicant.12

[12] Mrs Hikri’s evidence was that she was not involved in the discussions her husband had with the Applicant regarding his engagement and the terms of that engagement. Given that her evidence on the specifics of those discussions is based on her discussions with her husband, I have attached lesser weight to those aspects of her evidence.

[13] Mr Hikri’s evidence was that the Applicant was only engaged on those days that he was required by the Respondent, generally Sunday and Monday, and that over the period 26 February to 5 August 2012 the Applicant was coming in two days a week on an almost regular basis. 13 As to other days, his evidence was that he would ask the Applicant if he was available, either by ringing the Applicant of an evening or by discussing his availability on Sunday.14 Both Mr and Mrs Hikri in evidence under cross-examination accepted that of the invoices tendered by the Applicant over the period 26 February to 26 July 201215, four were invoices where the Applicant had worked 10 days over the particular fortnight, five involved the Applicant working nine days during the particular fortnight and one involved the Applicant working eight days during the particular fortnight.16 The invoices were not specific as to the reasons where less than 10 days had been worked by the Applicant during the relevant fortnight. However, it was submitted on behalf the Applicant that any days not worked were due either to public holidays or three days where the Applicant was unwell.17

[14] Mr Hikri’s evidence was that it was he who had suggested to the Applicant in late July that he be engaged as an employee. 18

[15] It was also Mr Hikri’s evidence that the Applicant’s duties during his period of engagement as a contractor were markedly different to his duties as an employee. For instance, in evidence Mr Hikri indicated that during the period the Applicant was engaged as a contractor his duties primarily involved deliveries and assisting with packing on Sundays. However, once engaged as an employee, the Applicant’s duties expanded to spending more time in the warehouse packing and also attending the market one day a week with Mr Hikri. 19 Mr Hikri’s evidence was that the Applicant’s whole days changed when he became an employee “... because he was working for the whole full time through the week ...”.20

[16] Under cross-examination Mrs Hikri confirmed that the Applicant had at no stage told the Respondent that he had other work and that she was unsure whether he did which is why the Respondent had requested certain documents from the Applicant regarding his taxation returns. 21 At the time of the hearing, the Applicant had not had an opportunity to consider the Respondent’s request.22

[17] Mr Hikri confirmed under cross-examination that the Respondent had several vans, some with the company’s logo on the van and others without and that while engaged as a contractor the Applicant drove both types of van. 23

[18] Mr Hikri’s evidence was that he had one other driver who is engaged as a contractor and who “works two other jobs”. 24 Mrs Hikri’s evidence was that in March 2012 the company also used another contracting service, Messenger Post, to provide delivery services from time to time.25

The Applicant’s evidence

[19] The Applicant gave evidence that on 23 February 2013 he applied for a Delivery/Store Person position with the Respondent which had been advertised on the SEEK website and that he was interviewed by Mr Hikri. The Applicant’s evidence was that in his resume he mentioned his previous work experience at Ansett Airfreight, Avon and as a bookseller. The Applicant was subsequently contacted by Mr Hikri who offered him the position and asked him to commence on Sunday, 26 February 2012. 26

[20] The Applicant’s evidence was that he was employed as a driver making deliveries in the Melbourne metropolitan area. 27

[21] The Applicant gave evidence that on his first day he was instructed by Mr Hikri and one other employee on how to pack boxes and the arrangements for loading vans for the following day’s deliveries. His evidence was that he was also informed that he would be driving the Respondent’s vehicles, which were a mix of refrigerated and non-refrigerated vehicles. 28

[22] The Applicant’s evidence was that on 26 February 2013 he discussed with Mr Hikri the basis of his engagement and that Mr Hikri had said that it could be via an ABN or as an employee but that he preferred an ABN arrangement. The Applicant’s evidence is that he indicated to the Respondent that he had an ABN and that it was agreed he would invoice the Respondent using his ABN at a rate of $150 per day. 29 The Applicant later gave evidence under cross-examination that he had had an ABN since 2009 and that he did not agree to a service fee but rather had been told by Mr Hikri what he would be paid.30

[23] The Applicant gave evidence that the Respondent had indicated that the engagement was for a three month trial period 31 and that it was he, together with another contractor, who later in 2012 asked the Respondent to become an employee.32

[24] The Applicant’s evidence in chief was that at no stage was it put to him that he could do other delivery work, that he had returned his own van to the leasing company in August 2011 and that he had finished his job “at the book thing in December [2011]”. 33 Under cross-examination the Applicant gave evidence that he had not performed work for anyone other than the Respondent between 26 February and July 2012. Further, the Applicant acknowledged that he had not been explicitly prevented by the Respondent from performing work for others during this period, though in his view he could not have possibly done so and did not have the inclination to do so given his hours of work.34 The Applicant’s evidence under cross-examination on this issue was that “They didn’t ask me to and I didn’t ask them either.”35

[25] The Applicant’s evidence was that his hours of work did not differ across the period of his engagement/employment by the Respondent, and that his duties were by and large the same across this period - the only change relating to the arrangements for the picking up of cakes for delivery. 36 With regard to his hours of work, under cross-examination the Applicant gave evidence that he worked five days a week regularly unless there was a public holiday or he was sick, with his start time being 6.00 am on Sundays, 3.00 am on Mondays, 4.00 am on Tuesdays and Wednesdays and 2.30am Thursdays.37

[26] Under cross-examination the Applicant gave evidence that while he was never told that he could delegate his duties he believed he would not have been able to do so. In support of that view, the Applicant highlighted that the Respondent had stopped him from using his own sedan vehicle to make deliveries. 38

[27] Also under cross-examination, the Applicant denied that Mr Hikri contacted him on a weekly basis or spoke to him on a Sunday as to when he would be required to work. 39 The Applicant’s evidence was he was “... told to work from Sunday to Thursday.”40

[28] The Applicant also gave evidence that the pay structure during the period he was engaged as a contractor was different from the period he was engaged as an employee. The key difference being that while engaged as a contractor he was paid $150 per day from which no tax was deducted by the Respondent and $168 per day when engaged as an employee from which tax was deducted by the Respondent.  41

The submissions of the Respondent

[29] The Respondent submitted that the evidence indicated an overwhelming number of factors in favour of finding that the Applicant was engaged as a contractor for the period 26 February to 5 August 2012 42. In particular, the Applicant:

(a) had an ABN and provided invoices for his work at a service fee of $150 per day on an as needed basis;

(b) was free to accept or reject work offered by the Respondent;

(c) was not required to work a regular five day week during this period;

(d) did not have set hours; 43

(e) was free to decide, subject to meeting customers’ demands, how the work was to be performed;

(f) was free to delegate work to others, though the Applicant did not;

(g) was free to work for others, though the Applicant did not;

(h) was required to cover his own expenses, including e-TAG, and maintain his own insurances;

(i) was not required to wear Office Fruit’s livery, although it was featured on the company’s vehicles; 44

(j) did not have taxation deducted from his payments; and

(k) was not entitled to annual or sick leave.

[30] The Respondent also acknowledged that there were a number of factors which pointed to the Applicant being an employee during the period 26 February to 5 August 2012. 45 Those being that the Applicant:

(a) was only engaged to provide labour;

(b) did not provide any tools or equipment;

(c) did not incur any significant expenses in the course of providing his services;

(d) did not necessarily generate any goodwill; 46

(e) had little flexibility as to when and how the deliveries were made; and

(f) had to meet quality control standards dictated by the Respondent.

[31] In addition, the Respondent submitted that the nature of work undertaken by the Applicant was relatively unskilled and did not demand a profession, trade or distinct calling on the part of the Applicant. 47

[32] Based on the Respondent’s submissions that the Applicant had clearly been engaged as a contractor for the period 26 February to 5 August 2012, the Respondent submitted that as it was a small business employer as defined in the FW Act the Applicant had not served the minimum qualifying period of one year. As such, the application should be dismissed for want of jurisdiction. 48

The submissions of the Applicant

[33] The Applicant submitted that:

(a) he was an employee of the Respondent;

(b) he did not conduct a business of his own during the period in question, citing that he did not have his own van during this time;

(c) he was engaged on an ongoing basis from 26 February 2012, evidenced by the fact that invoices tendered for the period 26 February to 26 July 2012 indicate that the only absences during this period coincided with public holidays and three days when he was unable to work because of illness; 49

(d) his pattern of work would have been the same if he had been a full time employee; 50 and

(e) the job advertisement, which appeared on SEEK, was consistent with the position being one of employment and consistent with the successful applicant working to the Respondent’s requirements and subject to their control in respect what was to be driven and working times. 51

[34] It was further submitted that the only indicator that the relationship between the Applicant and the Respondent was not an employment relationship was that the Respondent was not responsible for the deducting taxation from the Applicant’s payments. 52

Employee or independent contractor?

[35] In Abdalla v Viewdaze Pty Ltd 53 the Full Bench of the Australian Industrial Relations Commission (AIRC) set out in detail the common law approach to the determination of whether a person is an employee or independent contractor and provided a summary of the law.54 I have followed the approach taken by the Full Bench.

1. Was the Applicant conducting a business of his own?

[36] The Respondent submitted that the Applicant had previously conducted his own business and thought that he had continued to do so. It was accepted that the Applicant had previously conducted his own business. 55 However, no evidence was presented to support the view that the Applicant continued to conduct his own business. The Respondent submitted that it was open to the Applicant to undertake work for other clients and referred to one of its other contractors who did so.

[37] On the other hand, the Applicant indicated that he did have an ABN, had previously operated his own business but that he had not had a van since August 2011 and had ceased his book delivery business in late December 2011. The Applicant submitted that while the issue was never explicitly discussed, in practical terms his hours of work precluded him from working for others.

[38] There are several factors which favour a finding that the Applicant was not conducting his own business while engaged as a contractor by the Respondent. First, the absence of any evidence which demonstrated or suggested that during the time the Applicant was engaged by the Respondent he was conducting his own business. To the contrary, the Applicant’s unchallenged evidence in-chief is that he ceased his previous business activities in late 2011 and had not had a van since August 2011. Second, it is agreed that the Applicant brought nothing to his role other than his skills and experience as a driver. Third, the evidence that in performing his duties the Applicant drove vehicles provided and maintained by the Respondent, some with the Respondent’s signage on the vehicle.

2. The nature of the work performed and the manner in which it is performed

[39] The work performed required no special skill or qualification other than having a current driver’s licence. Other than the instruction the Applicant received on 26 February 2012 on how to pack boxes of fruit for delivery and the arrangements for loading vans for deliveries it appears that the Applicant was given no formal training by the Respondent whilst engaged as a contractor.

[40] As to the manner in which the work was performed, it is not disputed that the Applicant was provided by the Respondent with a list of deliveries to make. The Applicant’s evidence was that when working as an employee for the Respondent he exercised discretion to arrange the schedule of deliveries to reduce travel time in a way that ensured that customer demands were met. 56 No evidence was led that the Applicant did not enjoy or exercise similar discretion when engaged as a contractor.

3. The terms of the contract

[41] No written contract was entered into by the parties. The evidence suggests that both parties considered their arrangement a contracting arrangement until July 2012 when an offer of employment was made by the Respondent to the Applicant. The issue of who proposed that the Applicant’s engagement be as a contractor is disputed. However, based on the balance of probabilities, I accept the Applicant’s evidence that it was the Respondent’s suggestion.

[42] Based on the evidence, I consider that the discussion between the Applicant and the Respondent regarding the terms of the engagement were limited to the issue of the quantum of service fee to be charged, i.e. $150 for each day worked, that invoices would be submitted fortnightly by the Applicant and that the Applicant would not be paid for days not worked, such as public holidays or when sick. However, despite the Respondent’s evidence that it was understood that the service fee was GST inclusive, I am not convinced that the parties explicitly discussed the issue of GST.

4. The indicia of an employment relationship

4.1 Whether the Respondent exercises, or has the right to exercise control over the manner in which the Applicant’s work is performed, place of work, hours of work and the like

[43] The Respondent submitted that the Applicant was only required to work on an as needs basis. However, this is not supported by the evidence. The evidence, in the form of the invoices submitted by the Applicant for the period 26 February to 26 July 2012, shows that but for public holidays and those days when sick, the Applicant was effectively required to work five days a week for the entire period.

[44] As to the Applicant’s hours of work, I accept the Applicant’s evidence that his starting times were dictated by the Respondent and remained consistent across the duration of his engagement. I accept that the Applicant’s finishing times on those days when he was making deliveries were governed by when he concluded his delivery run.

[45] In the absence of evidence to the contrary, it is more than likely that when engaged by the Respondent as a contractor the Applicant was able to exercise the same discretion to structure his deliveries in the most efficient manner which he was later able to exercise as an employee of the Respondent.

4.2 Whether the Applicant works for others (or has a genuine and practical entitlement to do so)

[46] There was no evidence indicating that the Applicant undertook work for others while working for the Respondent as a contractor. While the Respondent submitted that the Applicant had never been precluded from undertaking work for others, there is no evidence to indicate that the issue was explicitly discussed by the parties. Mr Hikri’s evidence that he engaged another driver as a contractor and who “works two other jobs” suggests that the Applicant would have been able to undertake work for others if he wished to. 57

4.3 Does the Applicant have a separate place of work and/or advertises his or her services to the world at large?

[47] The Applicant did not have a separate place of work. There is no evidence that the Applicant advertised his services to the world at large or to anyone else during his engagement with the Respondent.

4.4 Whether the Applicant provides or maintains significant tools or equipment

[48] The Applicant did not maintain any significant tools or equipment. The vehicles he used for deliveries were, save for several occasions when he used his own sedan, provided and maintained by the Respondent.

4.5. Whether the work can be delegated or subcontracted

[49] While the Respondent submitted that the Applicant had never been precluded from delegating work to others, there is no evidence to show that this was an issue that was explicitly discussed by the parties. Further, the Applicant’s submission that the Respondent’s direction that he was not to use his own vehicle to make deliveries suggests that delegating his work would not have been something that the Respondent would have accepted. 58 Mr Hikri’s evidence that the offer made to the Applicant in July 2012 of engagement as an employee reflected the fact that he and his wife knew the Applicant and “felt comfortable” with him also supports the view that the Respondent is unlikely to have accepted the Applicant delegating his work.59

4.6 Did the Respondent have the right to suspend or dismiss the person engaged?

[50] In the absence of a contract of employment and any evidence on this issue, I am unable to form a view as to whether or not the Respondent had the right to suspend or dismiss the Applicant.

4.7 Did the Respondent present the Applicant to the world at large as an emanation of the business?

[51] The Applicant was required to use the Respondent’s vehicles for deliveries, with some of those vehicles bearing the name Office Fruit. The Applicant was not required to wear a uniform.

4.8 Was income tax deducted from remuneration paid to the Applicant?

[52] No income tax was deducted by the Respondent.

4.9 Was the Applicant paid a periodic wage or salary or by reference to completion of tasks?

[53] The Applicant was paid a set fee of $150 for each day worked.

4.10 Was the Applicant provided with paid holidays or sick leave?

[54] The Applicant was not provided with paid holidays or sick leave. As evidenced by the invoices submitted by the Applicant over the period 26 February to 26 July 2012, both parties clearly understood that if the Applicant did not work on any day he would not get paid for that day.

4.11 Did the work performed by the Applicant involve a profession, trade or distinct calling on the part of the person engaged?

[55] As set out above, the Applicant’s work did not involve any particular skill or qualification.

4.12 Whether the Applicant created goodwill or saleable assets in the course of his or her work

[56] It was accepted that the Applicant did not create any goodwill or saleable asset in the course of his work. To the extent any goodwill was created, it would in my view have accrued to the Respondent.

4.13 Whether the Applicant spends a significant proportion of his remuneration on business expenses

[57] The Applicant was not required to spend any of his remuneration on business expenses while engaged as a contractor. As noted above, the Applicant was required to use the vehicles provided and maintained by the Respondent to undertake deliveries. While reference was made to the Applicant meeting e-TAG expenses, the evidence is that these expenses relate to when he was working as an employee. 60

Summary of the evidence

[58] What are the features that support the contentions of the Applicant that he was an employee?

• He worked exclusively for the Respondent;



• His starting time for work was determined by the Respondent;



• He was paid a set fee for each day worked;



• He did not have a separate place of work or advertise his services to the world at large;



• He did not maintain any significant tools or equipment;



• He was subject to supervision by the Respondent, for instance it was acknowledged on behalf of the Respondent that the Applicant had little flexibility as to when and how the deliveries were made and had to meet quality control standards dictated by the Respondent; 61

He did not create any goodwill or saleable asset; and

He did not spend a significant part of his remuneration on business expenses.

[59] What are the features that support the contentions of the Respondent that the Applicant was an independent contractor?

• The Applicant submitted invoices to the Respondent;



• The Applicant was not subject to PAYG taxation;



• The Applicant was not paid annual leave, sick leave or any other entitlement normally associated with employment;



• The Applicant’s finishing time was once he had completed his scheduled deliveries.

[60] The evidence is not clear whether the Applicant was able to undertake work for others and/or engage others to perform his work. As noted above, the evidence suggests that these issues were not explicitly discussed by the parties.

Conclusion

[61] Following the approach adopted by the Full Bench of the AIRC in Abdalla v Viewdaze Pty Ltd 62 I have considered the totality of the relationship.

[62] While there are several indicia which support a finding that the arrangement between the Applicant and the Respondent was a contracting relationship (refer [59] above), when the relationship is looked at in totality these indicia are outweighed by those supporting a finding that the arrangement was an employment relationship (refer [58] above). While I accept both parties in entering into their arrangement willingly described it as a contracting arrangement, based on the evidence I find that it was an employment arrangement. In coming to this conclusion, I have taken into account Mr Hikri’s evidence under cross-examination that the job advertisement to which the Applicant responded did not explicitly indicate that the advertised position was a contractor position. 63 This suggests that Mr Hikri was initially looking to engage an employee rather than a contractor and adds weight to the finding that the parties’ arrangement was an employment relationship despite how the parties chose to characterise it at the time.

[63]
For all these reasons, the jurisdictional objection is dismissed and the matter will be listed for hearing of the substantive application.

DEPUTY PRESIDENT

Appearances:

G. Dircks for the Applicant.

R. Best for the Respondent.

Hearing details:

2013.

Melbourne:

August 30.

 1 Refer s.23 of the Fair Work Act 2009 (the FW Act)

 2 Refer s.383(b) of the FW Act

 3   Transcript PN 316

 4   Ibid PN 645

 5   A copy of the job advertisement was provided at Exhibit D2, Attachment PK2

 6   Transcript at PN 321

 7   Ibid PN 397

 8   Ibid PN 419

 9   Ibid PN 437

 10   Witness statement of Mrs Danielle Hikri of 11 July 2013 at [9] and transcript at PN 374

 11   Transcript at PN 434

 12   Ibid PN 441

 13   Ibid PN 378 and PN 445

 14   Ibid PN 448

 15   Exhibit B9 - documents DH1A to DH1J

 16   Transcript at PN 234 and PN 490-493

 17   Ibid PN 649

 18   Ibid PN 444

 19   Ibid PN 323, 351 and 352

 20   Ibid PN 324

 21   Ibid PN 289

 22   Ibid PN 52

 23   Ibid PN 476-480

 24   Ibid PN 408-410

 25   Witness statement of Mrs Danielle Hikri of 11 July 2013 at [9]

 26   Exhibit D2 at [6]-[9]

 27   Ibid at [5]

 28   Ibid at [10] and [12]

 29   Ibid at [11]

 30   Transcript at PN 544 and 552

 31   Exhibit D2 at [13]

 32   Ibid at [16] and transcript at PN 526

 33   Transcript at PN 531-532

 34   Ibid PN 589-592

 35   Ibid PN 592

 36   Ibid PN 533-534

 37   Ibid PN 572-573

 38   Ibid PN 593-601

 39   Ibid PN 581

 40   Ibid PN 582

 41   Ibid PN 565-567

 42   Ibid PN 629-630

 43   Ibid PN 66

 44   Ibid PN 64

 45   Ibid PN 65

 46   Ibid PN 631

 47   Ibid PN 65

 48   Ibid PN 32-33

 49   Ibid PN 649

 50   Ibid PN 650

 51   Ibid PN 647

 52   Ibid PN 638

 53 (2003) 122 IR 215

 54   Ibid at [34]

 55   Transcript at PN 544

 56   Exhibit D2 at [32] and transcript at PN 535

 57   Transcript PN 408-410

 58   Ibid PN 593-601

 59   Ibid PN 328

 60   Exhibit D2 at [33]

 61   Transcript at PN 65

 62 (2003) 122 IR 215

 63   Transcript at PN 397

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