Primerano v Schisan Investments Pty Ltd
[2023] FedCFamC2G 667
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Primerano v Schisan Investments Pty Ltd [2023] FedCFamC2G 667
File number(s): SYG 2237 of 2021 Judgment of: JUDGE D HUMPHREYS Date of judgment: 28 July 2023 Catchwords: INDUSTRIAL LAW – Fair Work – Whether the Applicant was engaged by the First and Second Respondents as a National System Employee in the specified period of 1 April 2019 to 26 May 2021 – the Applicant was not found to be engaged by the First and Second Respondents as a National System Employee in the specified period of 1 April 2019 to 26 May 2021 – the application is dismissed. Legislation: Fair Work Act 2009 (Cth) Cases cited: Ace Insurance Limited v Trifunovski (2013) 209 FCR 146
Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1
Hollis v Vabu Pty Ltd (2001) 207 CLR 21
Jin v Premium Travel Pty Ltd [2023] FedCFamC2G 22
JMC Pty Ltd v Commissioner of Taxation [2022] FCA 750
Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 13
Division: Division 2 General Federal Law Number of paragraphs: 101 Date of last submission/s: 21 July 2023 Date of hearing: 21 July 2023 Place: Parramatta Counsel for the Applicant: Ms Wilson Solicitor for the Applicant: Mitry Lawyers Counsel for the Respondents: Ms Thew, Mr Pen and Mr Isaac Solicitor for the Respondents: Kent Attorneys ORDERS
SYG 2237 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: JOSEPHINE PRIMERANO
Applicant
AND: SCHISAN INVESTMENTS PTY LTD T/AS TUTTI FRUTTI PROMOTIONS ACN 124 454 182
First Respondent
TUTTI FRUTTI CORPORATE PTY LTD ACN 634 131 187
Second Respondent
SANTOS PAULO SCHINELLA (and another named in the Schedule)
Third Respondent
order made by:
JUDGE D HUMPHREYS
DATE OF ORDER:
28 July 2023
THE COURT ORDERS THAT:
1.The answer to the question of whether or not the applicant was engaged by the first and second respondents as “a national system employee” for the purposes of the Fair Work Act 2009 (Cth) during the period 1 April 2019 to 26 May 2021, is no.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE D HUMPHREYS
INTRODUCTION
In an Initiating Statement of Claim, Jospehine Primareno (the applicant) seeks declarations and orders inter ailia:
a) That she was an employee of Schisan Investments Pty Ltd (the first respondent) for the period 10 June 2016 to 30 September 2020;
b) That she was an employee of Tutti Frutti Corporate Pty Ltd (the second respondent) from 1 October 2020 to 26 May 2021;
c) That the General Retail Award applies to the applicant’s employment with the first and second respondents;
d) Declarations of various contraventions of the Fair Work Act 2009 (the Act) in relation to her claimed employment;
e) Orders for compensation for loss occasioned by the contraventions and the imposition of pecuniary penalties against the respondents.
The parties have agreed that a separate and distinct question should be initially heard and determined as a discrete issue. That question is as follows:
Was the applicant engaged by the first and second respondents as “a national system employee” for the purposes of the Fair Work Act 2009 (Cth) during the period 1 April 2019 to 26 May 2021?
For the reasons set out below, the answer to the question posed is “No”.
THE LAW
In Jin v Premium Travel Pty Ltd [2023] FedCFamC2G 22, at [9], [16] – [19] the Court had the following to say in relation to the determination of whether a person was an employee or contractor where no written contract existed:
[9] It is common ground that the applicant did not enter into any written employment contract with Premium. It is thus necessary to look at the parties conduct to determine the nature and terms of the contact the applicant entered into: (see; Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 at [83] (“Personnel Contracting”)).
[16] In a case such as the present in which the parties did not reduce their agreement to written form, it was submitted that its terms must be ascertained objectively from the parties conduct which requires an analysis of “the totality of the relationship between the parties” by reference to the indicia identified in the authorities, most notably Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 13 (“Stevens”), Hollis v Vabu Pty Ltd (2001) 207 CLR 21 and Personnel Contracting at [61] and [56] – [57].
[17] In Stevens at [24], Mason J said that a prominent factor in determining the nature of the relationship between a person who engages another to perform work and the person so engaged is the degree of control which the former can exercise over the latter. The importance of control lies not so much in its actual exercise, as in the right of the employer to exercise it. Other indicia include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and the provision for holidays, the deduction of income tax and the delegation work by the putative employee.
[18] Wilson and Dawson JJ in Stevens at [36] stated that it was appropriate to apply the control test in the first instance because it is the surest guide to whether person is contracting independently or serving as an employee. Other indicia which need to be considered include in relation to a contract of service, rather than a contract for service, the right to have a particular person to do the work, the right to suspend or dismiss the person engaged, the right to the exclusive services of the person engaged, the right to dictate the place of work, hours of work and the like. Those which indicate a contract for services include work involving a profession, trade or distinct calling on the part of the person engaged, the provision by him/her of their own place of work or own equipment, the creation by them of goodwill or saleable assets in the course of their work, the payment by them from their remuneration of business expenses of any significant proportion and the payment to them of remuneration without the deduction for income tax.
[19] The applicant also relied upon Ace Insurance Limited v Trifunovski (2013) 209 FCR 146 at [37] where Buchanan J observed:
It is also difficult, in my view, to give much independent weight to arrangements about taxation, or even matters such as insurance cover or superannuation. These are reflections of a view by one party (or both) that the relationship is, or is not, one of employment. For that reason, in my view, those matters are in the same category as declarations by the parties in their contract (from which they often proceed). They may be taken into account but are not conclusive. These matters are less important than the adoption by the parties (where this occurs) of rights and obligations which are fundamentally inconsistent with basic requirements of a contract of employment, such as the ability to delegate the discharge of obligations under a contract to another person, or where there is a lack of control over how work is done.
Counsel for the respondents referred the Court to JMC Pty Ltd v Commissioner of Taxation [2022] FCA 750 at [16] – [27], where Wigney J said as to the approach to be adopted in whether a person is an employee or contractor is as follows:
16. The fundamental principles established by the judgments of the majority of the justices in Personnel Contracting and Jamsek may be shortly summarised as follows.
17. First, where the rights and duties of the parties are comprehensively committed to a written contract, the legal rights and obligations established by the contract are decisive of the character of the relationship provided that the validity of the contract has not been challenged as a sham, or that the terms of the contract have not been varied, waived or are subject to an estoppel: Personnel Contracting at [43], [44], [47], [59] (Kiefel CJ, Keane and Edelman JJ), [172] (Gordon J, Steward J relevantly agreeing at [203]). The task is to construe and characterise the contract made between the parties at the time it was entered into: Personnel Contracting at [174] (Gordon J).
18. Second, in order to ascertain the relevant legal rights and obligations, the contract of employment must be construed in accordance with the established principles of contractual interpretation: Personnel Contracting at [60] (Kiefel CJ, Keane and Edelman JJ), [124] (Gageler and Gleeson JJ), [173] (Gordon J). In that respect, regard may be had to the circumstances surrounding the making of the contract, as well as to events and circumstances external to the contract which are objective, known to the parties at the time of contracting and which assist in identifying the purpose or object of the contract: Personnel Contracting at [174]-[175] (Gordon J); Jamsek at [61] (Kiefel CJ, Keane and Edelman JJ), referring to Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352. The nature of the specific job that the putative employee applied for and the nature and extent of any tools or equipment they have to supply for that job may also be relevant: Personnel Contracting at [175] (Gordon J). It is, however, generally not legitimate to use in aid of the construction of a contract anything which the parties said or did after it was made: Personnel Contracting at [176] (Gordon J).
19. Third, and flowing from the first two principles, the characterisation of the relationship between the parties is not affected by circumstances, facts or occurrences arising between the parties that have no bearing on their legal rights: Personnel Contracting at [44] (Kiefel CJ, Keane and Edelman JJ), [173]-[178] (Gordon J); Jamsek at [109] (Gordon and Steward JJ). A “wide-ranging review of the entire history of the parties’ dealings” is neither necessary nor appropriate: Personnel Contracting at [59] (Kiefel CJ, Keane and Edelman JJ); see also [185]-[189] (Gordon J). For a “matter to bear upon the ultimate characterisation of a relationship, it must be concerned with the rights and duties established by the parties’ contract, and not simply an aspect of how the parties’ relationship has come to play out in practice but bearing no necessary connection to the contractual obligations of the parties”: Personnel Contracting at [61] (Kiefel CJ, Keane and Edelman JJ) (emphasis added).
20. It follows that the fact that the parties’ subsequent conduct may not have precisely aligned with their contractual rights and obligations, or the fact that a particular contractual right may have never been exercised or utilised, will generally be irrelevant when it comes to characterising the relationship. That is so unless the manner in which the parties conducted themselves after entering into the contract was such as to establish that the contract was a sham, or that the contract had been varied, or that certain rights under the contract were subject to an estoppel.
21. Fourth, the contractual provisions that may be relevant in determining the nature of the relationship include, but are not limited to, those that deal with the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work, the provision for holidays, the deduction of income tax, the delegation of work and the right to exercise direction and control: Personnel Contracting at [113] (Gageler and Gleeson JJ); [174] (Gordon J), referring to Brodribb at 24 (Mason J); see also 36-37 (Wilson and Dawson JJ).
22. In Brodribb, Wilson and Dawson JJ said (at 36-37) that the indicia which suggested an employment relationship included “the right to have a particular person do the work, the right to suspend or dismiss the person engaged, the right to the exclusive services of the person engaged and the right to dictate the place of work, hours of work and the like”, whereas those that suggested a contract for services included “work involving a profession, trade or distinct calling on the part of the person engaged, the provision by him of his own place of work or of his own equipment, the creation by him of goodwill or saleable assets in the course of his work, the payment by him from his remuneration of business expenses of any significant proportion and the payment to him of remuneration without deduction for income tax”. Their Honours were, however, careful to note (at 37) that “any attempt to list the relevant matters, however incompletely, may mislead because they can be no more than a guide to the existence of the relationship of master and servant”. It should also be emphasised that the list of possible indicia must now be approached on the basis that the focus is on the parties’ contractual rights and obligations relevant to those matters, at least where the contract is wholly in writing, not on the way in which the work was actually carried out.
23. Fifth, the characterisation of the relationship as one of service or employment involving an employer and employee, as opposed to a relationship involving an independent contractor providing services to a principal, often hinges on two considerations. The first consideration is the extent to which the putative employer has the right to control how, where and when the putative employee performs the work: Personnel Contracting at [73]-[74] (Kiefel CJ, Keane and Edelman JJ); [113] (Gageler and Gleeson JJ); see also Brodribb at 24 (Mason J) and 36-37 (Wilson and Dawson JJ). The second is the extent to which the putative employee can be seen to work in his or her own business, as distinct from the business of the putative employer – the so-called “own business/employer’s business” dichotomy: Personnel Contracting at [36]-[39] (Kiefel CJ, Keane and Edelman JJ); [113] (Gageler and Gleeson JJ); cf [180]-[183] (Gordon J). Neither of those considerations are determinative and both involve questions of degree.
24. As for the element of control, “the existence of a right of control by a putative employer over the activities of a putative employee serves to sensitise one to the subservient and dependent nature of the work of an employee, so as to assist in an assessment of whether a relationship is properly to be regarded as a contract of service rather than a contract for services”: Personnel Contracting at [73] (Kiefel CJ, Keane and Edelman JJ).
25. As for the “own business/employer’s business” dichotomy, it also “usefully focusses attention upon those aspects of the relationship generally defined by the contract which bear more directly upon whether the putative employee’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] (Kiefel CJ, Keane and Edelman JJ); cf [180]-[182] (Gordon J). Another way of framing the question, which focusses more directly on the terms of the contract, is whether the person “is contracted to work in the business or enterprise of the purported employer”: Personnel Contracting at [183] (Gordon J) (emphasis in original). One consequence of answering that question in the negative may be that the person is not an employee.
26. Sixth, a “label” which the parties may have chosen to describe their relationship is not determinative of the nature of the relationship and will rarely assist the court in characterising the relationship by reference to the contractual rights and duties of the parties: Personnel Contracting at [63]-[66] (Kiefel CJ, Keane and Edelman JJ); [127] (Gageler and Gleeson JJ); [184] (Gordon J). The parties’ “legitimate freedom to agree upon the rights and duties which constitute their relationship” does not “extend to attaching a ‘label’ to describe their relationship which is inconsistent with the rights and duties otherwise set forth” – to permit otherwise would elevate the freedom to “a power to alter the operation of statute law to suit ... the interests of the party with the greater bargaining power”: Personnel Contracting at [58] (Kiefel CJ, Keane and Edelman JJ).
27. The characterisation of a relationship as being either one of employer and employee, or one involving the engagement of an independent contractor, is ultimately an evaluative judgment that takes into account the totality of the parties’ contractual rights and obligations. The exercise may not necessarily be straightforward because, in some cases at least, the parties’ contractual rights and obligations may point in different directions. The evaluative exercise also should not be approached on the basis that there is some checklist against which ticks and crosses may be placed so as to produce the right answer. Some degree of uncertainty is unavoidable, particularly in the case of many modern-day work or service contracts.
On behalf of the respondent it was submitted that an assessment of the credit of the various witnesses would be integral to the Court forming a view as to who should be believed.
EVIDENCE FOR THE APPLICANT.
Evidence of Ms Cathy Fazzalaro.
Ms Fazzalaro is the former Owner and Director of a company called Creative Gifts. Creative Gifts worked with another company called Tutti Frutti Promotions to provide clubs with prizes and raffles for their patrons.
Both businesses worked from the same warehouse for a period of about 15 years. In 2017, Ms Fazzalaro sold Creative Gifts to the third respondent, Mr Schinella.
In approximately 2016, she hired the applicant to work a few days per week. Shortly thereafter, it was agreed with Mr Schinella that the applicant would split her time between Creative Gifts and Tutti Frutti.
In cross examination, Ms Fazzalaro agreed that there was no written contract with the applicant. The applicant was responsible for her own taxation arrangements. The applicant was paid a flat rate each week of $1300.00. Ms Fazzalaro was unable to say if the applicant received a group certificate each year. As far as she was aware, Creative Gifts did pay superannuation on behalf of the applicant.
Evidence of Caterina McLean.
Ms McLean has known Mr Schinella for approximately 30 years. Ms McLean has known the applicant for approximately six years. Ms McLean allowed Mr Schinella to use the warehouse at the back of her restaurant three years ago, in about 2019.
Ms McLean deposed that she saw the applicant working at the warehouse every day that she was at the restaurant. Overnight time, if she went out and came back late, she saw the applicant unpacking shopping, or finalising orders.
In cross examination, Ms McLean confirmed that she was the niece of Ms Fazzalaro. She never heard Mr Schinella tell the applicant that she needed to work at night.
Evidence of Mr Francesco Primerano
Mr Primerano is the father of the applicant. In or around September October 2018, Mr Primerano became aware that the applicant was being given an opportunity of managing and running the administration of Tutti Frutti, which included the buying of products and the supervising of a number of casual staff. The applicant told him that her salary would be $1,500.00 per week in hand. In around May or June 2019, he agreed that the business could relocate to a garage at the back of his home. On a Friday afternoon, he saw Mr Schinella and the applicant sit together in his kitchen and organise payments to creditors and withdraw cash from wages. Each day, the applicant would leave home for a number of hours to purchase items that she would make up at night to be dispatched the next day.
From Mr Primerano’s observations, the applicant would handle Mr Schinella’s correspondence appointments orders and emails using the title of Manager.
After about six months, the business relocated to Earlwood behind a restaurant. From there they moved to a premise in Illawarra Road, Marrickville.
On occasions, the applicant would come home to have a few hours’ sleep after working all night. Some of the shopping was done late at night because the applicant had found items on the internet to purchase as prizes. The applicant’s work hours did not stop after she got home each evening, as she would continue looking for purchases as prizes.
In his second Affidavit, Mr Primerano deposes that while shopping with the applicant, she would contact Mr Schinella to confirm how much money he was willing to spend on items.
In cross examination, Mr Primerano confirmed that he attended the warehouse in Marrickville 3 to 5 times a week when the applicant needed assistance, generally in the hours of between 7:30pm and 10:00pm. Mr Primerano claims that on one or two occasions, he heard Mr Schinella say to people “speak to our manager”. He confirmed that his other daughter, Rosa, conducted a beauty business from the front room of his premises. On the odd occasion, the applicant helped out in that business
Evidence of Ms Rosa Primerano
Ms Primerano is the older sister of the applicant. To her knowledge, the applicant worked five days a week from about 8:00 am to 4:00 or 5:00pm.
From 2016 to the end of 2018, the applicant assisted Ms Primerano in her beauty salon, working only as needed once a week in the late afternoons from about 5:30pm till 9:3pm. She also worked a couple of Saturdays a month from 9:00am to 12:00pm. The applicant did not work in the beauty salon during 2019.
In cross examination she confirmed that she was not a qualified beautician and that his sister did do some work. The business also employed another beautician.
Evidence of Mr Esat Alper.
Mr Alper is the applicant’s partner. He recalls that prior to and mid-2022, the applicant worked throughout the night from as early as midnight until the afternoon of the following day in order to meet delivery deadlines for the business. He recalls she would only come home for a few hours in the early evening to rest and shower. The normal working hours would begin around 5 AM until late afternoon early evening. From early 2019 until the end of May 2021, he recalls Mr Schinella calling late at night, early morning and on weekends and request the applicant to go out and purchase supplies for a raffle at the last minute that needed to be delivered the next morning.
He recalls a discussion with the bookkeeper for Tutti Frutti, Ms Raleigh Aston, the fourth respondent, on 19 May 2021 in which he asked a number of questions regarding amounts owing on the applicants credits card. He also asked why the applicant had not been paid any superannuation.
In cross examination, he confirmed he had been the applicant’s partner for 13 years. During the period April 2019 to May 2021, they were living together. He confirmed on a number of occasions, he would attend the warehouse late at night. He said he was aware of where the applicant was at all times as they keep track of each other using the application “Apple track”. He confirmed he was aware that the applicant attended the Star City Casino. He confirmed that Mr Schinella would call her at odd hours to discuss business.
Evidence of the applicant, Ms Josephine Primerano
The applicant deposed that she first started working at Creative Gifts in June 2016. Creative Gifts and Tutti Frutti operated together at the same premises initially at Sydenham. Creative Gifts supplied raffles and prizes to venues such as RSL clubs, hotels and fundraisers. Tutti Frutti would supply meat tray prizes that were ordered through Creative Gifts and supply staffing to venues for promotions. Compere’s for promotions were subcontractors.
When working for Creative Gifts, the applicant states that she sourced products for gifts at the best price and products to add to hampers. She went shopping, purchased prizes and attended various venues to set up raffles and assisted the concept team with creative visions.
When working for Tutti Frutti the applicant was responsible for the shifts for compere’s, responding to emails and dealing with the various venues through email.
At that stage, the applicant was paid by both Creative Gifts and Tutti Frutti. She initially worked a few days per week but after a few months began working five days a week. In about June 2017, Creative Gifts as a business was sold to Mr Schinella. As time progressed, the applicant states that she was instructed by Ms Dana Younes to use her personal money to purchase gifts and prizes with the assurance that she would be paid back by the business.
When the applicant started working exclusively for Tutti Frutti, Mr Schinella continued to require her to use her credit card to pay for the majority of prizes and supplies.
In a conversation with Mr Schinella he told the applicant that he was happy to give her 5 days per week from 8.00 am to 5.00 pm for $1500.00 per week, plus super.
The applicant’s duties included sitting with Mr Schinella paying invoices and bills. At this point she claims that she was instructed by Mr Schinella to pay for all purchases using her own money. The applicant would then be reimbursed after the purchases were approved. Mr Schinella would accompany her to stores to make purchases or on the internet.
In August 2019, the company moved to a warehouse, however the applicant continued to do computer work from her home. Some staff were paid in cash. On occasions the applicant was paid in cash.
Around 11 March 2020 the applicant claims that she went away on holiday for a week but was not paid. She recalls saying to Mr Schinella “where is my holiday pay”. Mr Schinella replied that “The clubs haven’t paid me yet, so I don’t have the money right now but I will give it to you”.
A short time thereafter, the applicant found that an email that had come through, had been actioned (not on her behalf).
Around Tuesday, 13 October 2020, the applicant claims that she had a discussion with the fourth respondent, Ms Aston as to how she wanted her superannuation to be set up. At the end of October Ms Aston presented the applicant with a Visa debit work card and told her she was no longer to use her personal credit cards to make purchases. The applicant sought assurances that amounts owing to her for purchases on her credit card would be paid.
In around November 2020, the applicant states that she received a number of texts from Ms Aston stating that Mr Schinella needed to get the applicant on the books. She asked if the applicant’s ABN was registered for GST. Around Thursday, 3 December 2020, the applicant stated that she went out of the office shopping all day for prizes. Upon arrival the next day, she noticed a box of receipts she kept on her desk was missing. This was a box that contained any receipts in business and personal that she would later sort through. She asked Ms Aston if she had taken the box of her desk to which she replied that she had.
The applicant claims that Mr Schinella would make her come in on a Saturday at approximately 6:45 AM to collect her cash wages. This was because he collected all his cash from the venues on Friday and Saturday.
In May 2021, the applicant claims that a conversation with occurred between her partner and Ms Aston, this included why the applicant superannuation hadn’t been paid on time.
On around 26 May 2021 the applicant arrived at work and was asked by Mr Schinella to help her unload the truck. The applicant told Mr Schinella that she wished to resign.
Attached to the applicant’s Affidavit are various emails or texts in which she describes herself as “Business Development Manager” for Tutti Frutti Promotions. Also attached, are various texts showing photographs of various items in which the applicant was seeking approval to purchase.
At attachment JP11, is a copy of what appears to be a text conversation between Ms Aston and the applicant. It includes the following: “Ask Alper if you should have extra super pre-tax take out of pay and if so how much.”
In the applicant’s second Affidavit, she stated that she was required to work on weekends in order to purchase prizes which required her to go to many different places. She also created the raptor hampers.
The applicant stated the prior to 2019, she worked from 8:00am to 4:00pm, but would often stay back after hours in order to unload stock and finalise work that needed to be done for the following morning. This included organising raffles that were being delivered the next morning at 7:00am.
In terms of working at her sister’s business, the applicant stated that she worked full-time in the business up to 2016. From 2016 until late 2018 she worked in her sister’s business one night per week on a Thursday from about 5.50pm till 9:30pm and about two Saturdays per month from 9:00am till 12:00pm midday.
The applicant claims that the duties she performed for Creative Gifts and Tutti Frutti were different, as they included the making up of various hampers and raffles, paying cash to employees and assembly small to medium-size products and furniture. The applicant disagrees that she was fully reimbursed for the purchases she made on behalf of the company. The applicant claims that she was paid $1500.00 net per week, not gross and, was assured that all her entitlements and superannuation would be paid once the Bookkeeper and Accountant had the accounts in order. The applicant disagrees that she was solely responsible for the taxation and other statutory obligations.
The applicant claims that Mr Schinella started working at her parent’s house in order to suit him. She claims that she never received an extra $200.00 per week for doing invoicing for Mr Schinella. The applicant claims that she was always instructed by Mr Schinella on what items to purchase.
During her employment with Tutti Frutti, from April 2019 until May 2021, the applicant admitted to receiving payments from Centrelink, which range between $500.00 - $700.00 per fortnight. The applicant stated that she contacted Centrelink sometime in 2022 to notify them that she was working and they are in the process of creating a debt repayment plan.
The applicant stated that her tax returns have been submitted as nil income, as she has not received group certificates from Mr Schinella. Attached to her second affidavit are photographs of the warehouse showing various items that we used to package hampers together with samples of some hampers. There are also receipts from various sales in the applicant’s name.
In cross examination, the applicant conceded that she did not have a contract of employment as such, with Creative Gifts. The applicant claimed that she did provide a tax file number and the superannuation account details to Creative Gifts Bookkeeper in a text. She conceded she did not fill in a tax file declaration document and Creative Gifts did not deduct tax from her pay. In relation to holidays, she conceded that she did not put in a leave application but was paid for a few days holiday. She conceded that Creative Gifts did not pay any superannuation on her behalf.
The applicant conceded that she did not have a written contract of employment. She denied that she was responsible for her own taxation. In terms of a tax file declaration, she assumed it had been transferred from Creative Gifts to Tutti Frutti. She denied that Tutti Frutti had agreed to pay her travel expenses in addition to paying her $1500.00 a week in cash.
THE RESPONDENT’S EVIDENCE.
Evidence of Raleigh Aston.
From about July 2019, Ms Aston stated that she was engaged by Mr Boris Bosnovski, who had an accounting firm, to assist with the books of Tutti Frutti Promotions, as well as other clients. In about February or March 2020, she started to contract directly with Tutti Frutti and not through a third party.
During Ms Aston’s engagement, she worked mostly from her home office but attended a factory at Marrickville in person between 1 to 4 times a month, arriving in the morning and leaving in the evening.
Ms Aston claims that during the days she was present in the factory at Marrickville, she observed that the applicant typically arrived around 9:00am, disappeared for several hours, returned to the factory and did not work any later than 4:00pm.
In around August 2020, Ms Aston claimed that she had a conversation with the applicant to the following effect:
Ms Aston: “What are these $1500.00 payments being made to you?”
The Applicant: “That’s my cash payments. They are not on the books.”
Ms Aston: “Well, no, it’s gone to the company’s bank account – you either an employee or a subcontractor. You can’t be receiving cash payments of that amount of money. I need documentation this is ridiculous.”
The Applicant: “Well I’ll just get him to pay cash.”
Ms Aston claimed that in March 2021 she had a further conversation with the applicant in which she said: “Josephine. Enough is enough. I need your details and documents. Anyone that is on the payroll I need the information. I either need your employee details or your subcontractor details”.
Ms Aston stated that in about March 2022 she stopped undertaking Bookkeeper duties for Tutti Frutti Promotions.
Ms Aston denied that she ever asked the applicant if Tutti Frutti could submit her name and details as an employee, to claim the benefits of the Job Keeper allowance. Tutti Frutti did claim Job Keeper, which was paid to two employees, including Mr Schinella, but not the applicant because she was not an employee.
In late September 2020, Ms Aston recalls a conversation with the applicant about whether or not she should become an employee. She claims that she told the applicant that if she wanted to be an employee, she would need to submit her tax file number details and superannuation details.
In cross examination, Ms Aston agreed that she initially started work with Tutti Frutti on the income side of the business. This expanded later to preparing tax documents and paying invoices. Ms Aston stated that she was only asked to reconcile the expense side around March 2020.
Ms Aston confirmed that she could not find any Australian Business Number or any invoice from the applicant. She denied that she was in a position to supervise the applicant and she merely requested documents she needed in order to do her job. It was put to her that she had sufficient control to tell her what documents should be contained within a box of receipts. She was not aware if the applicant was registered for GST.
In re-examination, Ms Aston was asked what she understood by the term “being on the books”. She replied that it meant, being paid for service as an employee.
Evidence of Santos Paulo Schinella
Mr Schinella is the sole shareholder and Director of Tutti Frutti Promotions. In about 2017, Mr Schinella became a shareholder and Director of Creative gifts, which operated from the same warehouse as Tutti Frutti. As part of the purchase of Creative Gifts, Mr Schinella became familiar with the staff of Creative Gifts including the applicant.
In about March 2019, the applicant stated that she no longer wished to work for Creative Gifts and wanted to work solely for Tutti Frutti. Mr Schinella claims that he told the applicant: “Great, you can now become a contractor for Tutti Frutti Promotions. It lowers my work”.
In a separate conversation, the applicant told Mr Schinella:
The applicant: “I need to be paid $1500.00 per week. Out of that I’ll pay for my own fuel. I’ll keep doing what I was doing for you at Creative Gifts. The payment to me will cover everything. I will pay my own tax and petrol from those monies. Because I am involved in a beauty business I need to work hours that are to my own choosing.”
Mr Schinella: “You do the hours that are required to do what needs to be done. I will pay you that set amount no matter what hours are worked to do the job. As you know there will be some busy weeks and others which are quiet.”
Mr Schinella also claims that he stated, “I need all the receipts for your spending so I can reimburse you”.
Mr Schinella claims that during the same period, the applicant continued working at her sister’s beauty business. She worked 5 days per week about 4-5 hours per day until the conclusion of her engagement in May 2021.
At around the same time, the applicant asked if she could work from home, which included in her parent’s garage. Her engagement was a verbal one, no documentation was exchanged or signed.
Me Schinella claims that the terms of engagement were the same as the applicant was under while working for Creative Gifts. They were as follows
a. the applicant was to purchase goods on behalf of Tutti Frutti and such purchases had to be legitimately made and authorised;
b. the applicant was to provide receipts to him and/or Ms Aston in respect of purchases legitimately made and authorised;
c. Tutti Frutti would reimburse the applicant for purchases she had ostensibly made on its behalf` and that were legitimately made and authorised;
d. the applicant was required to work about 4 to 5 hours per day five days a week;
e. Tutti Frutti would pay the applicant a flat weekly fee of $1500.00 gross.
Mr Schinella claims that the applicant was solely responsible for her taxation and other statutory obligations. She was not provided with any statutory or contractual paid leave and was not issued with payslips because she was not employee.
Mr Schinella claims it was the applicant that started using her own credit card for purchases so that she could accumulate reward points. She did not do so at his request. Eventually, the applicant was told she would not receive reimbursements until she provided Ms Aston with receipts and invoices for purchases.
Mr Schinella agreed that at one point, the applicant did do some additional work for about two months, for which she received an additional payment of $200.00 per week.
Mr Schinella claims that the only two employees of the business were himself and Umberto. He claims that he did not control the applicants hours or days of work. The applicant dictated these, herself. The business also had a number of compere’s who were contracted. They never attended the warehouse. At the applicant parent’s home, in relation to stock purchases, she did that on her own. He conceded that the applicant was given direction in relation to budgets and the sort of prizes to be purchased. In relation to regular weekly raffles, the applicant decided what was to be purchased.
Mr Schinella agreed that he went to the applicant’s parent’s home every day between 8:00am and 9:00am on working days and some days on Saturdays. He agreed that several of his contractors requested to be paid in cash. Mr Schinella denied that he ever received cash payments from the clubs where raffles and promotions took place. Any payments in cash were taken out of the business bank account. He claims that large amounts of money reimbursed to that applicant could not be properly reconciled and that as at the date of swearing his Affidavit, a large amount of receipts and invoices have still not been provided by the applicant.
Mr Schinella claims that the applicant requested to be paid $1500.00 net if she agreed to become an employee. He claims she never agreed to become an employee and was never paid as such. At no time did she ever supply details of the super fund as she was always a contractor.
Mr Schinella denied that the applicant was ever instructed to attend the warehouse on a Sunday.
Mr Schinella denies that the applicant ever had a Management role. He agrees that in mid-2019, he relocated the business to the applicant’s parents’ home for about six months to suit the applicant, because she wanted to work from there. Given that the applicant was given the schedule for the clubs where activities were to take place seven days ahead, there was no reason for her to be making up prizes the day before they were needed to be collected and delivered to the clubs.
Mr Schinella denied that the applicant had any authority to represent herself as a Manager of Tutti Frutti.
In cross examination, Mr Schinella agreed that in terms of purchases, he required the applicant to use her credit card but also cash that he gave to her. He agreed that the applicant had access to the generic email address for the company.
In re-examination, he reiterated that the applicant would come and go as she pleased. If raffles were done, he did not care when she worked.
WAS MS PRIMERANO AN EMPLOYEE? OR AN INDEPENDENT CONTRACTOR?
The issue for the Court to determine initially, is whether or not the applicant was an employee of Tutti Frutti or was engaged as an independent contractor. It is for the applicant to discharge the burden of proof of proving that she was engaged as an employee. If the Court is so satisfied, then it is able to consider whether or not the allegations contained in the Statement of Claim have been made out. If she was not employee, that is the end of the matter in terms of the applicant’s claim against the respondents.
An analysis of the overall evidence reveals two competing claims. The first, by the applicant, is that she was an employee. The second, by the respondents, is that she was an independent contractor. As no contract of employment exists, the Court is left to look at the evidence about what was agreed between the parties. In so doing, the Court is entitled to look at the conduct of the parties which might provide evidence as to the terms and conditions of the contract.
The Court is satisfied that the applicant worked for Tutti Frutti, during the period claimed. It is common ground between the parties that she was paid an amount of $1500.00 per week either in cash or otherwise.
No material has been produced which would indicate that the applicant filled in a tax file number declaration or other paperwork which would have directed Tutti Frutti as to where payments in relation to superannuation, which was a necessary legislative required payment, were to be made.
The applicant conceded that during the relevant period, she made claims to Centrelink which resulted in her receiving benefits which she freely admits she was not entitled to. To the Court’s mind, this fact points towards finding the applicant was in fact self-employed and worked for Tutti Frutti as an independent contractor rather than as an employee.
The applicant claims that she worked excessive hours and is entitled to payments in respect of overtime and otherwise in respect of those hours worked. It seems beyond credibility that she would have worked those hours in the manner in which she claims, if she was an employee and entitled to the payment of over time, penalty rates and paid annual and other leave.
The applicant claims that she never looked at her superannuation account. The Court finds this difficult to accept. Noting that the applicant’s partner is a qualified accountant, it seems incredible that if, the applicant was an employee, she would not have ascertained at an early point of time that she was not receiving superannuation payments and taken the matter up with her employer. The Court finds this matter points more towards her being an independent contractor than an employee.
The applicant agreed that whilst working for Creative Gifts, she was an independent contractor. It appears, even on her own evidence, that when she commenced work for Tutti Frutti, she was engaged in the same terms and conditions that she was working for Creative Gifts. This points towards the applicant remaining an independent contractor following commencing work with Tutti Frutti rather than as an employee.
The Court has difficulty in accepting that if the applicant was an employee, she would not have requested payslips and a group certificate at the end of the financial year. The fact that the applicant concedes that she submitted taxation returns whilst engaged with Tutti Frutti showing nil income, points towards the fact that she was prepared to misrepresent her income, even as a contractor, and not as an employee to the Australian Taxation Office. The fact that she submitted the nil tax return points more towards the fact that she was an independent contractor rather than an employee.
Were this simply a contest between the evidence of the applicant and Mr Schinella, the Court may have had difficulty in which version of events to prefer. Ms Fazzalaro confirmed in cross examination that the applicant was engaged by Creative Gifts as a contractor. This supports the claim that when the applicant shifted her work from Creative Gifts to Tutti Frutti it would have been as a contractor.
The Court does not find that the work the applicant undertook with her sister points towards the applicant being a contractor rather than an employee.
The Court has noted the evidence of the applicant’s partner, sister and father, however the Court is of the view it adds little to the factual mix of which version of events to prefer.
Mr Schinella gave evidence that was broadly consistent with the fact that the applicant was a contractor and not an employee. His evidence however painted the picture of someone engaged in the business that operated as far as possible on a cash basis rather than properly recording income and expenditure so as to enable the business to properly submit and pay tax on any profit.
The Court does however accept Mr Schinella’s claim that he did not care when the applicant worked, as long as the work was done. This points to the applicant being a contractor rather than an employee. The fact he may have been asked to authorise purchases of goods sourced by the applicant is neutral as to the fact she was an employee of contractor.
There does not appear to be any evidence before the Court that the applicant had a right to delegate work to another person. However in the particular circumstances of this case, the Court does not consider this points to the applicant being either a contractor or an employee. The use of the applicant’s own credit card, given the particular nature of the work that she performed, and the arrangements for reimbursement, does not necessarily pointed towards the applicant either being a contractor or an employee. The same can be said in relation to the use of a motor vehicle and reimbursement for petrol.
Ms Ashton was engaged as a Bookkeeper. She now longer works for Tutti Frutti. Her evidence before the Court was both consistent and credible. She painted the picture of a business that was remarkably casual as regards recordkeeping, taxation obligations and attention to such details as the required paperwork for the engagement of employees, or even contractors. The Court accepts that she was concerned about her capacity to reconcile claims made by the applicant for reimbursement for purchases and that in the course of her duties, she raised her concerns with the applicant. This supports the view by the Court that Ms Ashton did what she could to try and regularise the records of Tutti Frutti. It is clear that she had considerable concerns about cash payments being made to the applicant.
The Court accepts her version of events of a discussion between herself and the applicant as to whether or not the applicant wished to become an employee as compared to continuing the arrangements that she was currently on as an independent contractor. This conversation as set out above indicated that if the applicant was to become an employee, she wanted to receive $1500.00 per week net of tax.
The Court also accepts the later conversation outlined by Ms Aston as regards the fact that the applicant needed to provide documentation one way or the other. That being documentation to enable her to be paid as an employee or as contractor. The response that the applicant would just get Ms Schinella to pay her in cash has a ring of truth to it, in the particular circumstances of this case. Having accepted this conversation and preferring it to the account of the applicant, the Court is led to the conclusion that Ms Primerano always knew her status was that of an independent contractor and not an employee.
Ms Aston’s evidence supports that of Mr Schinella that the applicant was a contractor and not an employee. Accordingly the weight of evidence is that she was a contractor not an employee
Weighing up all of the factual matters which the Court has determined, the Court is not satisfied that the applicant has discharged her burden of proof that she was an employee as compared to being a contractor.
In terms of the question posed at the beginning of this judgement the answer is “No”.
I certify that the preceding one hundred and one (101) numbered paragraphs are a true copy of the Reasons for Judgment of Judge D Humphreys. Associate:
Dated: 28 July 2023
SCHEDULE OF PARTIES
SYG 2237 of 2021 Respondents
Fourth Respondent:
RAELEIGH ASTON
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