Richard Khoury v Tabcorp Holdings Limited
[2024] FWC 2946
•24 OCTOBER 2024
| [2024] FWC 2946 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.365—General protections
Richard Khoury
v
Tabcorp Holdings Limited
(C2024/4782)
| COMMISSIONER CRAWFORD | SYDNEY, 24 OCTOBER 2024 |
General protections dismissal dispute – jurisdictional objection – independent contractor and not employee – no contract with Tabcorp – not an employee of Tabcorp - application dismissed.
BACKGROUND
Richard Khoury has made an application to the Fair Work Commission (Commission) under s.365 of the Fair Work Act 2009 (Cth) (FW Act) for the Commission to deal with a dispute arising out of Mr Khoury’s allegations that he was dismissed from employment with Tabcorp Holdings Limited (Tabcorp) in contravention of Part 3-1 of the FW Act. Mr Khoury’s application was filed on 12 July 2024.
Tabcorp operates a gambling business. Mr Khoury was engaged to perform work as an Operational Support Engineer.
On 8 August 2024, Tabcorp filed a Form F8A employer response. The response form raised a jurisdictional objection to Mr Khoury’s application on the ground that Mr Khoury was never employed by Tabcorp and therefore had not been “dismissed” within the meaning of s.386 of the FW Act.
Tabcorp’s jurisdictional objection must be resolved before the Commission’s conciliation powers under s.368 of the FW Act are exercised.[1]
I issued directions for the filing of material and listed a hearing regarding Tabcorp’s jurisdictional objection for 10 October 2024 via video.
I granted permission for both parties to be represented at the hearing because I was satisfied that would enable the matter to be dealt with more efficiently. Mr Khoury was represented by Chris McArdle from McArdle Legal. Tabcorp was represented by Vanja Bulut of counsel.
MATERIAL FILED
Tabcorp
Tabcorp relied on a witness statement from Matthew McKenzie dated 6 September 2024. Mr McKenzie is employed by Tabcorp Assets Pty Ltd (Tabcorp Assets), which is a wholly owned subsidiary of Tabcorp, in the position of General Manager Technology – Strategy, Architecture, Data, Engineering, Cloud and Operations. Mr McKenzie’s statement had the following documents attached:
· MM 1: Mr McKenzie gave evidence about Tabcorp Assets entering into an MSP Services Agreement with Hudson RPO (Aust) Pty Limited (Hudson RPO) on around 8 September 2024. The document marked MM 1 is a letter from Tabcorp to Hudson RPO dated 15 November 2023 which confirms an extension of the end date for the MSP Services Agreement from 9 September 2023 to 30 June 2024, with all contractual conditions, except the Program Fee, remaining the same.
· MM 2: A Statement of Work entered into by Tabcorp Assets and DXC Enterprise Australia Pty Ltd (DXC Enterprises) on around 9 September 2023. The Statement of Work was for a project directed at separating The Lottery Corporation Limited business from Tabcorp. The Statement of Work refers to DXC Enterprises providing engineers and administrators who will work under the guidance and direction of Tabcorp on the demerger activities for five days per week for a period of three months. Mr Khoury was one of the engineers that worked on the demerger project.
· MM 3: This is a document which confirms the Statement of Work between DXC Enterprises and Tabcorp Assets was extended to 31 March 2024.
· MM 4: This is a document which confirms the Statement of Work between DXC Enterprises and Tabcorp Assets was further extended to 22 May 2024.
· MM 5: This is an email sent from Hudson RPO to Mr Khoury on around 21 May 2024. Mr McKenzie gave evidence that Tabcorp Assets engaged Hudson RPO on around 21 May 2024 to provide the services of Mr Khoury through the Services Agreement between Tabcorp Assets and Hudson RPO. The email refers to an attached Hudson RPO Independent Contracting Agreement. The email refers to RK Advisors Pty Ltd providing the services of Mr Khoury to Hudson RPO. The email refers to RK Advisors Pty Ltd being responsible for sourcing workers’ compensation and other insurances concerning the work to be performed by Mr Khoury. The email states Mr Khoury will report to Travis Weston (Senior Project Manager) and will be paid a rate of $1,000 per day plus GST. The email refers to Hudson RPO providing Recipient Created Tax Invoices to facilitate payments to RK Advisors Pty Ltd for work performed by Mr Khoury. The email refers to RK Advisors Pty Ltd needing to sign the Independent Contractor Agreement and an ABN/GST declaration.
· MM 6: This is the Independent Contractor Agreement between Hudson RPO and RK Advisors Pty Ltd in relation to the work to be performed for Tabcorp by Mr Khoury. Mr Khoury signed the Independent Contractor Agreement on behalf of RK Advisors Pty Ltd on 21 May 2024.
· MM 7: This is a series of tax invoices and backing timesheets issued by Hudson RPO to Tabcorp Assets for work performed by Mr Khoury. The invoices demonstrate Hudson RPO was charging Tabcorp Assets a rate of $1,086.50 per day plus GST for work performed by Mr Khoury. The invoices are dated: 30 May 2024, 6 June 2024, 13 June 2024, 20 June 2024, 27 June 2024, and 4 July 2024. The invoices demonstrate Tabcorp Assets paid Hudson RPO a total of $28,249 plus GST for work performed by Mr Khoury from 27 May 2024 to 28 June 2024.
I marked Mr McKenzie’s statement, and the attached documents, Exhibit R1.
Mr McKenzie also provided a supplementary statement dated 27 September 2024. I marked the supplementary statement Exhibit R2. The supplementary statement provides evidence that Tabcorp was not involved in the process whereby Mr Khoury was recruited to provide services to DXC Enterprises via a recruitment company named Talent International.
Mr McKenzie was cross-examined on his evidence during the hearing. Mr McKenzie gave evidence about a discussion he had with Mr Khoury on around 28 June 2024. Mr McKenzie stated he referred to a “fit for work check performed by Hudson” and that Mr Khoury was “outside of our risk appetite.” Mr McKenzie elaborated on the issues identified in Hudson’s fit for work check during the hearing but did not give these details to Mr Khoury during their phone call.
Tabcorp relied on an outline of submissions dated 6 September 2024 and an outline of submissions in reply dated 27 September 2024. Ms Bulut also provided oral closing submissions at the end of the hearing. I have considered all the submissions provided by Tabcorp.
Mr Khoury
Mr Khoury provided a witness statement dated 23 September 2024. Mr Khoury’s statement confirms he was recruited through Talent International and then entered into a contract with DXC Enterprises to perform work for Tabcorp. Mr Khoury responded to an advertisement on Seek in August 2023. Mr Khoury states he was directed by Tabcorp officers to sign a document with Hudson RPO in May 2024. Mr Khoury states Mr McKenzie called him in late June 2024 and advised him that his contract with Hudson RPO would not be extended beyond 28 June 2024 because Mr Khoury was not a good fit to perform work for Tabcorp.
Mr Khoury’s statement attached a copy of the Independent Contractor Agreement he signed with Hudson RPO on behalf of RK Advisors Pty Ltd on 21 May 2024. A letter sent by Mr McArdle via email to Tabcorp on 5 July 2024 was also attached. This letter alleged Mr Khoury was an employee of Tabcorp and indicated legal action would be commenced by Mr Khoury if he is not permitted to continue performing work for Tabcorp.
I marked Mr Khoury’s statement, and the attached documents, Exhibit A1. Mr Khoury was cross-examined during the hearing on 10 October 2024. Mr Khoury admitted in cross-examination that he incorporated RK Advisory Pty Ltd in 2022 and that he is the sole owner, director, and company secretary. Mr Khoury confirmed the company is registered for GST and completes business activity statements. Mr Khoury confirmed RK Advisory Pty Ltd entered into contracts with DXC Enterprises and Hudson RPO in relation to the work he performed for Tabcorp. Mr Khoury confirmed that DXC Enterprises and Hudson RPO made payments for work he performed to RK Advisory Pty Ltd.
STATUTORY PROVISIONS
Section 365(1) of the FW Act states:
If:
(a) a person has been dismissed; and
(b) the person, or an industrial association that is entitled to represent the industrial interests of the person, alleges that the person was dismissed in contravention of this Part;
the person, or the industrial association, may apply to the FWC for the FWC to deal with the dispute.
The dictionary in s.12 of the FW Act defines “dismissal” by calling up the definition in s.386 of the FW Act. The definition in s.386 states:
Meaning of dismissed
(1) A person has been dismissedif:
(a) the person's employment with his or her employer has been terminated on the employer's initiative; or
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.
(2) However, a person has not been dismissed if:
(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or
(b) the person was an employee:
(i) to whom a training arrangement applied; and
(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;
and the employment has terminated at the end of the training arrangement; or
(c) the person was demoted in employment but:
(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and
(ii) he or she remains employed with the employer that effected the demotion.
(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person's employment, to avoid the employer's obligations under this Part.
Given these definitions, a person can only be “dismissed” for the purposes of s.386(1) of the FW Act if there was an employment relationship in existence.
The jurisdictional issue that needs to be determined initially in this case is whether Mr Khoury was an employee of Tabcorp.
CONSIDERATION – EMPLOYEE OR CONTRACTOR
The legal approach to assessing whether a person was engaged as an employee or independent contractor was significantly changed by amendments to the FW Act that commenced on 26 August 2024.[2] The amendments are specifically directed at the issue of whether subsequent conduct of the parties can be considered when characterising the nature of their relationship. However, the new legislative provisions are not relevant for this case given the relationship between the parties ended on 28 June 2024, which was prior to the commencement of the amendments. As a result, I am required to apply the precedent established by the majority of the High Court in Personnel Contracting[3] and Jamsek.[4]
Justice Wigney provided a summary of the principles established by the Personnel Contracting and Jamsek judgments in JMC,[5] the accuracy of this summary was not contested on appeal.[6] His Honour identified the following six principles:
i.Where the rights and duties of the parties are comprehensively recorded in a written contract, the legal rights and obligations established by the contract are decisive of the character of the relationship as long as there are no arguments that the contract was a sham, the contract has been varied or waived, or are subject to an estoppel.
ii.A contract of employment must be construed in accordance with the established principles of contractual interpretation.
iii.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. As a result, the parties’ subsequent conduct will generally be irrelevant when it comes to characterising the relationship.
iv.Relevant contractual provisions for determining the nature of the relationship include mode of remuneration, provision and maintenance of equipment, obligation to work, hours of work, provision of holidays, the deduction of income tax, the delegation of work, and the right to exercise direction and control.
v.There are often two key considerations for the characterisation. The extent of control the putative employer has regarding how, when, and where the work is performed. The other is the extent to which the putative employee can be said to be working in their own business, as distinct from the business of the putative employer.
vi.A label given by the parties to their relationship is not determinative and will rarely assist in characterising the relationship.
There is an Independent Contractor Agreement between Hudson RPO and RK Advisors Pty Ltd which comprehensively records the rights and duties of the parties. There is also a comprehensive written document between DXC Enterprises and RK Advisory Pty Ltd that records the rights and duties of the parties. However, I have not been provided with a copy of the contract between RK Advisory Pty Ltd and DXC Enterprises. Mr Khoury gave evidence that he could have located that document from his email account but had not done the necessary searches. That is regrettable given the type of case he is attempting to run.
In the circumstances, I consider it is open for me to assume that the terms of the agreement between DXC Enterprises and RK Advisory Pty Ltd have the same general effect as those contained in the Independent Contractor Agreement between Hudson RPO and RK Advisors Pty Ltd. If there was a material difference between the contracts, Mr Khoury should have led evidence to establish the differences. What is clear from the evidence is that the contract was between DXC Enterprises and RK Advisory Pty Ltd, as opposed to Mr Khoury as an individual. Mr Khoury also confirmed that DXC Enterprises made payments directly to RK Advisory as opposed to Mr Khoury as an individual, presumably in accordance with the contractual terms.
Mr Khoury argued that the contracts made by RK Advisors Pty Ltd with DXC Enterprises and Hudson RPO were “shams” designed to allow Tabcorp to “evade the responsibilities under the Fair Work Act” and “mere pieces of machinery” to achieve that outcome.
In Sharrment Pty Ltd v Official Trustee[7], Lockhart J provided the following summary of what constitutes a “sham” in Australian law:
“A ‘sham’ is therefore, for the purposes of Australian law, something that is intended to be mistaken for something else or that is not really what it purports to be. It is a spurious imitation, a counterfeit, a disguise or a false front. It is not genuine or true, but something made in imitation of something else or made to appear to be something which it is not. It is something which is false or deceptive.”
This analysis was cited with approval in the judgment of Gaudron, Gummow, Kirby and Hayne JJ in Federal Commissioner of Taxation v Montgomery.[8]
The Supreme Court of South Australia Full Court held in Golden Plains Fodder Australia Pty Ltd v Millard that:
“When directed to the topic of sham it is appropriate to receive evidence directly from the parties about their intentions. One inquiry is the terms of the arrangement. However, equally important, is whether the parties intended there to be a facade, a misrepresentation of the position or a falsehood”.[9]
I am not satisfied the contracts that RK Advisory Pty Ltd entered into with DXC Enterprises or Hudson RPO fall within the legal meaning of a “sham”. I find the contracts represent genuine commercial arrangements that benefitted all the parties involved.
Tabcorp contracted with DXC Enterprises and Hudson RPO in order to engage people with specialised skills to perform work on projects for limited periods of time. DXC Enterprises and Hudson RPO received commercial benefit from these arrangements. The businesses charged Tabcorp a fee for arranging Mr Khoury to perform work for Tabcorp. Mr Khoury benefitted from the arrangements because his company was paid a significant amount of money by DXC Enterprises and Hudson to perform project work for Tabcorp. Mr Khoury’s company was paid $1000.00 plus GST per day by Hudson RPO. That was substantial remuneration for an employee with an Advanced Diploma qualification. It would roughly equate to an annual salary of $250,000.00.
I am not satisfied the relevant contracts represent a façade, misrepresentation, or falsehood. I consider the contracts represent reasonably standard commercial arrangements that can be generally described as Tabcorp contracting with DXC Enterprises and Hudson RPO to hire labour to be used on specific projects. Tabcorp paid a fee to DXC Enterprises and Hudson RPO for the provision of labour from people such as Mr Khoury on the basis that its legal relationship would be with DXC Enterprises and Hudson RPO as opposed to directly with workers such as Mr Khoury. RK Advisory Pty Ltd was acting in accordance with the commercial arrangements by submitting business activity statements to the ATO concerning work performed by Mr Khoury.
Given I am not satisfied the relevant contracts were a “sham”, the legal rights and obligations established by the contract are decisive of the character of the relationship.
Having reviewed the terms of the Independent Contractor Agreement between RK Advisory Pty Ltd and Hudson RPO, I find the terms are generally all consistent with that of an independent contracting relationship and not an employment relationship. The Independent Contractor Agreement refers to payment arrangements that would be expected for a contracting relationship and required RK Advisory Pty Ltd to provide its certificate of incorporation, ABN, and proof that workers’ compensation and other insurances have been sourced. Clause 10 of the contract is directed at specifically excluding the possibility of an employment relationship arising with Hudson RPO or its clients.
The fact that DXC Enterprises and Hudson RPO entered into contracts with a corporate entity also weighs heavily in favour of finding the relationship was that of independent contractors.
In Personnel Contracting, Gordon J was part of the majority and wrote separate reasons. In relation to the identity of the contracting parties, Her Honour stated:
“The nature of the contracting parties, such as where a contracting party is a separate entity or partnership, rather than an individual, may suggest that the relationship between the parties is not that of employer and employee.”[10]
A Full Bench of the Commission recently stated the following when upholding an appeal against a finding of employment where the purported employee operated through a corporate entity:
“Of course, the human hand of Mr Coulthard was behind the activities of VJC. But there is a human hand behind every company. A corporation is an abstraction, but its legal existence is very real and cannot be disregarded simply because work is being done by an individual.”[11]
Mr Khoury has led no evidence regarding the arrangements that were in place between RK Advisory Pty Ltd and himself. It is not clear whether RK Advisory Pty Ltd paid Mr Khoury as an employee or if Mr Khoury received some benefit in terms of taxation through the involvement of a corporate entity.
A substantial amount of the evidence relied upon by Mr Khoury was directed at how the parties subsequently conducted themselves under the contract. For example, Mr Khoury referred to working exclusively under the direction of Tabcorp employees and having no direct contact with DXC Enterprises or Hudson RPO. I do not consider I can place any significant weight on the submission that this evinces an employee-employer relationship given the High Court’s judgments in Personnel Contracting and Jamsek. These matters are evidence of subsequent conduct that cannot currently be considered when characterising the relationship. In any event, it is not correct that there was no further contact between RK Advisory Pty Ltd and DXC Enterprises and Hudson RPO after the contracts were entered into. The parties were in regular contact via their invoicing and payment arrangements.
After reviewing the terms of the Independent Contactor Agreement between RK Advisory Pty Ltd and Hudson RPO, and in the context where there is no evidence of any differing contractual terms of significance in RK Advisory Pty Ltd’s contract with DXC Enterprises, I find that there was an independent contracting relationship between RK Advisory Pty Ltd and DXC Enterprises from around September 2023 until May 2024. I find there was an independent contracting relationship between RK Advisory Pty Ltd and Hudson RPO from 21 May 2024 until 28 June 2024.
I accept Mr Khoury performed duties exclusively for Tabcorp from September 2023 to 28 June 2024. I accept Tabcorp arranged for Mr Khoury to perform duties through a contract with Hudson RPO instead of DXC Enterprises on around 21 May 2024. I also accept it was Mr McKenzie that decided the contract whereby Mr Khoury was performing duties for Tabcorp would not be extended beyond 28 June 2024. However, given the legal principles I need to apply in this case, I do not consider that these factors can justify a conclusion that Mr Khoury was an employee of Tabcorp.
I find Mr Khoury was not an employee of Tabcorp at any relevant time and that Tabcorp did not “dismiss” Mr Khoury within the meaning of s.386 of the FW Act.
CONCLUSION
I have found that Mr Khoury was not an employee of Tabcorp and hence that Mr Khoury was not “dismissed” by Tabcorp. As a result, Tabcorp’s jurisdictional objection is upheld.
Mr Khoury’s application is dismissed.
COMMISSIONER
\
Appearances:
Mr McArdle from McArdle Legal representing Mr Khoury.
Ms Bulut of counsel representing Tabcorp.
Hearing details:
2024.
Sydney (by video via Microsoft Teams).
10 October.
[1] Coles Supply Chain Pty Ltd v Milford [2020] FCAFC 152 and Lipa Pharmaceuticals Ltd v Mariam Jarouche [2023] FWCFB 101 at [23].
[2] The Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 amends the definition of “employee” under the FW Act. The new definition in s.15AA will expressly require consideration of how the contract is performed in practice. That in broad terms overrules the current High Court precedent on the issue.
[3] Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 96 ALJR 89; [2022] HCA 1.
[4] ZG Operations Australia Pty Ltd v Jamsek (2022) 96 ALJR 144; [2022] HCA 2.
[5] JMC Pty Ltd v Federal Commissioner of Taxation [2022] FCA 750 at [16] to [27].
[6] JMC Pty Ltd v Federal Commissioner of Taxation (2023) 297 FCR 600; [2023] FCAFC 76 at [8] and [9].
[7] Sharrment Pty Ltd v Official Trustee (1988) 18 FCR 449 at 454.
[8] Federal Commissioner of Taxation v Montgomery (1999) 198 CLR 639 at [88].
[9] Golden Plains Fodder Australia Pty Ltd v Millard (2007) 99 SASR 461 at [29].
[10] Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 96 ALJR 89; [2022] HCA 1, Gordon J at [174].
[11] Redei Enterprises Pty Ltd and another v Maxwell Coulthard [2024] FWCFB 349 at [22].
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