Roberts and Secretary, Department of Jobs and Small Business - [2019] AATA 64

Roberts and Secretary, Department of Jobs and Small Business [2019] AATA 64 (22 January 2019)
Division:GENERAL DIVISION
File Number: 2018/3203
Re:Phillip Raymond Roberts
APPLICANT

Secretary, Department of Jobs and Small BusinessAnd
RESPONDENT

DECISION
Tribunal:Senior Member D R Davies
Date:22 January 2019
Place:Brisbane

The Tribunal sets aside the decision under review and Mr Roberts’ claim for an advance under the Fair Entitlements Guarantee Act 2012 (Cth) is remitted to the Respondent to be assessed in accordance with the Tribunal’s findings.
.....................[Sgd]...................................................
Senior Member D R Davies
CATCHWORDS
EMPLOYMENT ENTITLEMENTS – Claim for an advance under Fair Entitlements Guarantee Act 2012 – Whether Applicant an employee or a independent contractor – Unpaid remuneration due to insolvency event – Reasonable steps before the insolvency event – Decision under review set aside
LEGISLATION
Fair Entitlements Guarantee Act 2012 (Cth)
CASES
Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16
On Call Interpreters and Translators Agency Pty Ltd v Federal Commissioner of Taxation (No 3) [2011] FCA 366
Tabone and Secretary Department of Employment [2018] AATA 2138
Hollis v Vabu (2001) 207 CLR 21
Marshall v Whittakers Building Supply Company Pty Ltd (1963) 109 CLR 210
SECONDARY MATERIALS
Explanatory Memorandum to the Fair Entitlements Guarantee Bill 2012
REASONS FOR DECISION
Senior Member D R Davies
22 January 2019
INTRODUCTION

The Applicant, Mr Roberts, seeks the review of a decision of the Respondent, the Secretary, Department of Jobs and Small Business, that he was not eligible for an advance under the Fair Entitlements Guarantee Act 2012 (Cth) (FEG Act).
The issue is whether Mr Roberts was an employee of Ignite Homes Pty Ltd (Ignite) and was eligible for an advance under the FEG Act.
BACKGROUND
The FEG Act provides for the Commonwealth to make payments owed to employees if their employer becomes insolvent. The Commonwealth advances the entitlements of the employees to the employees and then seeks to recover the advances from the insolvent employer.
On 2 March 2015, Mr Roberts entered into an agreement with Ignite to be a contractor of Ignite (First Agreement).[1]
[1] Exhibit 1 Tribunal Documents, T6 pp117-123.
On 18 March 2016 Mr Roberts entered into a new agreement with Ignite which superseded the First Agreement and commenced on 1 April 2016 (Second Agreement).[2]
[2] Exhibit 1 Tribunal Documents, T6 pp124-130.
Mr Roberts asserts that on 22 March 2017 the Second Agreement with Ignite was terminated by Ignite without prior notice.[3]
[3] Exhibit 1 Tribunal Documents, T6 p101.
On 27 March 2017 Mr Roberts submitted a complaint to the Queensland Building and Construction Commission (QBCC) against Ignite for a failure to pay money which was owed to him by Ignite.[4]
[4] Exhibit 1 Tribunal Documents, T6 pp141-3.
On 6 April 2017 Mr Roberts filed an Application for minor civil dispute to the Queensland Civil and Administrative Tribunal (QCAT) claiming payment of service fees of $6,072.00 and commissions of $7,150.00.[5]
[5] Exhibit 1…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Roberts and Secretary, Department of Jobs and Small Business

Details

AGLC: Roberts and Secretary, Department of Jobs and Small Business [2019] AATA 64
Case: [2019] AATA 64
Decision Date: 22 January 2019

CaseChat Overview and Summary

This matter concerned an application by Mr. Roberts for an advance under the Fair Entitlements Guarantee Act 2012 (FEG Act) following the insolvency of his employer, Ignite. The Secretary of the Department of Jobs and Small Business had initially determined that Mr. Roberts was not eligible for an advance because he was considered an independent contractor, not an employee. Mr. Roberts sought a review of this decision, contending that he was, in fact, an employee of Ignite.

The primary legal issues before the Tribunal were whether Mr. Roberts was an employee of Ignite for the purposes of the FEG Act, and whether he had taken reasonable steps prior to the insolvency event to be paid his employment entitlement debts. The FEG Act defines an employee by reference to the common law definition and does not include contractors. Eligibility for an advance requires, among other things, that the person's employment has ceased due to the employer's insolvency, that they are owed employment entitlement debts, and that they took reasonable steps to be paid those debts before the insolvency event.

The Tribunal considered various indicia to determine the nature of the relationship between Mr. Roberts and Ignite, including the terms of their agreements, the mode of remuneration, the deduction of income tax, the establishment of a business, the degree of control exercised by Ignite, and the entitlement to delegate work. While the agreements stated Mr. Roberts was an independent contractor and he provided tax invoices, the Tribunal found that his remuneration was a fixed weekly or fortnightly rate, not for a completed job or at an hourly rate, which suggested an employee relationship. Furthermore, Ignite exercised significant control over Mr. Roberts' work, including specifying his duties, requiring him to report to management, and dictating his working hours and location, which also pointed towards an employment relationship.

Ultimately, the Tribunal found that Mr. Roberts was an employee of Ignite. Consequently, the previous decisions denying him an advance under the FEG Act were set aside, and the matter was remitted for further consideration of his eligibility for an advance.

Orders

Orders of the court

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Background

Background to the litigation

The relevant factors or indicia to be considered in determining whether a person is an employee or a contractor were summarised by the Tribunal in the recent decision Tabone and Secretary Department of Employment[17] as follows (at paragraph 5):[17] [2018] AATA 2138.“The totality of the relevant relationship needs to be examined with a variety of indicators to be weighed and assessed including:(i) The terms of the relevant contract;(ii) The mode of remuneration and in particular whether remuneration was to be paid for a completed job or hours worked;(iii) Deduction of amounts on account of income tax;(iv) Attendance to the basic steps usually associated with setting up a business such as obtaining an ABN and insurance;(v) The putative employer’s degree of control or right to exercise control over the work to be done, the organisation and allocation of work, the manner in which the work is to be performed and the place and hours of work;(vi) Any entitlement or power to delegate work to others;(vii) Any actual work or entitlement to work for others;(viii) Advertising of services to others;(ix) Any exclusive service obligations;(x) Whether the worker is presented to the public as part of the putative employer’s organisation or a representative of it;(xi) Rights to paid holidays, superannuation and sick leave;(xii) Whether the worker has a separate workplace; (xiii) Whether the worker provides and maintains significant resources or equipment; and(xiv) Whether the worker is required to bear all expenses and indemnify the putative employer against any losses.”FACTS The evidence before the Tribunal is contained in the Exhibits before the Tribunal which are admitted by the parties including the Respondent’s Statement of Facts, Issues and Contentions (Exhibit 3) and Mr Roberts’ submissions (Exhibits 4 and 5). Mr Roberts also appeared before the Tribunal and gave evidence and answered questions of the Tribunal and Mr Holcombe who appeared on behalf of the Respondent. Mr Roberts impressed me as a truthful witness and was prepared to concede in response to questions that some statements which he had made in emails in dealings with various parties in relation to the matter either overstated or did not correctly state the position.Terms of the contracts As previously mentioned, Mr Roberts entered into two contracts with Ignite. The recitals to both agreements state: [18]“The Company has requested the Contractor to provide services to the company.”“The Contractor has agreed to provide the Services to the Company upon and subject to the following terms and conditions.”[18] Exhibit 1 Tribunal Documents, T6 p117 and p124. The Second Agreement is expressed to supersede the First Agreement and continues until terminated.[19] Relevant provisions of the First and Second Agreements (the Agreements) are as follows:[19] Exhibit 1 Tribunal Documents, T6 p125 clauses 2 and 4.(a)Clause 2 requires the Contractor to provide the Services at the Premises or such other place or places which the Company may from time to time authorise or direct. Schedule 2 provides that the Premises are a specified display home and the head office at Springwood.(b)Clause 3 provides for remuneration of the Contractor. Whilst this clause in the First Agreement refers to payment of a Contractor’s Fee for the Services in accordance with Schedule 1, the Second Agreement omits that provision although Schedule 1 in both Agreements provides for the payment of a service fee upon receipt of a tax invoice as follows:(i)First Agreement - $1,100.00 including GST weekly; and(ii)Second Agreement - $2,400.00 excluding GST fortnightly.(c)Clause 3 of the Agreements also provides for the payment of travel expenses as provided in Schedule 3. In his evidence, Mr Roberts said that he does not recall having claimed for any travel expenses and the reason for the increase in his fee in the Second Agreement was partly to cover his expenses and that is why he did not claim expenses. Clause 3 also provides for payment of commission in accordance with Schedule 5. Under the Second Agreement, the commission payment was to be $2,000.00 excluding GST paid on receipt of a tax invoice and was payable upon receipt of the deposit for a Building Contract.(d)Clause 5 sets out various warranties and indemnities which are given by the Contractor including, in sub-clause 5(4) that the Contractor “indemnifies the Company from and against any costs, damages, loss or liability of any kind… however suffered or incurred by the Company by virtue of the provision of the Services or any breach of this Agreement by the Contractor”.(e)Clause 6 sets out various confidentiality obligations which are imposed on the Contractor.(f)Clause 7 states that “the Contractor’s relationship with the Company is that of independent contractor” and that nothing in the Agreement is to be construed “as creating the relationship of employer and employee.”(g)Schedule 3 outlines the Services to be provided by the Contractor including:·Creating service agreements to new marketing contacts with those agreements to be countersigned by the manager, Brendon Ferns.·Presenting the company’s house and land packages to marketing contacts for purposes of closing investment property sales.·Working out of the display home six days a fortnight on a rotational basis with another staff member.·Overseeing sales staff and reporting back to management.·Maintaining an ongoing relationship with new and past clients and recording activities with clients onto Base CRM.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

On 9 November 2017 a delegate of the Respondent made a decision under subsection 15(1) of the FEG Act that Mr Roberts was not eligible for an advance under the FEG Act (Initial Decision).[9][9] Exhibit 1 Tribunal Documents, T11. The delegate decided that Mr Roberts was not an employee of Ignite and was instead a contractor. Accordingly the delegate concluded that Mr Roberts was not eligible for an advance under the FEG Act which is a payment scheme solely for former employees of an insolvent employer. On 17 January 2018 Mr Roberts applied for internal review of the Initial Decision under subsection 38(1) of the FEG Act.[10] Mr Roberts contended that he was an employee of Ignite and not a contractor. [10] Exhibit 1 Tribunal Documents, T12. On 8 June 2018 a delegate of the Respondent made a decision under section 39(1) of the FEG Act to affirm the Initial Decision[11] and determined that Mr Roberts was not an employee of Ignite and that he did not take reasonable steps prior to the insolvency event to be paid employment entitlement debts or to be treated as an employee before his contract was terminated. Accordingly, the delegate determined that Mr Roberts did not satisfy subsection 10(1)(f) of the FEG Act and that he was ineligible for FEG assistance by virtue of that section.[12][11] Exhibit 1 Tribunal Documents, T27.[12] Exhibit 1 Tribunal Documents, T27 p432.ISSUES Mr Roberts contends that he was an employee of Ignite and the Respondent contends that he was an independent contractor. The issues in contention in this Application are therefore:(a)Whether Mr Roberts was an employee of Ignite for the purposes of the conditions of eligibility for an advance under section 10 of the FEG Act; and(b)Whether Mr Roberts took reasonable steps prior to the insolvency event to be paid employment entitlement debts as required by paragraph 10(1)(f) of the FEG Act.LEGISLATION The relevant provisions of the FEG Act are in section 10, which sets out the conditions of eligibility for an advance. Relevantly:·Paragraph 10(1)(a) requires the person’s employment to have ceased. ·Paragraph 10(1)(c) requires the end of employment to be due to the insolvency of the employer or within six months before the appointment of an insolvency practitioner for the employer.·Paragraph 10(1)(d) requires that the person is owed one or more debts attributable to employment entitlements.·Paragraph 10(1)(f) requires that if the person was owed any of the debts before the insolvency event happened, the person took reasonable steps before that event to be paid those debts. Paragraph 10(1)(h) also requires an effective claim to be made in accordance with section 14. Relevantly, section 14 requires the claim to be made in the form approved by the Secretary and within 12 months of the insolvency event of the employer. Whilst section 5 of the FEG Act defines “employer” as “including former employer”, “employee” or “employment” are not defined within the FEG Act. Paragraph 4 of the Explanatory Memorandum to the Fair Entitlements Guarantee Bill 2012 states:“For the purposes of the scheme, the term “employee” refers to an employee at common law and does not include contractors.”

Ratio Decidendi

Legal Principle Established

As previously mentioned, the Agreements are expressed to be contracts for services and specifically provide that the relationship between Ignite and Mr Roberts is that of independent contractor. The Agreements are entered into by Mr Roberts personally and refer to his personal ABN. The Agreements also provide for Mr Roberts to indemnify Ignite against costs, damaged, loss or liability incurred by Ignite as a result of the provision of the Services or any breach of the Agreement. Those provisions suggest that the relationship is that of independent contractor.Mode of remuneration Mr Roberts’ remuneration was for a fixed weekly or fortnightly rate. He was required to submit tax invoices for payment which he did, referring to his ABN and adding GST to the fee. He also submitted invoices for commissions from time to time but did not submit invoices for expenses. However, it is clear that his remuneration was at a weekly or fortnightly rate and was not for a completed job nor for hours worked at an hourly rate. Those factors suggest that it was in the nature of an employee relationship.Deduction of income tax There was no deduction made by Ignite for income tax upon payment of the invoices submitted by Mr Roberts. It is also apparent that Mr Roberts submitted his income tax returns on the basis that he was a sole trader and paid tax on that basis. Those factors suggest that it was an independent contractor relationship. Steps associated with setting up a business Mr Roberts had obtained his personal ABN in 2012 although he says that until he entered into the contract with Ignite he had not used the ABN to operate a business. I am satisfied that he did not have an existing business using this ABN at the time that he entered into the Agreements with Ignite. Whilst the use of the ABN suggests an independent contractor relationship, I am satisfied that the provision of the services under the Agreement was not part of a previously existing business operated by Mr Roberts.Putative employer’s control It is apparent that Ignite controlled or had the right to exercise control over the work which Mr Roberts was required to undertake. He was Ignite’s Business Development Manager. He reported to Mr Ferns and provided regular written reports on his work. He was required to work specific hours at the display home under a roster with other sales staff which was approved. The work he was to perform was specified in the Agreements. He was required to oversee sales staff. He was responsible for the recruitment of sales staff subject to the approval of Mr Ferns. I consider that those matters suggest an employee relationship. Entitlement to delegate work Clause 2(2) of the Agreement provides that Mr Roberts must provide the Services. Clause 9(2) of the Agreement provides that any rights or obligations under the Agreement cannot be assigned or transferred without the other party’s permissions. Mr Roberts did not delegate his work to anyone else. Those matters suggest an employee relationship.Actual work or entitlement to work for others