Rudina Pekaj v AAMG Cleaning Group Pty Ltd

[2018] FWC 2348

[2018] FWC 2348

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Rudina Pekaj
v
AAMG Cleaning Group Pty Ltd
(U2018/1373)

COMMISSIONER HAMPTON ADELAIDE, 14 MAY 2018

Application for an unfair dismissal remedy – jurisdictional objection – whether applicant eligible to apply – whether an employee – jurisdictional issue heard and determined as preliminary point – principles discussed – nature of evidence and materials considered – apparent subcontract system put in place by respondent but not applied in practice in this case – some competing indicia but clear that applicant not conducting a business for herself but rather employed in the business of the respondent – employment found – jurisdiction exists – further proceedings to be scheduled.

1. Background and case outline

[1] Ms Rudina Pekaj has made an application under s.394 of the Fair Work Act 2009 (the FW Act) seeking a remedy for an alleged unfair dismissal. AAMG Cleaning Group Pty Ltd (AAMG) had engaged Ms Pekaj as a Commercial Cleaner between 7 April 2015 and 30 January 2018.

[2] AAMG contends that Ms Pekaj is not protected from unfair dismissal, and not eligible to make this application, on the basis that she was not an employee within the meaning of the FW Act; but rather, was a subcontractor who invoiced AAMG for work undertaken and carried out by her own business. In order to properly bring an application of this present kind, an applicant must satisfy the Commission that they have been an employee. 1 Ms Pekaj contends that she was an employee and I will for convenience describe the dispute about this aspect as the jurisdictional issue.

[3] Having consulted with the parties I determined that the jurisdictional issue should be considered and dealt with as a preliminary point. Further, I considered that the matter should be subject to a determinative conference given all of the circumstances evident here. 2

[4] Some of those circumstances have also led to some difficulties in preparing for the determination of this matter. This includes the fact that the parties are not represented by representatives with experience in the Commission’s jurisdiction and the parties initially both failed to fully engage with the process. The applicant had tended to focus more upon the bona fides concerning the date of a statutory declaration and AAMG upon the view taken by the Australian Taxation Office (ATO) and related matters. Whilst both are potentially of some relevance, it is the substance of the relationship based upon evidence that matters for present purposes.

[5] During the course of the Determinative Conference the Commission was able to have the parties focus upon the relevant considerations and each gave evidence in support of their respective positions.

2. The positions of the parties

[6] Ms Pekaj was supported by her partner, Mr Benfield, and gave evidence with the assistance of an Albanian Interpreter.

[7] Ms Pekaj submits that she was an employee of AAMG at all times and contends as follows:

•  There was no subcontractor agreement in place and she was never provided with one;

•  The statutory declaration relied upon by AAMG is false and is dated before she was even in Australia;

•  Ms Pekaj did not understand the legal implications of the different methods of engagement apparently used within the cleaning industry;

•  Ms Pekaj did not provide invoices, other than two documents that were, in effect, drafted by AAMG; and

•  Ms Pekaj was assisted with any paperwork that was supplied to AAMG by the respondent.

[8] AAMG was represented (with permission and without objection) by Ms Barresi from Advantage Business Centre, the respondent’s accounting services provider. Given their respective roles and direct knowledge of some of the factual context, both Ms Barresi and Ms Grecu, AAMG’s Managing Director, gave evidence in support of its position.

[9] AAMG submits that Ms Pekaj was not an employee and contends as follows:

•  Ms Pekaj was an independent contractor supplying cleaning services on a non-exclusive basis;

•  This was supported by an audit conducted by the ATO;

•  Although a written contract was not signed by Ms Pekaj, a subcontractor agreement was provided and formed the basis of the relationship between AAMG and all of the cleaners, including Ms Pekaj;

•  Ms Pekaj provided a statutory declaration to the ATO confirming that she was a subcontractor and that she was employed by another cleaning business; and

•  Ms Pekaj had an ABN and provided invoices to AAMG and was conducting her own business, including by undertaking cleaning services for other companies.

3. Observations on the evidence

[10] Despite the best endeavours of the Commission, it is reasonably apparent that not all of the material and potential witness evidence that might shed some light upon the jurisdictional issue have been provided to the Commission. However, both parties have had ample opportunity to provide all of that material, including through a comprehensive directions conference and written directions, and via the subsequent supply of information about the considerations that might be applied to the present task.

[11] In that light, I will determine the jurisdictional issue based upon the evidence and submissions that are properly before the Commission.

[12] In addition to the originating application and the response documents, the following written material is before the Commission:

•  Extract of visa and copies of other identification for Ms Pekaj – Exhibit A1

•  Ms Pekaj’s Individual Tax Return 2016 (Summary) – Exhibit A2

•  Ms Pekaj’s Individual Tax Return 2017 (Summary) – Exhibit A3

•  Email correspondence to AAMG from the ATO about its audit - Exhibit R1

•  AAMG Subcontract Agreement – Exhibit R2

•  AAMG General ledger reports confirming payments to cleaners including Ms Pekaj – Exhibit R3

•  Extract from ABS - ABN look-up relating to Ms Pekaj – Exhibit R4

•  Statutory Declaration (disputed) – Exhibit R5

•  Taxation Invoices issued to AAMG dated 5 October 2017 and 17 November 2017 – Exhibit R6

[13] To some extent, each of the three witnesses provided opinions about the implications of their competing contentions. These are matters for the Commission itself to determine. In terms of the facts of the matter, there was considerable conflict between the evidence of Ms Pekaj and Ms Grecu.

[14] In assessing the witness evidence, I make some allowance for the fact that for Ms Pekaj, English is not her first language, and it is reasonably apparent to me that she has limited ability to read and understand documents written in English and relies heavily upon others in that respect. Her oral comprehension is more advanced, and for the most part she was able to participate in the determinative conference without the direct assistance of an Interpreter. However, Ms Pekaj had some difficulty with higher levels of English comprehension and I have taken this into account.

[15] After taking the above factors into account, I was still left with the impression that Ms Pekaj was not always being completely open with the Commission and I have some reservations about aspects of her evidence.

[16] I found that Ms Grecu’s evidence was influenced to some degree by her resentment of the application and what she considered to be the inappropriateness of this matter given her previous support and friendship with Ms Pekaj. I do however consider that in terms of the matters that Ms Grecu directly witnessed or participated in, she gave her evidence honestly and openly.

[17] Where Ms Grecu’s evidence of direct facts conflicts with that of Ms Pekaj, I generally prefer the evidence of Ms Grecu. I observe that in general terms, it is the evidence of Ms Grecu that has led to most of the substantive factual findings.

[18] I found the evidence of Ms Baressi to be open and honest and I accept it where it relates to facts directly witnessed by her.

[19] Ultimately, I have not found it necessary to attempt to determine the veracity of the disputed statutory declaration and there is insufficient evidence before the Commission to enable me to do so. In any event, for reasons that will become clear, the declaration would not directly assist the determination of this matter.

4. The general context in which the relationship was formed and conducted

[20] AAMG conducts a commercial cleaning business, mainly servicing clients in retail shopping centres. It engages something in the order of 10 to 12 cleaners and generally treats them as subcontractors. It did at one point expressly engage one or more Cleaners apparently as “employees”, based upon advice from the ATO.

[21] Ms Pekaj has worked as a cleaner originally in Melbourne and more recently in Adelaide. Initially, she worked in the business of a former boyfriend. In due course, when seeking assistance to gain employment in the Industry, Ms Pekaj was advised that some engagements required an ABN and she subsequently sought and obtained such. There is no evidence that Ms Pekaj took any additional steps to establish any business infrastructure (accounting systems, promotional materials or equipment) at that time or during her work with AAMG.

[22] Ms Pekaj approached a Cleaner at one of the centres where an AAMG cleaner was engaged and was in due course introduced to Ms Grecu, who conducts the business of AAMG along with her daughter. I find that there was a general discussion about the cleaning work and that AAMG would require Ms Pekaj to have an ABN, which would be utilised. It is also likely that Ms Grecu explained the requirement for Ms Pekaj to notify AAMG if she could not work on a scheduled day; however there is no evidence that any discussion about the nature of the relationship, beyond the reference to the ABN, took place.

[23] Although there is some indication that various contract documents were utilised by AAMG, there is no evidence that a contract was issued to Ms Pekaj at the time of her commencement in April 2015.

[24] Subsequently, a detailed written “subcontractor” agreement was developed as part of an audit conducted by the ATO. I accept that this contract was potentially used widely by AAMG for the other Cleaners from early 2017. Ms Grecu contends that this was provided to Ms Pekaj by others for her to sign, however this is denied. There is no direct evidence before the Commission about whether that was done. What is clear is that there was no written contract executed between AAMG and Ms Pekaj and the relationship continued without relying upon the written contract or the details set out therein.

[25] Ms Pekaj worked at a number of locations and generally worked set hours. However, there were variations in hours due to a range of factors including where Ms Pekaj was not available to work and where she completed extra shifts to fill in for other Cleaners. Ms Pekaj was paid for each hour worked. The rate at the end of the relationship was $23.00 per hour and the payment made each month apparently reflected the different hours worked in that month.

[26] At the outset of the relationship, the hours were one and a half hours per working day. This increased with subsequent work allocations and by late 2017 Ms Pekaj started to work Monday to Friday from 10 am to 6 pm and on Saturdays from 10 am to 5 pm. 3 She generally had Sundays off, but had on one occasion worked every day for a period of two weeks to cover other Cleaner’s shifts when they did not attend for work.4 This was organised by Ms Grecu’s daughter who often also worked alongside Ms Pekaj.

[27] Other than for two taxation invoices, Ms Pekaj did not provide invoices to AAMG and I find on the balance of probabilities that the hours that had been worked were confirmed through regular discussions between Ms Grecu and Ms Pekaj.

[28] The two invoices that were provided were generated; firstly, with the assistance of Ms Grecu’s daughter, and secondly, with the assistance of Ms Pekaj’s young son using a phone “app” (potentially access to a MYOB accounting system) provided by AAMG.

[29] Although it is possible that AAMG made attempts to obtain other invoices, payments were made without these being provided. Despite the absence of tax invoices, AAMG paid the amount due (based upon the relevant rate and the hours worked) in full to Ms Pekaj’s bank account, without the deduction of taxation.

[30] Ms Pekaj supplied some cleaning products (sprays), personal shoes and gloves. All of the other chemicals and equipment were supplied by AAMG. I accept that AAMG had a system in place whereby the Cleaners would be required to pay an amount for the chemicals supplied by the respondent. This was by way of a deduction shown from the gross amount on any tax invoice provided by the Cleaner. In the case of Ms Pekaj, there was no reference to chemicals shown on one of the two invoices that were supplied and on the other, an additional payment for chemicals was added to the payments (rather than a deduction). Based upon the evidence before the Commission, I am not satisfied that the system of deduction for chemicals supplied by AAMG was applied in the case of Ms Pekaj.

[31] Ms Pekaj provided two taxation returns as part of her evidence. Each was completed by a taxation agent and involved an individual tax return. The income from AAMG was treated as personal services income and there is a substantial discrepancy between the income apparently received from AAMG for the 2016 year and the amount declared on the return. In each year, very little was claimed for work-related expenses and nothing was claimed for (other) business expenses.

[32] During at least some of the period with AAMG, Ms Pekaj was employed by another cleaning company. This apparently involved the payment of a wage plus additional entitlements and was declared by Ms Pekaj as wages on her taxation returns.

[33] The ATO undertook an audit of AAMG covering several years leading up to 2017. The ATO audit approved all but one or two of the Cleaners being treated as contractors under rules being applied by the ATO. It is likely that this audit included Ms Pekaj, however there is no evidence as to what the ATO was informed about the practical operation of the relationship, including the absence of the paperwork and other systems apparently associated with the other Cleaners.

[34] During 2017, AAMG did offer to “convert” Ms Pekaj to being an “employee”. This would have involved receiving the award rate of pay (said to be $19.00 per hour as opposed to the $23.00 per hour) with superannuation and “WorkCover” benefits. This was declined by Ms Pekaj due to the substantial drop in income that would have eventuated. There is no evidence as to whether there was any discussion about the other consequences of the change or how it might differ in practice from the existing arrangements, other than the alteration to the payment rate.

[35] The relationship ended in late January 2018. This took place in the context of concerns held by Ms Grecu that Ms Pekaj was not being respectful in her dealings with the company and was not giving appropriate notice of her intended absences from (non-performance of) the required work shifts.

5. The proper approach to be applied in determining the nature of this relationship

[36] The required approach is conveniently summarised by the Full Bench of the Commission in Abdalla v Viewdaze Pty Ltd t/as Malta Travel⁵ (Abdalla) as follows (footnotes omitted):

“[34] Following Hollis v Vabu, the state of the law governing the determination of whether an individual is an employee or an independent contractor may be summarised as follows:

(1) Whether a worker is an employee or an independent contractor turns on whether the relationship to which the contract between the worker and the putative employer gives rise is a relationship where the contract between the parties is to be characterised as a contract of service or a contract for the provision of services. The ultimate question will always be whether the worker is the servant of another in that other's business, or whether the worker carries on a trade or business of his or her own behalf: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own. This question is answered by considering the totality of the relationship.

(2) The nature of the work performed and the manner in which it is performed must always be considered. This will always be relevant to the identification of relevant `indicia' and the relative weight to be assigned to various `indicia' and may often be relevant to the construction of ambiguous terms in the contract.

(3) The terms and terminology of the contract are always important and must be considered. However, in so doing, it should be borne in mind that parties cannot alter the true nature of their relationship by putting a different label on it. In particular, an express term that the worker is an independent contractor cannot take effect according to its terms if it contradicts the effect of the terms of the contract as a whole: that is, the parties cannot deem the relationship between themselves to be something it is not. Similarly, subsequent conduct of the parties may demonstrate that relationship has a character contrary to the terms of the contract. If, after considering all other matters, the relationship is ambiguous and is capable of being one or the other, then the parties can remove that ambiguity by the very agreement itself which they make with one another.

(4) Consideration should then be given to the various 'indicia' identified in Brodribb and the other authorities bearing in mind that no list of indicia is to be regarded as comprehensive and the weight to be given to particular indicia will vary according to the circumstances. Where a consideration of the `indicia' points one way or overwhelmingly one way so as to yield a clear result, the determination should be in accordance with that result. For ease of reference we have collected the following list of 'indicia':

•  Whether the putative employer exercises, or has the right to exercise, control over the manner in which work is performed, place or work, hours of work and the like.

Control of this sort is indicative of a relationship of employment. The absence of such control or the right to exercise control is indicative of independent contract. While control of this sort is a significant factor is not by itself determinative. In particular, the absence of control over the way in which work is performed is not a strong indicator that a worker is an independent contractor where their work involves a high degree of skill and expertise. On the other hand, where there is a high level of control over the way in which work is performed and the worker is presented to the world at large as a representative of the business then this weights significantly in favour of the worker being an employee.

"The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter's order and directions." "[B]ut in some circumstances it may even be a mistake to treat as decisive a reservation of control over the manner in which work is performed for another. That was made clear in Queensland Stations Pty. Ltd v Federal Commissioner of Taxation, a case involving a droving contract in which Dixon J observed that the reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract."

•  Whether the worker performs work for others (or has a genuine and practical entitlement to do so)

The right to the exclusive services of the person engaged is characteristic of the employment relationship. On the other hand, if the individual also works for others (or the genuine and practical entitlement to do so) then this suggests independent contract.

•  Whether the worker has a separate place of work and or advertises his or her services to the world at large.

•  Whether the worker provides and maintains significant tools or equipment.

Where the worker's investment in capital equipment is substantial and a substantial degree of skill or training is required to use or operate that equipment the worker will be an independent contractor in the absence of overwhelming indications to the contrary.

•  Whether the work can be delegated or subcontracted.

If the worker is contractually entitled to delegate the work to others (without reference to the putative employer) then this is a strong indicator that the worker is an independent contractor. This is because a contract of service (as distinct from a contract for services) is personal in nature: it is a contract for the supply of the services of the worker personally.

•  Whether the putative employer has the right to suspend or dismiss the person engaged.

•  Whether the putative employer presents the worker to the world at large as an emanation of the business.

Typically, this will arise because the worker is required to wear the livery of the putative employer.

•  Whether income tax is deducted from remuneration paid to the worker.

•  Whether the worker is remunerated by periodic wage or salary or by reference to completion of tasks.

Employees tend to be paid a periodic wage or salary. Independent contractors tend to be paid by reference to completion of tasks. Obviously, in the modern economy this distinction has reduced relevance.

•  Whether the worker is provided with paid holidays or sick leave.

•  Whether the work involves a profession, trade or distinct calling on the part of the person engaged.

Such persons tend to be engaged as independent contractors rather than as employees.

•  Whether the worker creates goodwill or saleable assets in the course of his or her work.

•  Whether the worker spends a significant portion of his remuneration on business expenses.

This list is not exhaustive. Features of the relationship in a particular case which do not appear in this list may nevertheless be relevant to a determination of the ultimate question.

(5) If the indicia point both ways and do not yield a clear result the determination should be guided primarily by whether it can be said that, viewed as a practical matter, the individual in question was or was not running his or her own business or enterprise with independence in the conduct of his or her operations as distinct from operating as a representative of another business with little or no independence in the conduct of his or her operations.

(6) If the result is still uncertain then the determination should be guided by "matters which are expressive of the fundamental concerns underlying the doctrine of vicarious liability" including the "notions" referred to in paragraphs [41] and [42] of Hollis v Vabu (see above).”

[37] The reference to the extracts from Hollis above, is as follows (footnotes omitted):

“[41] In Bazley v Curry, the Supreme Court of Canada saw two fundamental or major concerns as underlying the imposition of vicarious liability. The first is the provision of a just and practical remedy for the harm suffered as a result of the wrongs committed in the course of the conduct of the defendant's enterprise. The second is the deterrence of future harm, by the incentive given to employers to reduce the risk of accident, even where there has been no negligence in the legal sense in the particular case giving rise to the claim.

[42] In general, under contemporary Australian conditions, the conduct by the defendant of an enterprise in which persons are identified as representing that enterprise should carry an obligation to third persons to bear the cost of injury or damage to them which may fairly be said to be characteristic of the conduct of that enterprise. In delivering the judgment of the Supreme Court of Canada in Bazley v Curry, McLachlin J said of such cases that "the employer's enterprise [has] created the risk that produced the tortious act" and the employer must bear responsibility for it. McLachlin J termed this risk "enterprise risk" and said that "where the employee's conduct is closely tied to a risk that the employer's enterprise has placed in the community, the employer may justly be held vicariously liable for the employee's wrong". Earlier, in Ira S Bushey & Sons, Inc v United States, Judge Friendly had said that the doctrine of respondeat superior rests:

"in a deeply rooted sentiment that a business enterprise cannot justly disclaim responsibility for accidents which may fairly be said to be characteristic of its activities".”⁶

[38] I also note that the following extract from Hollis was relied upon by the Full Bench in Abdalla to illustrate the import of the High Court decision:

"[47] In classifying the bicycle couriers as independent contractors, the Court of Appeal fell into error in making too much of the circumstances that the bicycle couriers owned their own bicycles, bore the expenses of running them and supplied many of their own accessories. Viewed as a practical matter, the bicycle couriers were not running their own business or enterprise, nor did they have independence in the conduct of their operations. A different conclusion might, for example, be appropriate where the investment in capital equipment was more significant, and greater skill and training were required to operate it. The case does not deal with situations of that character. The concern here is with the bicycle couriers engaged on Vabu's business. A consideration of the nature of their engagement, as evidenced by the documents to which reference has been made and by the work practices imposed by Vabu, indicates that they were employees."7

[39] As a result, the Commission is obliged to consider the totality of the relationship having regard to various indicia that might shed light on the true nature of that relationship.

[40] The Federal Court (per Bromberg J) has also summarised the central question involved in the totality test in On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) 8 in the following terms:

“Simply expressed, the question of whether a person is an independent contractor in relation to the performance of particular work, may be posed and answered as follows:

Viewed as a "practical matter":

(i) is the person performing the work an entrepreneur who owns and operates a business; and,

(ii) in performing the work, is that person working in and for that person's business as a representative of that business and not of the business receiving the work?

If the answer to that question is yes, in the performance of that particular work, the person is likely to be an independent contractor. If no, then the person is likely to be an employee.” 9

[41] The central question provides the focal point around which the indicia may be examined and has two elements. The first is whether the person (the applicant) has a business. The second is whether the work or the economic activity being performed is being performed in and for the business of that person. 10

[42] An earlier Full Bench of the Commission in Jiang Shen Cai trading as French Accent v Michael Anthony Do Rozario 11 (French Accent) also dealt with the use of the various indicia and observed:

“[20] A consideration of the nature of the work performed, the terms of the contract, and the so-called indicia must always be directed to the ultimate question. The leading case in this area is the decision of the High Court in Hollis v Vabu Pty Ltd. The most significant case since Hollis v Vabu is the decision of the Full Court of the Federal Court in Roy Morgan Research Pty Ltd v Commissioner of Taxation (Roy Morgan). That case concerned an appeal against a decision of the Administrative Appeals Tribunal that interviewers engaged by Roy Morgan were “employees” either within the ordinary meaning of that word in s.12(1) of the Superannuation Guarantee Charge Act 1992 (SGC Act) or because they worked under a contract that was wholly or principally for their labour as specified in s.12(3) of that Act. The Full Court endorsed a passage from the leading judgment in the decision of the Victorian Court of Appeal in Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue, which in turn had endorsed a passage from the judgment of Mummery J in Hall (Inspector of Taxes) v Lorimer which makes it clear that a consideration of the indicia:

“...is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another.” (footnotes omitted)

[43] The Full Bench in French Accent also emphasised that the focus is upon the character of the contract between the parties and said:

“(3) The terms and terminology of the contract are always important. However, the parties cannot alter the true nature of their relationship by putting a different label on it. In particular, an express term that the worker is an independent contractor cannot take effect according to its terms if it contradicts the effect of the terms of the contract as a whole: the parties cannot deem the relationship between themselves to be something it is not. Similarly, subsequent conduct of the parties may demonstrate that relationship has a character contrary to the terms of the contract.” 12 (references omitted)

6. The indicia concerning the relationship between Ms Pekaj and AAMG

[44] Without detracting from the overall assessment of the relationship that is required, it is convenient to initially consider the various indicia under general headings adapted from those used by the Full Bench in Abdalla. These also inform that overall assessment in the manner set out above.

Control over how work is performed and the hours of work etc.

[45] This indicia is concerned with the exercise, or the right to exercise, control over the manner in which the work is performed including the place of work, hours and the like. This must be considered in light of the nature and circumstances of the work in question.

[46] The evidence supports the notion that AAMG had the right to control most aspects of the work. This included the extent of the work and the hours involved. 13 There was no detailed supervision of the work, however the quality of the cleaning work was monitored and Ms Grecu accepts that AAMG had ultimate control over the work performed.14

The entitlement to work for others (in the context of a full-time arrangement)

[47] Ms Pekaj had the right to work for others and did seek other cleaning work from time to time. Indeed, AAMG would have required Ms Pekaj to work at other workplaces so as to avoid the so-called 80:20 rule 15 adopted by the ATO. In 2016/2017, Ms Pekaj earned about 50 per cent of her income from her work with the other cleaning business. However, it is not clear on the evidence whether Ms Pekaj was undertaking any work for another cleaning business by the end of 2017.

[48] In the context of this relationship, and noting the relatively limited number of hours worked at the outset of the relationship, this indicia is somewhat supportive of the respondent’s contention, but the practical context must also be considered.

A separate place of work and the advertising of the services

[49] Ms Pekaj worked in facilities that were not owned or controlled by either party.

[50] Ms Pekaj did not advertise her services or have any promotional material for her work at all.

The provision and maintenance of tools and equipment

[51] As outlined above, other than for some limited cleaning products, personal shoes and gloves, all of the tools and supplies were provided by AAMG. This included the commercial cleaning equipment required to clean major retail facilities.

[52] Ms Pekaj made only a very small monetary investment into her work as a Cleaner.

The entitlement to delegate or sub-contract work

[53] Ms Pekaj had no right to delegate her work to others. In the event that she was unable, or unwilling, to attend, she was obliged to give reasonable notice to AAMG so that the respondent could organise a replacement. 16 I note that this is one of a number of examples where an apparent right that was referenced in the subcontract document (which was used with other Cleaners but not executed or agreed with Ms Pekaj), was not discussed as a right to delegate, and did not operate in a fashion that might have been more consistent with an independent contractual relationship.

The right to suspend or dismiss

[54] The parties accepted that AAMG had the right to suspend or dismiss (conclude) the relationship for poor performance or misconduct by Ms Pekaj.

The public presentation of the workers (uniforms and other badging)

[55] AAMG supplied Ms Pekaj with work tops, hats and other clothes that bore its logo. Ms Pekaj was required to wear the uniform at all times when at work on AAMG cleaning contracts.

[56] I accept that this obligation arose from requirements placed upon AAMG by the shopping centre management that all cleaners had to be identifiable as cleaners to the public and the shop owners. This is a factor to be weighed into this consideration, although the uniform itself was more consistent with the indication that Ms Pekaj was part of the business of AAMG.

Deduction of income tax

[57] Income tax was not deducted by AAMG and Ms Pekaj was paid in full. Ms Pekaj also declared her income to the ATO as personal services income; rather than as wages. In that regard, I also note that in the absence of a PAYG Payment Summary from AAMG, it may have been difficult for that income to have been treated as wages.

[58] Notwithstanding that, the present indicia, and some of the associated conduct of the parties, is more consistent with the notion of a subcontract relationship.

The provision of invoices/periodic payment of “wages”

[59] In general terms invoices were not supplied and were not ultimately insisted on by AAMG.

[60] Payments were made monthly, according to the hours worked in that month. Those hours were confirmed by discussions between Ms Grecu and Ms Pekaj.

[61] The fact that payments were made monthly is a factor. However, given that the payments were based solely upon hours worked for the labour supplied (apart from one additional claim for chemicals on one invoice) rather than upon the completion of tasks and without the supply of invoices, it is more consistent with the notion of employment.

[62] AAMG contends, in effect, that the rate paid to Ms Pekaj ($23.00 per hour) was indicative of an independent contractual relationship given that the award rate was in the order of $19.00 per hour. I note that in late 2017 the base rate for a Full-time or Part-time Level 1 Cleaner under the Cleaning Industry Award 2010 was $19.53 per hour. This rate of pay for a Casual Level 1 Cleaner would have been $24.41 per hour. In addition to the base rate, a Cleaner under that award would be entitled to be paid penalty rates for working hours on Saturdays (time and a half), 17 Sundays (double time)18 and overtime rates.19 Given that these would have been applicable at certain times to the hours worked by Ms Pekaj if treated as an employee, and noting that the award is a minimum rates instrument, there were no additional payments made beyond the $23.00 per hour (including superannuation) and that loaded rates for employees may be utilised in some parts of industry, the rate paid here is not necessarily indicative of a subcontract relationship.

Paid holidays and leave

[63] Ms Pekaj did not receive paid holidays or leave. This is arguably more consistent with subcontract work. I note that Ms Pekaj did take days off with the approval of AAMG and described these as being a “personal leave day”.  20 Nothing flows from the title itself as used by a party.

[64] However, all of this indicia must be weighed in the context of each circumstance, including the potential for casual employment.

[65] In this case, I do not consider that this indicia is of particular assistance.

The nature of the work (profession, trade or special calling)

[66] Ms Pekaj was undertaking work as a Cleaner. This is certainly not necessarily inconsistent with the notion of genuine subcontract arrangements but does not involve a profession or calling traditionally associated with such arrangements.

The creation of goodwill and other saleable assets

[67] Ms Pekaj did not have any capacity to generate goodwill or saleable assets as a result of her work with AAMG.

The proportion of remuneration on business expenses

[68] Ms Pekaj did not have any of the financial or other infrastructure sometimes associated with conducting a business. She supplied very limited materials.

[69] Ms Pekaj claimed in the order of $150 as expenses in the 2017 taxation return. I do accept that this may not have represented all of the costs given the applicant’s limited understanding of the capacity to do so.

[70] However, when the undisputed evidence about the nature of the applicant’s contribution is considered, it is clear that there was little by way of “business” expenses, both in absolute and relative terms.

7. Was Ms Pekaj an employee?

[71] The indicia discussed above are not exhaustive and they also need to be weighed according to their importance in the circumstances being considered.

[72] There are some competing indicia however in my view the more significant factors weigh in favour of this particular relationship being that of employment.

[73] There was no operative written contract between the parties and very little by way of any agreed parameters for the relationship. Some of the paperwork surrounding the contract variously refers to Ms Pekaj as being a “Contractor” and the agreement applying to other Cleaners is described in that fashion. This is of little assistance in clearing up any uncertainty about this relationship given that its terms were not in practice applied to the engagement of Ms Pekaj.

[74] I would accept that Ms Pekaj should have understood that the engagement with AAMG was different than that with the other cleaning company where she was apparently being treated as an employee. I also accept that Ms Pekaj was offered a change in status during 2017 and declined that approach. However, it is not clear that Ms Pekaj had the implications of any of the alternatives explained to her and the labels that may have been used by the parties do not in this case remove any ambiguity in the relationship. 21

[75] In any event, the systems that were designed by AAMG to create an independent contractual relationship with its Cleaners were not in practice applied in terms of Ms Pekaj. There was no written contract, there is no evidence that would support the notion that the conditions of the contract otherwise being used were discussed and agreed with Ms Pekaj and its terms were not generally applied. This included the absence of taxation invoices (on all but two occasions in the full period of work) and the personal nature of the obligations and the work expectations.

[76] There was no capacity to delegate the work and the manner in which the relationship was conducted is more consistent with an individual who had personal obligations akin to an employee.

[77] There are some contrary indicia, including the title that may have been used by the parties, the absence of paid leave, and the treatment of taxation with the gross payments being made by reference to an ABN.

[78] However, in the context in which the relationship was being conducted, without any written contract and many of the systems that one would expect with subcontract work, and with Ms Pekaj not having any of the infrastructure or making other contributions normally associated with conducting some form of business (other than for holding an ABN) it is intuitively unsound 22 to consider that Ms Pekaj was running her own enterprise.

[79] Having regard to the totality of the relationship as a practical matter, I am satisfied that Ms Pekaj was not conducting a business of her own within the meaning and contemplation of Hollis. Further, based upon the material properly before the Commission, the practical reality of the matter was that Ms Pekaj was working in the business of AAMG.

[80] When all matters are taken into account, the informed, considered, qualitative appreciation of the whole of the relationship is that Ms Pekaj was an employee within the meaning of the FW Act.

8. Conclusions

[81] I have found that Ms Pekaj was an employee for present purposes. As a result, Ms Pekaj was eligible to bring an unfair dismissal application and there is a valid application before the Commission.

[82] I have not yet considered whether any dismissal was unfair within the meaning of the FW Act and I will shortly conduct a directions conference to make arrangements for a hearing to be conducted to that end.

[83] I note that there are a number of issues arising from these findings, including certain potential implications arising from the taxation obligations of each party. These are matters for others.

[84] Should the parties seek some assistance to consider a resolution of this matter, the Commission should be advised.

COMMISSIONER

Appearances:

S Benfield with R Pekaj, the Applicant.

N Barresi of Advantage Business Centre, with permission, with Ms Grecu for AAMG Cleaning Group Pty Ltd.

Determinative Conference details:

2018

Adelaide

27 April.

Printed by authority of the Commonwealth Government Printer

<PR606304>

 1 Sections 380 and 382 of the FW Act. Other provisions of Part 3-2 also refer to “employment” and “employee” in relevant provisions establishing the unfair dismissal jurisdiction.

 2 Sections 397, 398 and 399 of the FW Act.

 3   Transcript PN630 and PN634.

 4   Transcript PN666.

5 PR927971, 14 May 2003.

6 Per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ.

7 Ibid.

 8 [2011] FCA 366 [(2011) 206 IR 252].

 9   Ibid at 208.

 10   Ibid at 209.

 11   [2011] FWAFB 8307.

 12 Ibid at [30].

 13   Transcript PN637 to PN646.

 14   Transcript PN883 to PN894.

 15   The 80:20 rule, or 80% rule is applied by the ATO for income taxation purposes. It relates to personal services income and can change how a “contractor” reports their income and claims business-like deductions.

 16   Transcript PN808 to PN814.

 17   Clause 27.2(a).

 18   Clause 27.2(b).

 19   Clause 28.

 20   Email exchange - transcript PN1036.

 21   See French Accent at [30].

 22   See Slater v WorkCover/Allianz Aust (Chiqiota Brands Adelaide Pty Ltd)/CGU & Metropolitan Agency Contracting Services Pty Ltd [2001] SWACT 27 at 45 and on appeal at [2003] SAWCT 57 – applied in the context of the case where, unlike this matter, a comprehensive written contract was being applied in the relationship.