Tabone and Secretary, Department of Employment

Case [2018] AATA 2138

Tabone and Secretary, Department of Employment [2018] AATA 2138 (6 July 2018)

Division:GENERAL DIVISION

File Number:    2016/1709 

Re:Joseph Tabone  

APPLICANT

Secretary, Department of EmploymentAnd  

RESPONDENT

DECISION

Tribunal:F D O’Loughlin, Deputy President 

Date:6 July 2018  

Place:Melbourne

The Tribunal sets aside the decisions under review. For the purposes of s 6(6) of the Act[1], the Applicant was an employee of Pentridge Village[2] who had unpaid wages at the time of termination of his employment. 

[1]Fair EntitlementsGuarantee Act 2012 (Cth).

[2]Pentridge Village Pty Ltd.

........................................................................
F D O’Loughlin, Deputy President

Catchwords

EMPLOYMENT ENTITLEMENTS – Claim for advance under Fair Entitlements Guarantee Act 2012 — whether Applicant an employee or a contractor – unpaid remuneration due to insolvency event – Applicant initially engaged as contractor – relationship with employer changed over time to that of employee – change to employment relationship not reflected in formal arrangements between Applicant and employer – decision set aside

Legislation

Fair Entitlements Guarantee Act 2012 (Cth) ss 6(6), 10(1), 12

Cases

Hollis v Vabu Pty Ltd (2001) 207 CLR 21
ACE Insurance v Trifunovski [2013] FCAFC 3
On Call Interpreters and Translators Agency v Federal Commissioner of Taxation (No 3) [2011] FCA 366
Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vic) (1997) 37 ATR 528
Marshall v Whittaker's Building Supply Co (1963) 109 CLR 210
Stevens v Brodribb Sawmilling Co Pty Ltd (1985-1986) 160 CLR 16

REASONS FOR DECISION

F D O'Loughlin, Deputy President

6 July 2018

  1. This application concerns whether entitlements under the Act[3] arise in respect of the Applicant’s remuneration for services rendered to Pentridge Village that went unpaid due to insolvency of Pentridge Village.  Disposition of the application turns on whether the Applicant’s relationship with Pentridge Village was an employment relationship, and if so, whether it commenced more than six months before the earlier of the end of the relationship or the appointment of an insolvency practitioner for the employer.

    [3]Fair EntitlementsGuarantee Act 2012 (Cth).

  2. The Applicant had an arrangement under which he provided services to Pentridge Village and was paid for them at an hourly rate.  He maintains that from at least late 2012 he was an employee and that that employment terminated in August 2014 whereas the Respondent contends that there is sufficient evidence in all of the circumstances to conclude that the Applicant was never an employee or if he was this only commenced in February 2014 and the six month rule excluding entitlements under the Act operates.

    Legislation

  3. Central to the present application are:

    (a)s 10(1) of the Act which is in the following terms:

    SECT 10

    Conditions of eligibility for advance

    General conditions

    (1)  A person is eligible for an advance if the Secretary is satisfied of all of the following:

    (a)  the person's employment by a particular employer has ended;

    (b)  after the commencement of this section, an insolvency event happened to the employer;

    (c)  the end of the employment:

    (i)  was due to the insolvency of…

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AGLC
Tabone and Secretary, Department of Employment [2018] AATA 2138
Case
[2018] AATA 2138
Decision Date

CaseChat Overview and Summary

This matter concerned an application by Mr Tabone for an advance under the *Fair Entitlements Guarantee Act 2012* following an insolvency event at Pentridge Village. The core dispute revolved around whether Mr Tabone was an employee or an independent contractor of Pentridge Village, as this determination was crucial for establishing his eligibility for the advance. The Administrative Appeals Tribunal was tasked with resolving this classification.

The legal issue before the Tribunal was to determine the true nature of the relationship between Mr Tabone and Pentridge Village, particularly whether it had evolved from an independent contractor arrangement to one of employment, despite the absence of formal changes to their contractual arrangements. This required the Tribunal to consider the substance of the relationship rather than merely the labels used by the parties.

The Tribunal reasoned that while Mr Tabone initially commenced his engagement as a sub-contractor, the reality of his working relationship with Pentridge Village had significantly changed over time. Evidence indicated that his role expanded, he worked full-time, reported to and took directions from a director, and performed tasks previously undertaken by various employees. The Tribunal applied the principle that the substance of a relationship, not its form or the labels applied, dictates its true character. Consequently, the Tribunal concluded that Mr Tabone had become an employee by 2012, even though the formal arrangements had not been updated to reflect this change.

The Tribunal set aside the decision under review, finding that Mr Tabone's relationship with Pentridge Village had morphed into one of employment.

Orders

Orders of the court

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Background

Background to the litigation

There is no error in these principles as advanced by the Respondent. These principles might be supplemented by the remarks (without citations) of M M Gordon:[12]The law has been and remains clear: it is not what you call something that counts, it is “what it really is” that matters. A mere label is not sufficient and never will be. In Commissioner of Taxation v BHP, the Full Federal Court said:“The true position is that the label that a party uses to characterise payment, in the present case the word “interest”, will not be determinative, although it may have some relevance: cf NM Superannuation Pty Ltd v Young (1993) 41 FCR 182 at 198-9, referred to by the learned trial Judge in this context. What that relevance may be will depend on the particular circumstances of the case. A licence does not become a lease because the parties chose to call it one, if it is in truth a licence: Radaich v Smith (1959) 101 CLR 209. A person does not cease to be an employee and become an independent contractor because the parties use the latter description: Hannan & Allen v Australian Mutual Provident Society (unreported, Supreme Court of Victoria, 15 November 1996). …..[12]M M Gordon (as her Honour was), Principles of Deductibility of Interest, 2003, The Tax Institute, referring to Colonial Mutual Life Assurance Society Ltd v Federal Commissioner of Taxation (1953) 89 CLR 428, Hallstroms Pty Ltd v Commissioner of Taxation (1946) 72 CLR 634, Sun Newspapers Ltd & Association Newspapers Ltd v Commissioner of Taxation (1938) 61 CLR 337 and Radaich v Smith (1959) 101 CLR 209, Australia and New Zealand Savings Bank Ltd v Federal Commissioner of Taxation [1993] ATC 4370 at 4390 and the citation of NM Superannuation Pty Ltd v Young, (1993) 41 FCR 182, and Commissioner of Taxation v BHP [2000] ATC 4659.Facts In 2007 or 2008 Mr Tabone bought a Hire a Hubby franchise business and registered a business name in connection with that business. Mr Tabone commenced his engagement with Pentridge Village as a sub-contractor in about 2009. Pentridge Village was a developer undertaking a residential development project at the former Pentridge Prison site. The arrangement he entered for remuneration was that he was to be paid $70 per hour and that was to compensate for holidays and entitlements including superannuation. Over time Pentridge Village work grew and a Mr Chiavaroli, who was a director of Pentridge Village at some time before 2012 had represented to Mr Tabone that there were 10 to 15 years of work ahead for him as part of the project. In June 2012 Mr Tabone registered the business name JT Property and Real Estate Solutions when he understood that he had handed the Hire a Hubby business name back to the Hire a Hubby franchisor. By the end of 2012 or the start of 2013, Mr Tabone was working fulltime at Pentridge Village reporting to and taking directions from Mr Chiavaroli. Mr Tabone was assigned tasks to do on a daily basis in response to emails coming in. They ranged from maintenance tasks, opening and closing buildings, facilitating inspections and town planning matters. His role expanded as other people left the organisation. From early 2013 his role had extended to cover tasks previously undertaken by site foreman, the OH&S officer, the gate keeper and others. Those tasks allowed entry to and supervision of subcontractors, supervision of tradespeople, utility company contractors, prospective financiers, valuers, council staff, and others. These positions had become vacant through lack of project funding. Although not always getting paid, he was asked by Mr Chiavaroli not to leave Pentridge Village and not to commit anywhere else.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

The conclusion that ought be reached is that Mr Tabone began his relationship with Pentridge village as an independent contractor undertaking maintenance tasks consistent with the terms of the formal arrangements between Mr Tabone and Pentridge Village, and that that relationship had morphed into one of an employee over time and had by 2012 become an arrangement that had changed in substance without the form and formalities changing to reflect the substance.Decision The Tribunal sets aside the decision under review.

Ratio Decidendi

Legal Principle Established

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