| [2021] FWCFB 3707 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
Brendon Hempel
v
Northern Territory Air Services Pty Ltd
(C2021/1353)
VICE PRESIDENT HATCHER |
SYDNEY, 2 JULY 2021 |
Appeal against decision [2021] FWC 886 and order PR727109 of Commissioner Bissett at Melbourne on 4 March 2021 in matter number U2020/12902.
[1] Mr Brendon Hempel has lodged an appeal, for which permission to appeal is required, against a decision of Commissioner Bissett issued on 4 March 2021 1 (decision) and an order2 of the same date by which the Commissioner dismissed Mr Hempel’s application for an unfair dismissal remedy made under s 394 of the Fair Work Act 2009 (FW Act) in respect of his former employment with Northern Territory Air Services Pty Ltd (NTAS). The Commissioner dismissed the application on the basis that Mr Hempel was not a person protected from unfair dismissal within the meaning of s 382 of the FW Act.
[2] The statutory framework relating to the decision is as follows. Part 3-2 of the FW Act provides for a scheme pursuant to which persons may in prescribed circumstances apply for and obtain an unfair dismissal remedy. Relevant to these proceedings, s 390(1)(a) provides that the Commission must be satisfied that a person was “protected from unfair dismissal” at the time of being dismissed before it may make an order in the person’s favour for an unfair dismissal remedy. Section 382 defines when a person is “protected from unfair dismissal”, and the definition includes (in paragraph (a)) a requirement that the person be “an employee who has completed a period of employment with his or her employer of at least the minimum employment period”. “Minimum employment period” is defined in s 383 to mean 6 months ending at the earlier of the time when the notice of the dismissal is given or immediately before the dismissal if the employer is not a small business employer, or one year ending at that time if the employer is a small business employer. “Small business employer” was defined in s 23 at the time Mr Hempel made his unfair dismissal application, and as at the date of the decision, as follows:
(1) A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.
(2) For the purpose of calculating the number of employees employed by the employer at a particular time:
(a) subject to paragraph (b), all employees employed by the employer at that time are to be counted; and
(b) a casual employee is not to be counted unless, at that time, he or she has been employed by the employer on a regular and systematic basis.
(3) For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.
(4) To avoid doubt, in determining whether a national system employer is a small business employer at a particular time in relation to the dismissal of an employee, or termination of an employee’s employment, the employees that are to be counted include (subject to paragraph (2)(b)):
(a) the employee who is being dismissed or whose employment is being terminated; and
(b) any other employee of the employer who is also being dismissed or whose employment is also being terminated.
[3] Mr Hempel was employed on a full-time basis as a Line Pilot by NTAS commencing on or around 26 January 2020 until he was dismissed without notice on 15 September 2020 for alleged serious misconduct. He filed an application for an unfair dismissal remedy on 26 September 2020. In its Form F3 response to Mr Hempel’s application, NTAS objected to the application on the basis that it was a small business employer with only 11 employees at the relevant time and that Mr Hempel did not meet the minimum employment period of one year. Mr Hempel’s case in response was that NTAS together with an associated entity, Alice Aircraft Maintenance & Services Pty Ltd (AAMS), employed 14 employees (including himself) at the relevant time and, in addition, two persons nominally engaged as contractors, Mr Mark Robertson (by NTAS) and Mr Andrew Lang (by AAMS), were at law employees and thus made up a total of 16.
[4] The questions to be determined by the Commissioner, in respect of NTAS’s contention that Mr Hempel had not served the minimum employment period, were:
(1) Was AAMS an associated entity of NTAS for the purpose of s 23(3)?
(2) If so, were Mr Robertson and Mr Lang employees of NTAS and AAMS respectively?
[5] The Commissioner issued an order for the attendance of Mr Robertson and Mr Lang at the hearing conducted in relation to these questions for the purpose of giving evidence. Mr Robertson attended the hearing in accordance with this order and gave evidence, but Mr Lang did not.
[6] In her decision, the Commissioner decided in respect of the first question that AAMS was an associated entity of NTAS. However, in relation to the second question, the Commissioner determined that Mr Robertson and Mr Lang were not employees and, as a consequence, that there were only 14 employees in total and therefore that NTAS was a small business employer within the meaning of s 23. On that basis, the Commissioner found that Mr Hempel had not served the minimum employment period and dismissed his application.
[7] Mr Hempel contends in his appeal that the Commissioner erred in determining that Mr Robertson and Mr Lang were not employees for the purposes of s 23 of the FW Act. NTAS has not filed a cross-appeal or notice of contention concerning the Commissioner’s finding that AAMS was an associated entity of NTAS. Therefore, the status of Mr Robertson and Mr Lang as employees or contractors is the only issue arising in this appeal.
[8] In the decision under appeal, after determining that AAMS was an associated entity of NTAS, the Commissioner first turned to the question of whether Mr Robertson, a pilot who flies for NTAS, was an employee of NTAS. The Commissioner summarised the evidence and submissions concerning Mr Robertson, 3 and then said:
“[36] Both Mr Robertson and Mr Scheyer [the sole director and 50% shareholder of NTAS] agree that Mr Robertson is a contractor and not an employee. However, how Mr Robertson and NTAS may define their relationship, the label they may give to it and how Mr Robertson may have arranged his affairs (an ABN, payment of his own taxation etc) cannot define whether he is a contractor or employee (See Aster Home Nursing v Peel [2020] FWCFB 6760 at [40] – [44]). What is necessary is a consideration of the relationship against the relevant indicia with a determination made taking each of the relevant factors into account.
[37] I have considered the evidence in accordance with the various indicia outlined in a range of decisions of the Courts and the Commission (Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; On-Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366; Abdalla v Viewdaze Pty Ltd T/A Malta Travel PR927971). In particular I have followed the formulation in Abdalla (Abdalla at [34]).” (footnotes inserted in text)
[9] The Commissioner first considered whether Mr Robertson conducted his own business or was a servant of NTAS. The Commissioner noted that Mr Robertson was a sole trader, but rejected Mr Hempel’s submission that the fact that Mr Robertson did not run an incorporated business and did not provide his own aeroplane were matters of substantial weight. The Commissioner said that Mr Hempel “confuses form over substance” and that Mr Robertson did not suggest that he provided aircraft as part of the services he offered but rather that “he provides his skills and services as a pilot”. 4
[10] The Commissioner also rejected Mr Hempel’s submission, founded on the Federal Court decision in Bobridge v Choppair Helicopters Pty Ltd and Anor, 5 that Mr Robertson could not be operating his own business and must be an employee because he did not hold the Air Operator Certificate (AOC) under the Civil Aviation Act 1988 (Cth) for the aircraft which he flew for NTAS. The Commissioner then dealt with “[t]he nature of the work performed and the manner in which it is performed”, and found:
“[47] Mr Robertson is a pilot. He does not run or operate his own aircraft or flying business. The service he offers to NTAS (and Barclay Aviation) is as a pilot flying aircraft owned and operated by those he contracts to. That is, he provides his skills, not physical equipment to the job at hand.”
[11] In relation to “[t]he terms and terminology of the contract”, the Commissioner observed that no written contract between Mr Robertson and NTAS had been put before the Commission, that their agreement appeared to have been signed on a “handshake” between Mr Robertson, Mr Scheyer and the NTAS Chief Pilot, that Mr Robertson was offered work on a casual or part-time basis or as a contractor, and that Mr Robertson chose to be a contractor (though she noted that this does not support a conclusion that he was a contractor). 6
[12] As to “[w]hether the putative employer exercises, or has the right to exercise, control over the manner in which work is performed, place of work, hours of work and the like”, the Commissioner stated the following conclusions (footnote omitted):
“[50] To the extent that NTAS has particular flights that need to be undertaken it certainly controls the hours of work available to Mr Robertson. NTAS offers specific slots in its schedule to Mr Robertson based on the hours he is prepared to work. Whether he actually works on those days, the evidence supports, is a matter for him.
[51] I am satisfied that Mr Robertson has no control over when the work is to be done – the Thursday and Friday scheduled work must be done on Thursday and Friday. However, it should be noted that NTAS holds the contract with the Department of Infrastructure to provide services to remote communities and, in this respect, it too is required to deliver those services on the scheduled basis.
[52] I do not consider this weighs in favour of finding Mr Robertson is a contractor or employee. A lack of control over when the work is to be performed would appear to be a reflection of the contract held by NTAS…”
[13] The Commissioner found in relation to “[w]hether the worker performs work for others (or has a genuine and practical entitlement to do so)” that she was satisfied that Mr Robertson has the right to and does perform work for others, namely Barclay Aviation. 7 As to “[w]hether the worker has a separate place of work and or advertises his or her services to the world at large”, the Commissioner found that Mr Robertson does not have a separate place of work and does not advertise his services but rather relies on word of mouth, which she considered not to be unusual or surprising and to be a neutral consideration.8
[14] In relation to “[w]hether the worker provides and maintains significant tools or equipment”, the Commissioner found that Mr Robertson provides many of the necessary tools to carry out his work, however accepted that radio frequencies, pilot data, aircraft and fuel are provided by NTAS. 9 As to “[w]hether the work can be delegated or subcontracted”, the Commissioner found that Mr Robertson did not delegate or subcontract the work he performed for NTAS and did not employ anyone else. The Commissioner found that if Mr Robertson cannot or does not want to work, he advises NTAS and leaves it to NTAS to find someone else to fly the aircraft that day or days.10 The Commissioner concluded:
“[60] In many circumstances the inability to delegate would weigh against a finding that a person was a contractor. In this case, given the work performed and when it is required to be performed, I consider this a neutral consideration.”
[15] The Commissioner found in relation to “[w]hether the putative employer has the right to suspend or dismiss the person engaged” that NTAS could suspend Mr Robertson but only in the sense of not providing work to him, that it did not have the right to dismiss him from employment and any decision to cease to offer work to him would not affect the work he performs for others, and concluded that this weighed in favour of a finding that Mr Robertson was a contractor. 11 As to “[w]hether the putative employer presents the worker to the world at large as an emanation of the business”, the Commissioner found:
“[63] Mr Robertson does not have his name of [sic] the aeroplane he flies. This, in my view, is to continue to misrepresent the services Mr Robertson provides. He does not provide an aircraft service that can be contracted for work. He provides his services as a pilot. There was no evidence that Mr Robertson wears a uniform or has any insignia on his clothing (or aeroplane) that suggest he is an emanation of NTAS.”
[16] In relation to “[w]hether the worker is remunerated by periodic wage or salary or by reference to completion of tasks”, the Commissioner found:
“[64] Mr Robertson charges a daily rate for his services based on the maximum flying hours allowed by CASA [Civil Aviation Safety Authority].
[65] The invoices Mr Robertson provide to NTAS for his services show that Mr Robertson does invoice for the same rate each day he works. That rate ($350 per day) is charged regardless of the hours Mr Robertson is available to work or does work.
[66] As is apparent from the evidence Mr Robertson is scheduled to work 8 hours on Thursdays and 5 hours on Fridays and works those days when he is available to do so (which is most Thursdays and Fridays although there are apparently dates in July, September, October and December when Mr Robertson was not available to NTAS). Mr Robertson said that the actual hours he works may vary (presumably depending on weather, the number of stops he is required to make and so on) but he charges a daily rate for his services, regardless of the number of hours he works on a particular day.
[67] There is no evidence of the hours Mr Robertson does actually work.”
[17] As to “[w]hether income tax is deducted from remuneration paid to the worker”, the Commissioner found that NTAS does not deduct income tax from monies paid to Mr Robertson, and that Mr Robertson pays his own tax to the Australian Taxation Office”. 12 In relation to “[w]hether the worker is provided with paid holidays or sick leave”, the Commissioner was satisfied that Mr Robertson is not provided with paid holidays or sick leave.13 The Commissioner then dealt with “[w]hether the work involves a profession, trade or distinct calling on the part of the person engaged” and found that she was “satisfied that the work performed by Mr Robertson is a profession. It is certainly not work that could be performed by anyone. I consider it widely accepted that to undertake the work he does requires many hours of training and skill development.”14
[18] In relation to “[w]hether the worker creates goodwill or saleable assets in the course of his or her work”, the Commissioner found that “[t]he flights flown by Mr Robertson appear to be work on a contract that NTAS holds. The extent to which Mr Robertson completing his work effectively may create goodwill for himself or anyone else is not a matter subject to any evidence before me.” 15 Finally, the Commissioner considered “[w]hether the worker spends a significant portion of his remuneration on business expenses” and stated that she had “received no evidence on what proportion of his income Mr Robertson spends on business expenses. Mr Hempel’s evidence that Mr Robertson does not spend remuneration on aircraft maintenance or fuel is not determinative of this issue.”16
[19] The Commissioner then made the following determination in relation to Mr Robertson’s engagement (footnotes omitted):
“[73] I accept that Mr Robertson is content in providing his services to NTAS as a contractor. Further, I accept that he also provides his services to Barclay Aviation and that he may do so to the third air services provider in Mt Isa.
[74] I do not consider the taxation arrangements, superannuation or leave arrangements to be determinative of the matter I need to decide. They are, in my view, ‘reflections of a view…that the relationship is, or is not, one of employment.’
[75] I have carefully considered the relationship between Mr Robertson and NTAS as described by Mr Robertson and Mr Scheyer. This is not a case where the parties to the relationship are at odds as to what their relationship is. For this reason I consider that some weight should be given to how the parties say they are joined. Neither claims employment and both agree it is a contractor relationship.
. . .
[77] I am satisfied in this case that what has truly been agreed is a contractor relationship between NTAS and Mr Robertson and that the arrangement of the work does support a conclusion to this effect. I do not consider the regularity of the work performed – or the requirement as to when it is performed – to distract from this. I do not consider the absence of an AOC to affect my finding because of what it is that Mr Robertson contracts. There is nothing else in the indicia outlined above that outweighs my finding.
[78] I appreciate that it is a third party (Mr Hempel) who seeks to have me determine the relationship to be that of an employer and employee. Mr Hempel has his reason for doing so which is that he might pursue his application for relief from unfair dismissal, but this is not grounds for me to overturn the established relationship. It seems to me it will often be difficult for a third party to prove a particular relationship against the will of the parties to that relationship.
[79] I accept that Mr Robertson is a sole trader and does not operate an incorporated business. However, I am not convinced that this is determinative of the questions of whether he can be a contractor. Whilst this was relied on by Mr Hempel the basis of this reliance was not made clear.
. . .
[81] There is nothing in this matter that, objectively viewed, definitively points one way or the other. In such circumstances I have placed weight on the relationship entered into between Mr Robertson and NTAS. I am therefore satisfied that the relationship is of contractor whereby Mr Robertson provides his services as a pilot to NTAS.”
[20] The Commissioner then turned to consider whether Mr Lang, who performs maintenance for AAMS, was a contractor or an employee of AAMS. She noted that despite being ordered to attend the Commission to give evidence at the hearing of 14 January 2021, Mr Lang failed to attend and, following further correspondence from the Commissioner’s chambers, failed to attend the second day of hearing on 5 February 2021. The Commissioner rejected a submission from Mr Hempel that the Commission should infer that Mr Lang had chosen not to attend on the basis that had he attended, his evidence would not have assisted NTAS:
“[89] In the circumstances I am not prepared to infer that Mr Lang’s has failed to attend because his evidence would not support NTAS’s claim to be a small business. Firstly, there is no basis on which I can conclude that Mr Lang would do anything for the benefit or otherwise of NTAS. Secondly, the inference I have been asked to draw suggests that NTAS (or Mr Scheyer) has played some part in the non-attendance of Mr Lang and the evidence before the Commission does not support such a conclusion. Thirdly, it is apparent that Mr Scheyer, through his various companies, has a myriad of arrangements with employees and contractors – the complexity of which appears to be exacerbated by the fact that he operates in remote areas of Australia (the location of operations not being in dispute). This is enough to persuade me that the inference should not be drawn. Further, given the claim by Mr Scheyer that Mr Lang is a contractor it would be unfair to draw an inference that adversely effects NTAS in circumstances where Mr Scheyer claims he has no control over Mr Lang.
[90] I do acknowledge the frustration of Mr Hempel at the non-attendance of Mr Lang. By his actions Mr Lang has demonstrated a wilful disregard for the Commission and its role in resolving workplace disputes. Mr Lang’s failure to attend does mean Mr Hempel has been denied the opportunity to prosecute his claim to the fullest. However, to transfer the cost of such disregard to NTAS it seems to me a step too far.
[91] I indicated at the hearing that I would refer Mr Lang to the General Manager, given his failure to comply with an order of the Commission. Mr Lang has blatantly refused to comply with an Order issued by the Commission. He has provided no reason for his actions. It is fortunate this case did not, ultimately turn on his evidence, but he could not have known this. By his failure to attend Mr Lang has denied Mr Hempel an opportunity to further press his case that NTAS is not a small business.”
[21] The Commissioner said that for the reasons given, she was satisfied that Mr Robertson was not an employee of NTAS, was not prepared to draw any adverse conclusions of the failure of Mr Lang to attend the Commission pursuant to the order issued and could not conclude that he was an employee of AAMS. 17
Mr Hempel
[22] In his notice of appeal, as amended, Mr Hempel advanced the following substantive grounds of appeal (excluding grounds not pressed):
(1) The Commissioner erred in her conclusion that Mr Robertson was an independent contractor engaged by NTAS, rather than an employee and that as a consequence NTAS was a “small business employer” for the purposes of s 23 of the FW Act. In particular, the Commissioner failed to give sufficient weight such as the evidence of control, the evidence as to independent business and the need for personal service; and failed to take into account relevant matters such as the evidence as to a daily salary.
. . .
(3) The Commissioner erred by taking into account the subjective views of the parties as to the nature of the relationship between Mr Robertson and NTAS and basing her conclusions on those subjective views to the exclusion of other criteria.
. . .
(5) The Commissioner erred in not drawing the inference that Mr Lang’s evidence would not have assisted NTAS.
(6) The Commissioner erred in not concluding on the available evidence that Mr Lang was an employee of AAMS.
[23] Mr Hempel submitted that permission to appeal should be granted because the Commissioner made errors of the type in House v The King, in particular errors that raise issues of importance and general application in determining jurisdictional questions as to the existence of employment as opposed to independent contract. He also submitted that the decision manifests an injustice whereby he was denied the possibility of a remedy on the basis of a fact finding exercise that went seriously astray, and the result was counterintuitive and contrary to a raft of decisions as to the proper test for determining the relationship of employment. In respect of the merits of the appeal, Mr Hempel submitted:
• the Commissioner made a number of factual and procedural findings that were in error and were material in the sense that she should have reached an alternative conclusion had the findings been different, and acted upon a wrong principle, mistook the facts and did not take into account material considerations;
• in respect of the Commissioner’s finding as to Mr Robertson, the Commissioner erred in: failing to ascribe any weight to unchallenged evidence of control; her findings as to how income tax, paid holidays and sick leave would be weighed; failing to properly give weight to her findings in relation to the criterion of independent business and the contractual description; and failing to determine that the inability to delegate weighed in favour of employment;
• the Commissioner did not take into account relevant matters, namely Mr Hempel’s submission that Mr Robertson did not have the authority to set a fee for the work performed and did not negotiate the fee with NTAS but instead was paid on the basis daily rate based on the hourly rates in the Air Pilots Award 2010;
• the Commissioner’s ultimate conclusion that there was nothing in the matter that, objectively viewed, definitively pointed to an employee or contractor relationship was not a conclusion available had the Commissioner properly weighed the criteria, and was not protected by the latitude given to a tribunal member exercising a broad discretion;
• the Commissioner’s findings as to Mr Lang were counterintuitive in that it is unclear why none of the grounds relied on by the Commissioner in paragraph [89] of the decision would prevent the making of an adverse Jones v Dunkel 18 inference, such inferences are regularly drawn, and in the absence of some explanation for his absence, there was no reason not to draw such an inference;
• the breach of the rule in Jones v Dunkel which occurred gave rise to error because the failure to draw the adverse inference here resulted in a factual finding that was manifestly unfair;
• the Commissioner failed to take into account a material consideration in that she failed to have any regard to the evidence contained in Mr Hempel’s witness statement that Mr Lang had been working full time hours and was reimbursed business costs, and this material alone was a basis to find that Mr Lang was an employee in the absence of any contrary evidence; and
• a finding should be made that both Mr Robertson and Mr Lang were employees, the Commissioner’s finding as to the small business jurisdictional objection should be quashed and the matter should be remitted to a single member of the Commission for further hearing.
NTAS
[24] NTAS submitted that permission to appeal should not be granted because no important matter of principle or general application was raised in the notice of appeal, the appeal did not call into question any authority relied on by the Commissioner, and instead Mr Hempel sought only to question the Commissioner’s findings of fact and her assignment of weight. It submitted that it was not in the public interest to allow parties to relitigate the facts underpinning the exercise of the Commission’s broad discretion. In relation to the merits of the appeal, NTAS submitted, in summary:
• in relation to Mr Robertson, the Commissioner did not err in weighing the issue of control, Mr Hempel mischaracterised the decision in that it was about control of that particular contract and the work, not Mr Robertson per se as Mr Robertson chooses whether he makes himself available and whether he actually works on those days;
• in respect of the weight given by the Commissioner to whether Mr Robertson has an independent incorporated business, the weight given to these matters is at the discretion of the Commission and is different depending on particular industries and circumstances;
• in relation to Mr Lang, NTAS submitted before the Commissioner that he did not work full-time hours but works as much or as little as he chooses and works for a number of other companies;
• Mr Hempel is effectively demanding that the Commission overturn the contracting relationship to change the status of a small business as defined at law when the evidence does not support this; and
• a Jones v Dunkel inference cannot be drawn, as Mr Hempel would be asking the Commission to arbitrarily change the relationship of a third party from a contractor to that of an employee in circumstances where there is no dispute from the parties to that relationship that it is anything other than a contractor relationship.
[25] We do not consider that the grant of permission to appeal would, in respect of appeal grounds 5 and 6 as set out above, be in the public interest, for two reasons. The first is that we consider that these appeal grounds are lacking in sufficient merit. The fact that Mr Lang did not give evidence in the proceedings was not a result of NTAS failing to call him as a witness in its case, but because he failed to comply with the Commission’s order for him to attend the hearing and give evidence. In that context, there was no basis for the Commissioner to draw an inference that his evidence would not have assisted NTAS’s case; indeed, NTAS would reasonably have expected that Mr Lang would comply with the order and give evidence. Jones v Dunkel 19 is simply inapplicable and irrelevant to this situation. The second is that, for the reasons that follow in respect of appeal grounds 1 and 3, there is no practical purpose in dealing with appeal grounds 5 and 6 and hence the public interest is not attracted.
[26] We are satisfied in respect of appeal grounds 1 and 3 that the grant of permission to appeal would be in the public interest. Mr Hempel’s challenge to the Commissioner’s determination that Mr Robertson was not an employee of NTAS has substantive merit, as we explain below, and the Commissioner’s determination that Mr Robertson was not at the relevant time an employee of NTAS had the effect of depriving Mr Hempel of the opportunity to obtain an unfair dismissal remedy. Those circumstances make it appropriate, in the public interest, to hear and determine grounds 1 and 3.
[27] Mr Hempel has advanced his case on the basis that the Commissioner’s decision involved the exercise of a discretion and, for that reason, it is necessary for him to demonstrate error on the part of the Commissioner in the exercise of that discretion in accordance with the principles stated in House v The King. 20 We do not think that is correct. Decisions concerning the question of whether an applicant for an unfair dismissal remedy was, at law, an employee of the respondent employer have not been treated as discretionary decisions on appeal. The task of the appellant in such an appeal is to demonstrate that the conclusion in the decision was wrong, not that there was some error in the first-instance decision-maker’s reasoning process. This is because the question concerns the jurisdiction of the Commissioner to entertain the application.21 More generally, the question of whether a person is an employee or independent contractor for the purpose of determining legal rights has been held not to be “an exercise in, or akin to, discretionary decision-making” because, although an evaluation is involved, “the person is either an employee or independent contractor”.22 Although the decision under appeal here concerns the question of whether Mr Robertson was an employee of NTAS for the purpose of determining whether NTAS was at the time of dismissal a small business employer, because the answer to that question is determinative of whether the Commission has the jurisdiction to deal with Mr Hempel’s application, we consider that the task in this appeal in relation to appeal grounds 1 and 3 is to determine whether the Commissioner’s conclusion concerning the status of Mr Robertson was right or wrong.
[28] The principles applicable to the determination of whether a person is an employee or an independent contractor have been well established in various court decisions, of which the High Court decisions in Stevens v Brodribb Sawmilling Co Pty Ltd 23 and Hollis v Vabu24 are of principal significance. The elements of the multi-factorial test which is articulated in those authorities were usefully summarised in the Full Bench decision in Jiang Shen Cai trading as French Accent v Rozario25 and need not be recited here. It is sufficient to characterise the task in applying the multi-factorial test as “a matter of obtaining the overall picture from the accumulation of detail”, which requires an “assessment and evaluation of evidence for the purpose of identification and isolating factors or indicia which are capable of pointing in one direction or the other, and then weighing or balancing those factors in accordance with established principles, none of which is conclusive, in order to reach a conclusion”.26
[29] We consider that the majority of the relevant indicia, and the most significant of those indicia, favour the conclusion that Mr Robertson was an employee of NTAS. First, on the findings made by the Commissioner, it is clear that NTAS exercised a significant degree of control over what work was performed by Mr Robertson and when he performed it. NTAS held a contract with the Department of Infrastructure to provide services to remote communities on a scheduled basis specified in that contract. The work assigned to Mr Robertson was to undertake flights to particular locations scheduled in the contract to occur on Thursdays and Fridays. Mr Robertson had no say in what work he was to perform or when the work was to be performed. Pursuant to NTAS’s flight schedule, Mr Robertson worked for 8 hours each Thursday and 5 hours each Friday. There was also evidence of other aspects of control, including that Mr Robertson is supervised by NTAS’ chief pilot and that, like employed NTAS pilots, he is required to file his flight and duty times.
[30] The Commissioner, as earlier stated, effectively considered this degree of control to be a neutral factor on the basis that Mr Robertson’s lack of control over the work to be performed appeared to be a reflection of the contract held by NTAS. We respectfully disagree with this conclusion. The fact that NTAS operated a particular flight schedule in order to discharge its contractual obligations with the Department does not diminish the weight to be given to the degree of control it held over the work to be performed by Mr Robertson. Mr Robertson had no independent discretion as to when the work was to be performed; that was dictated by the commercial dictates of NTAS’s business. The Commissioner also referred to a passage in the joint judgment of Wilson and Dawson JJ in Brodribb to the effect that, although the right to control rather than the exercise of control is “the important thing”, in some circumstances it may be a mistake to treat as decisive a reservation of control over the manner in which work is performed for another. 27 However, that passage was not apposite to the situation here because this was a case where NTAS both had the apparent right to control Mr Robertson as to the work to be performed and when it was to be performed, and exercised that right to a substantial degree in practice.28
[31] Second, when Mr Robertson performed work for NTAS, he was not conducting any independent business of his own but was rather working in the business of NTAS. As just discussed, the flying work he performed was that which was required to be undertaken by NTAS pursuant to its contract with the Department – that is, it was NTAS’s work, not work obtained by Mr Robertson due to any independent effort on his part. As a result, there was no capacity for Mr Robertson to generate more work and income through performing NTAS flying work or to develop a saleable asset or goodwill. We note that the Commissioner said that there was no evidence before her as to whether Mr Robertson could develop a saleable asset or goodwill, 29 but no such evidence was necessary; that he could not do so must necessarily be inferred as a matter of commercial common sense from the fact that he was performing NTAS’s work. There was no other indication that Mr Robertson was conducting his own business: he did not operate through a corporate entity or use a business name, he did not advertise, he had no business premises, and there was no evidence that he incurred business costs of any significance.
[32] Third, the capital expenses of operating the flights upon which Mr Robertson worked was borne by NTAS, in that NTAS supplied the aircraft and the fuel. NTAS also supplied the radio frequencies and pilot data, and the AOC for the flights was held by a related company. The Commissioner found, notwithstanding this, that “Mr Robertson provides many of the necessary tools to carry out his work”, but the evidence was that this was relatively trivial, consisting (on his own evidence) of folders for his paperwork and his headset. This factor further underlines that Mr Robertson was serving as a pilot in a flying business operated by NTAS.
[33] Fourth, the arrangement between NTAS and Mr Robertson was one of personal service, in that when he works, he is required to perform his flying duties personally and he is not permitted to delegate the performance of those duties. When he is absent from work, he is not required to arrange his replacement; that is left to NTAS. The Commissioner considered this to be a neutral consideration “given the work performed and when it is required to be performed”, 30 and her conclusion in this respect appears to related to her earlier finding that Mr Robertson provided “his skills, not physical equipment to the job at hand”.31 We consider this approach was in error: where the person in question provides no more than their labour, this is a strong indicator in favour of a contract of employment.32 The fact that Mr Robertson’s work involved the specialist skills and qualifications of a pilot is not a counteracting factor since, to our knowledge, most pilots in Australia work as employees of the air operations for which they provide flying services.
[34] Fifth, the rate paid to Mr Robertson was a daily rate of $350. It was established by reference to the hourly rates in the Air Pilots Award 2010 and thus compensated Mr Robertson for the provision of his labour only. The rate was set by NTAS. 33 There was no evidence of any capacity for Mr Robertson to charge his own rate.
[35] The evidence concerning whether Mr Robertson presented as an emanation of NTAS was somewhat ambiguous. He was not required to wear a uniform. The planes he flew were not marked as NTAS planes, but Mr Hempel’s evidence was that they had writing on them to the effect that that were operated by AvCharter, which the Commissioner found to be a related company to NTAS and which held the AOC for the flights. However, no inference could reasonably be available other than that the flights upon which Mr Robertson was the pilot would be understood to be NTAS flights. There was certainly no evidence to suggest that Mr Robertson did anything to present himself to the world as running his own business. On balance, this factor favours a finding that Mr Robertson was an employee of NTAS.
[36] In paragraph [81] of the decision, as we read it, the Commissioner chose to give determinative weight to the way in which NTAS and Mr Robertson had subjectively described their relationship in the absence of any objective consideration definitively pointing to one or conclusion or the other. The Commissioner had earlier stated Mr Robertson was content to provide his services to NTAS as a contractor, 34 that this was not a case where the parties were at odds with the nature of their relationship,35 that some weight should be given to how the parties say they are joined,36 and that she was satisfied that what was truly agreed was a contactor relationship.37 In effect, the Commissioner treated the subjective label placed upon their contractual relationship by NTAS and Mr Robertson as a “tie breaker”.
[37] An approach whereby default or “tie breaker” status may be given to the contractual terms is supported by a number of authorities but cannot be said to be uncontroversial. 38 However, it was not the appropriate approach to be taken in the circumstances of this case. As we have earlier stated, the other indicia relevant to the substance and reality of the relationship between Mr Robertson and NTAS weigh significantly in favour of a finding that it was an employment relationship. This is not a finely balanced case calling for the application of a “tie breaker”. Accordingly, the parties’ consensual labelling of the relationship could not alter its real substance.39
[38] Further, the circumstances in which the relationship was formed are instructive. As the Commissioner found, there was no written contract between Mr Robertson and NTAS, only a “handshake” arrangement. Mr Hempel gave evidence before the Commissioner that, while employed by NTAS, he was responsible for the recruitment of the position which Mr Robertson ultimately filled, and he advertised the position on the website of the Australian Federation of Air Pilots in the following terms: “The position will be initially casual 3 days a week, but will grow to a permanent position with consistent flying hours”. He received a large number of resumes for the role and conducted interviews for the role, and reported back to Mr Scheyer and the Chief Pilot. He said that his understanding was that Mr Robertson was engaged as an employee, but that at the last moment he was advised by Mr Scheyer that he request Mr Robertson to submit invoices for payment and that Mr Robertson should be treated as a contractor.
[39] Mr Robertson’s evidence was that, at the time he applied for the position with NTAS, he was “employed full-time” by Barclay Aviation, and was looking to earn additional income. 40 When asked about the job advertisement for the position he obtained with NTAS, he said he didn’t remember it because “I drink too many beers”.41 He recalled speaking to Mr Hempel and/or Mr Scheyer about the role,42 accepted that the job offered was for two days per week,43 and gave the following evidence:
So you remember it was two days a week?---They said that's what they had to offer was like a casual type flying basis but I was contracting so that's why I operate off my own ABN, invoice and all that sort of stuff, look after my own tax and super, which is what I do now with Barclay as well. So it worked out perfect for me because at the current time I was working full-time for Barclay, so something that wasn't full-time was ideal for me. 44 (underlining added)
[40] Mr Robertson elsewhere confirmed that he had previously worked “full-time” for Barclay Aviation, but he now “work[ed] contract” for them because he preferred to work as a contractor. 45 He also gave the following evidence with respect to how he came to work for NTAS as a contractor:
MR O'HALLORAN: One more question, Mr Robinson [sic; Robertson]. You're a pilot, Mr Hempel was a pilot, you pilots do the same things as far as I can tell, they fly an aircraft. He was an employee, you're a contractor, now you may not be able to say but why are you a contractor and he was an employee?---Yes, I think it's because it's my choice to be a contractor. Like I said before it's due to the lifestyle that I have in Mt Isa at the moment.
So it's merely you asked to be a contractor, therefore you were made a contractor?---No, I believe that - I wasn't asked to be a contractor, I think it was offered to me like that or casual, so I was offered do you want to take a day rate, do you want to - how do you want to charge basically, so there was a couple of options there for me to choose what I wanted and that's what I choice with a day rate. It worked well for me and obviously they were happy with that agreement as well.
So you were given a couple of options, to be an employee or to be a contractor and you said contractor suits you?---Yes, they only had casual work so I don't know whether they meant I would be working for them on a casual basis but I chose contracting anyway, because that was my intention with Barclay to do the same thing, which I did. 46 (underlining added)
[41] Ms Scheyer confirmed this aspect of Mr Robertson’s evidence as follows:
Well, Mr Scheyer, I'm not asking you about that. I'm just asking you how did you decide in July last year that Mark Robertson should be offered a contracting position and not an employment position? How did you make that decision?---We had employees that could have done that job, but it was - he was looking for - to be a contractor because that's what he was - he was switching to that, I understand he was switching to that with Barclay and he - - -
He asked to be a contractor and you said okay?---Yes. I spoke to him.
. . .
And that's if they ask to be a contractor, then you're okay with that?---Yes. Yes, because we have our core, our minimum number of employees and right now with COVID, I have additional employees that, you know - - -
. . .
So, how would an applicant applying for that role, in this case Mr Robertson, know that they're applying for a contracting position?---Well, that's what he wanted to be; he wanted to be a contractor. He was fully employed at the time and he wanted this work. So, you know, he wanted to be. He's put that to us. 47 (underlining added)
[42] We consider that this evidence clearly demonstrates that the position which Mr Robertson ultimately filled was initially advertised and offered as a casual employment position, but that NTAS acceded to Mr Robertson’s request to be treated as if he were a contractor. Mr Robertson made that request because it suited him as a matter of his own lifestyle and convenience and it was consistent with his intention to convert his pre-existing employment with Barclay Aviation to a contracting relationship. This is indicative of an approach on the part of NTAS and Mr Robertson whereby “employment” and “contracting” are merely interchangeable labels to be placed on a working relationship at the choice of one or both of the parties rather than terms that which respectively reflect the fundamentally different nature of two distinct types of relationship. To allow the parties’ choice of label in this respect to be determinative amounts to denying the objective substance of the relationship in favour of reliance upon a label of convenience adopted by the parties. The fact that NTAS and Mr Robertson were both content with the characterisation of the relationship they adopted is not, we consider, a matter of significance since it cannot be ignored that disguising employment as an independent contracting arrangement can often be as much in the interests of the employee as the employer for a range of reasons.
[43] The Commissioner took into account that NTAS did not deduct tax from Mr Robertson’s pay or provide him with paid leave benefits or superannuation. We agree with the Commissioner that these are not matters to be assigned significant weight since they are reflective of the label which the parties chose to place on the relationship. The same may be said of the fact that Mr Barclay has an ABN and renders invoices for payment (although he does not charge GST 48). The Commissioner appears to have given some weight in paragraph [73] of the decision to the fact that Mr Robertson also worked for Barclay Aviation and at some time to another air services provider in Mt Isa. We do not consider that in the circumstances this consideration provides support for the proposition that Mr Robertson was an independent contractor in respect of NTAS. As the evidence outlined above demonstrates, Mr Robertson was at the time of his engagement by NTAS an employee of Barclay, and thus was clearly not operating any business of his own at the time; his status with Barclay only subsequently changed in accordance with Mr Robertson’s subjective preference to be characterised as a contractor. The NTAS position was initially offered to him as casual employment for two days per week, and nothing about Mr Robertson’s other work operates to indicate that this was not an accurate characterisation of the substance of the relationship which was formed. NTAS also sought that weight be assigned to the evidence given by Mr Robertson and Mr Scheyer to the effect that Mr Robertson was not required to work every Thursday and Friday and could choose not to work if he wished. However, the documentary evidence adduced by Mr Hempel showed that in fact Mr Robertson had worked every Thursday and Friday up until the time of Mr Hempel’s dismissal and that the majority of subsequent absences by him were marked as “leave” on the roster. Mr Robertson also gave evidence that his absence in December 2020 was because he wished to take a holiday. None of this evidence is inconsistent with the characterisation of Mr Robertson’s role as involving regular casual employment.
[44] The overall picture which clearly emerges is that Mr Robertson worked as an employed pilot in the business of NTAS. There is no evidence that Mr Robertson ran a business of his own apart from his subjective desire to describe himself as doing so. We consider that Mr Robertson was, at the time immediately before Mr Hempel’s dismissal, an employee of NTAS, and the Commissioner erred in finding otherwise. Grounds 1 and 3 of the appeal are therefore upheld on this basis.
[45] In a redetermination of whether NTAS was, at the time immediately before the dismissal, a small business employer, it is necessary to consider whether Mr Robertson was a casual employee who should be excluded from the “count” pursuant to s 23(2)(b). This provision was amended, effective from 27 March 2021, by the Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Act 2021, and we were not addressed on the question of whether, on a rehearing, we should apply the new provisions of the FW Act concerning casual employment effected by the amending Act or whether we should apply the FW Act as it was at the time immediately before the dismissal. We consider that the latter approach is the correct course, but ultimately this does not matter. Mr Robertson was offered, and accepted, employment on the basis that he would work two days a week performing particular scheduled flights. In respect of s 23 as it was immediately before Mr Hempel’s dismissal, if Mr Robertson was a casual employee at all, he was clearly employed by NTAS on a regular and systematic basis. Under the FW Act in its current form, Mr Robertson is likely not a casual employee within the meaning of s 15A(1) because he was offered and accepted employment on the basis of a firm advance commitment to continuing and indefinite work according to an agreed pattern of work. Alternatively, even if he was a casual employee, he was a “regular casual employee” because he was employed on a regular and systematic basis.
[46] This conclusion means that NTAS and its related companies employed (at least) 15 employees at the time immediately before Mr Hempel’s dismissal, and was consequently not a small business employer within the meaning of s 23 of the FW Act. Mr Hempel therefore had served the minimum employment period when he was dismissed and was a person protected from unfair dismissal.
Orders
[47] We order as follows:
(1) Permission to appeal is granted in respect of appeal grounds 1 and 3 in the amended notice of appeal. Permission to appeal is otherwise refused.
(2) The appeal is upheld.
(3) The decision ([2021] FWC 886) and order (PR727109) of 4 March 2021 are quashed.
(4) The matter (U2020/12902) is remitted to Commissioner Bissett for further hearing and determination on the basis that Mr Hempel is a person protected from unfair dismissal within the meaning of s 382 of the FW Act.
VICE PRESIDENT
Appearances:
Mr I Latham of counsel on behalf of the Appellant.
Ms A Carter on behalf of the Respondent.
Hearing details:
2021.
Sydney (via video-link):
5 May.
Printed by authority of the Commonwealth Government Printer
<PR731101>
2 PR727109
3 [2021] FWC 886 at [25]-[35]
4 Ibid at [38]-[39]
5 [2016] FCCA 2301
6 [2021] FWC 886 at [48]-[49]
7 Ibid at [53]
8 Ibid at [54]-[56]
9 Ibid at [57]
10 Ibid at [58]
11 Ibid at [61]-[62]
12 Ibid at [68]
13 Ibid at [69]
14 Ibid at [70]
15 Ibid at [71]
16 Ibid at [72]
17 Ibid at [92]-[93]
18 [1959] HCA 8, 101 CLR 298
19 Ibid
20 [1936] HCA 40; (1936) 55 CLR 499
21 Sammartino v Foggo [1999] FCA 1231, 93 IR 52 at [9]-[10]; Voros v Dick [2013] FWCFB 9339, 237 IR 248 at [11]; Asia Pacific Cleaning Services Pty Ltd v Cook [2013] FWCFB 5320 at [5]; Gupta v Portier Pacific Pty Ltd [2020] FWCFB 1698, 296 IR 246 at [55]-[56]; Aster Home Nursing Service Pty Ltd v Peel [2020] FWCFB 6760 at [38]
22 CFMMEU v Personnel Contracting Pty Ltd [2020] FCAFC 122, 381 ALR 457, 297 IR 269 at [22] per Allsop CJ
23 [1986] HCA 1, 160 CLR 16
24 [2001] HCA 44, 207 CLR 21
25 [2011] FWAFB 8307, 215 IR 235
26 The Roy Morgan Research Centre P/L v The Commissioner of State Revenue [1997] VicSC 515, 37 ATR 528 at 533
27 [1986] HCA 1, 160 CLR 16 at 36
28 See Hollis v Vabu Pty Ltd [2001] HCA 44, 207 CLR 21 at [57]
29 [2021] FWC 886 at [71]
30 Ibid at [60]
31 Ibid at [47]
32 ACE Insurance Limited v Trifunovski [2013] FCAFC 3, 209 FCR 146, 235 IR 115 at [74], [102], [120]
33 Transcript, 14 January 2021, PN 183
34 [2021] FWC 886 at [73]
35 Ibid at [75]
36 Ibid
37 Ibid at [77]
38 See CFMMEU v Personnel Contracting Pty Ltd [2020] FCAFC 122, 381 ALR 457, 297 IR 269 at [35]-[36] per Allsop CJ and [97]-[117] per Lee J. The High Court granted special leave to appeal this decision on 12 February 2021.
39 See Gupta v Portier Pacific Pty Ltd [2020] FWCFB 1698, 296 IR 246 at [39]-[40] and the authorities there cited.
40 Transcript, 14 January 2021, PNs 81-82
41 Ibid, PN 87
42 Ibid, PN 89
43 Ibid, PN 90
44 Ibid, PN 91
45 Ibid, PN 54
46 Ibid, PNs 182-184
47 Ibid, PNs 352-353, 355, 393
48 NTAS asserted in the appeal hearing that this was because he fell below the GST threshold, but this was not a matter which was the subject of any relevant evidence before the Commissioner.