DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Kirsten Seaver
v
Trade Fair @ Falls Creek T/A K C Bell Enterprises
(U2017/12514)

Application for relief from unfair dismissal – jurisdictional objection – whether applicant an employee or independent contractor – indicia in ‘French Accent’ decision considered – applicant held to be an independent contractor – application dismissed.

Introduction

[1] Ms Kirsten Seaver has made application alleging she has been unfairly dismissed and seeking a remedy under s.394 of the Fair Work Act 2009 (Cth) (“the Act”). She has had a long involvement with the Respondent, Trade Fair @ Falls Creek t/as KC Bell Enterprises (“KC Bell Enterprises”), dating back to 2005 and is clearly disappointed that it decided to dispense with her services earlier this year, and to obtain those services elsewhere.

[2] However, KC Bell Enterprises has lodged a jurisdictional objection in response to the application claiming its relationship with Ms Seaver was one of principal and independent contractor, rather than employer and employee, and as such the Commission has no jurisdiction to deal with the application.

[3] Section 382 of the Act states in part:

“A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period.” 1

[4] It follows that if a person is not an employee they are not a person protected from unfair dismissal, and are accordingly unable to pursue an unfair dismissal application. In dealing with this application the Commission is therefore first required to determine whether Ms Seaver was employed by KC Bell Enterprises, or whether she was engaged to provide services to it as an independent contractor. If the Commission finds that it was an employment relationship then it must determine whether Ms Seaver was unfairly dismissed. However, if it finds the relationship was one of principal and independent contractor then the application must be dismissed.

[5] The hearing was held by telephone on 26 April 2018 with the agreement of the parties, given their separate and distant locations. Ms Seaver appeared on her own behalf. Mr Ken Bell appeared on behalf of the Respondent.

The Evidence and Submissions

Ms Kirsten Seaver

[6] Ms Seaver provided a written statement which indicates she commenced working for KC Bell Enterprises in 2005 as a Graphic Designer/Pre-Press Production. Her hours were variable and she initially worked on a tourism project that the business was involved with. At the time she was paid at the rate of $25 per hour and her hours varied depending on the volume of ads and the layout that needed to be done. This rate increased over time to $40 per hour. She initially considered herself to be providing services to the business as a contractor and would be remunerated on the basis of invoices provided to the business. However, based on advice received, 2 she subsequently came to understand that she was required to provide an invoice to the business for the total amount less PAYG tax, which she began to do. At the time she claims to have been terminated she was providing invoices in this manner, which also indicated “[n]o ABN – please withhold PAYG amount”.3 She also provided details of her tax file number on the invoice.

[7] Ms Seaver contributed to the production of a publication entitled “This Week in Falls Creek and Mount Beauty” that was published by the business, and as part of her role provided articles, captions and minor editing. She was also involved in creating graphics and producing print ready files for electronic submission. She would be given directions by Mr Ken Bell via email in regard to the placement of advertisements in the publication and what captions and photographs were required to be added. She stated that:

“Every week I would receive an excel spreadsheet with details, information about the ads that needed to be changed, the numbers of pages that are required for the template to be created and then, specific blow by blow, client by client instructions on what needed to be changed, even down to details about spacing, changing - minor details. At no stage did I have direct contact with any of the clients, nor was I encouraged to. Everything relied on Mr Bell being the bottleneck and the funnel through which all information would flow.” 4

[8] “This Week in Falls Creek and Mount Beauty” was published weekly during Winter and fortnightly at other times of the year. Ms Seaver generally worked for around 34 weeks each year and would take extended breaks of up to 3 weeks in Spring and at the end of the Winter period. At the time she claims her employment was terminated she was earning approximately $40,000. She also received a bonus at the end of the Winter season in most years.

[9] Ms Seaver worked from home using her own computer equipment and would receive emails from Mr Bell informing her about what was required to be done. She and Mr Bell were rarely in direct contact and the instructions and directions were generally provided to her by email. Files were often provided close to deadline and she would then be required to do whatever was necessary to get the publication completed. This would often require her to work what were described in her submissions as “back to back days and nights to keep on production schedules.” 5 She also said it generally took around 40 hours each week to do this work but this could vary depending on the nature and content of the publication. She also charged a set amount for the work done in respect of each publication. This meant that some weeks were more profitable than others and this was dependent on the amount of work involved in each case.

[10] She also indicated that she received more than 80% of her income from the graphic design services she provided to the business. 6 However, she did have another part-time job at a Visitor Information Centre, involving around 8 hours per week, but this was totally unrelated to her work as a graphic designer.7 She also submits that she was ultimately under the direction of the business and it was responsible for the outcome of the work performed. She had no access to the clients of the business, and had no control over the pricing of the advertising artwork.

KC Bell Enterprises

[11] The submissions provided on behalf of KC Bell Enterprises were set out in a letter dated 15 March 2018 from Mr Ken Bell. It indicates that “This Week in Falls Creek and Mount Beauty” is a small tourism related publication that essentially provides what was described as “a community service publication.” 8 It is published weekly over around 16 weeks during the winter season and is then published on a fortnightly basis.

[12] Ms Seaver began assisting with the production of the publication in 2006 and, at that time, provided a regular invoice and quoted an ABN number. However, in 2010 she requested that the business register for PAYG so that tax could be deducted from the remuneration provided to her. In 2014 Ms Seaver also asked if the business could supply a statement of earnings for the 2014-2015 financial year which was apparently required to assist with her son’s entrance into university, however, it was submitted that none of this involves any acknowledgement by the business that Ms Seaver’s status as a contractor had changed.

[13] The submission continues to indicate that Ms Seaver has always been considered by the business to be a contractor and she was always professional in her approach and provided the product in a timely manner. 9 It was also understood that she undertook work for other entities at different times and this was understood and accepted. She also worked from her own home and supplied her own equipment. She also worked her own hours, with the only requirement being that she completed the product by the deadline time of each publication. The business had no control over the times or the hours she worked. Mr Bell also indicated in response to a question from the Commission that he would provide emails to Ms Seaver at different times, often at short notice and sometimes late at night, and would then just expect the work would be completed.10

[14] The materials were prepared on behalf of around 70 advertisers so a range of material had to be prepared, and then approved and checked.

[15] She also charged her time at $40 per hour, which was a figure determined by her, and there was no consultation or discussion with her about how this amount had been arrived at. However, the invoices provided did not make reference to the number of hours involved and simply stated a specific amount less PAYG tax.

[16] It was also indicated that the business had decided to end its relationship with Ms Seaver because it had been offered the same service at a substantially lesser rate by the business that was involved in printing the publication. 11

Consideration

[17] As indicated that at the outset, Ms Seaver was clearly disappointed that her long-standing relationship with the business has come to an end. She also claims that there are outstanding entitlements owed to her. Mr Bell also indicated on behalf of the business that he was also disappointed that a mostly good and long-standing arrangement had come to an end. However, he indicated that cost issues impacting on the business left him with no option but to obtain the same services from another provider at a lower cost. However, these are not matters of direct concern to the Commission’s deliberations at this time. It is instead required to, firstly, determine the nature of the relationship between Ms Seaver and KC Bell Enterprises.

[18] The parties did not go to any detail in regard to the principles to be considered in deciding whether a relationship is one of employer and employee or rather one of the principal and independent contractor. They also did not make reference to any relevant authorities. However, there are well established principles that have been developed to determine whether an individual is an employee or an independent contractor. These were set out in the Full Bench decision in Jiang Shen Cai trading as French Accent v Michael Anthony Do Rozario (‘French Accent’). 12 In its decision the Full Bench highlighted some of the difficulties in seeking to retrospectively categorise relationships as either one of employer and employee or principal and independent contractor. It stated, in particular at paragraph 25 of the decision:

“[25] The FW Act imposes obligations on employers in relation to their “employees” and confers benefits and rights on “employees” without defining when a worker is an employee as distinct from an independent contractor. The definition of “employee” leaves it to the general law to supply that distinction. The nature of the established general law approach to distinguishing between employees and independent contractors may be seen as contributing to the problem precisely because the nature of the general law test is such that it does not admit a clear answer in every case. Once one adopts the position, as the general law has done, that the distinction is rooted in the objective character of the work relationship two things follow. First, the infinite variety of human affairs means that work relationships present as a spectrum, some of which are clearly relationships of employment and others of which are clearly relationships of independent contract but some of which are less clear cut. Secondly, that character of a work relationship is what it is and cannot be changed simply because the parties agree to label it differently (unless, of course, the relationship is sufficiently ambiguous that a clear determination is not possible, the situation addressed by the Massey Proposition). That is a matter clearly recognised by the courts and tribunals.” 13

[19] It then continued to deal at length with the approach to be applied in distinguishing between an employee and an independent contractor. Those conclusions are contained in paragraph [30] of the decision in the following terms:

“[30] The general law approach to distinguishing between employees and independent contractors may be summarised as follows:

(1) In determining whether a worker is an employee or an independent contractor the ultimate question is 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 of which the work in question forms part? This question is concerned with the objective character of the relationship. It is answered by considering the terms of the contract and 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. 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.

(4) Consideration should then be given to the various indicia identified in Stevens v Brodribb Sawmilling Co Pty Ltd and the other authorities as are relevant in the particular context. For ease of reference the following is a list of indicia identified in the authorities:

•  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 an independent contract. While control of this sort is a significant factor it 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 the 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 weighs 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, working for others (or the genuine and practical entitlement to do so) suggests an 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.

It should be borne in mind that no list of indicia is to be regarded as comprehensive or exhaustive and the weight to be given to particular indicia will vary according to the circumstances. 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) Where a consideration of the indicia (in the context of the nature of the work performed and the terms of the contract) points one way or overwhelmingly one way so as to yield a clear result, the determination should be in accordance with that result. However, 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 of the relationship 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. The ultimate question remains as stated in (1) above. If, having approached the matter in that way, the relationship remains ambiguous, such that the ultimate question cannot be answered with satisfaction one way or the other, then the parties can remove that ambiguity a term that declares the relationship to have one character or the other.

(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.” 14

[20] It is accordingly clear that no single factor can be used to determine whether a person is an employee or an independent contractor. The Commission is accordingly required to look at each case and make a decision based on the totality of the relationship between the parties. A number of the indicators identified by the Full Bench in French Accent are clearly relevant in determining this matter. I now turn to consider the circumstances in the context of those various indicia.

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

[21] The evidence indicates that Ms Seaver was a skilled graphic designer who exercised a degree of expertise and autonomy in performing her work. She clearly did not require any direct supervision, but was simply provided with direction by email in regard to what was to be done in respect of each publication. She worked from home and did not have set hours. She was simply provided with direction by email, often close to deadline, and then was expected to do whatever was required to complete the work in accordance with those directions.

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

[22] Ms Seaver states that she generally earned around 80 percent of her income from her work with K C Bell Enterprises, 15 although she also indicated that this figure might actually have been higher. However, she did have another part-time job, although this was unrelated to her work as a graphic designer. It also appears that she had some capacity to do other work, given she only worked for the Respondent for around 34 weeks each year, and the hours she worked appeared to be concentrated around publication times. KC Bell Enterprises indicated in its submissions that it understood Ms Seaver did work on occasions for other businesses, but regardless it had no objection to whether this occurred.16

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

[23] Ms Seaver worked from home and had an entirely separate place of work from the business. She also appears to have been responsible for all related home office expenses. Her principal source of communication with the business was by email, and the evidence indicates she had virtually no requirement to speak with Mr Bell, or to visit the premises from where he operated the business. However, there was nothing to indicate she advertised her services to the world at large, although it also appears there was nothing that necessarily prevented her from doing so.

Whether the worker provides and maintains significant tools or equipment.

[24] As indicated, Ms Bell worked from home and provided and maintained the equipment necessary to carry out the work she provided to the publication.

Whether the work can be delegated or subcontracted

[25] There was no evidence provided about this.

Whether the employer has the right to suspend or dismiss the person engaged

[26] There was no evidence provided about the nature of the arrangement entered into between the parties that determined or regulated their relationship. However, there does not appear to have been any written agreement that might have provided further insight into the nature of the relationship. It appears instead that the relationship was essentially based on verbal understandings that were agreed upon from time to time. There was also nothing provided in terms of how the relationship could be brought to an end. KC Bell Enterprises indicated in its submissions that it was able to end the relationship at any time, and did so when it found it was able to obtain the same services as those being provided by Ms Seaver at a substantially reduced rate. 17

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

[27] Ms Seaver indicated that she had no dealings with the clients of the business and it does not appear she was held out in any way to be an employee of the business.

Whether income tax is deducted from remuneration paid to the worker

[28] The evidence indicates Ms Seaver initially provided invoices to the business and received payments in response and presumably was then responsible for dealing with her own taxation arrangements. Her evidence also indicates that at this time she considered herself to be a contractor providing services to the business. However, in around 2010 she sought to change this arrangement in order to have PAYG deductions made from the invoiced amounts. She would accordingly then provide an invoice to KC Bell Enterprises for a total figure less PAYG. Her invoices also indicated “[n]o ABN – please withhold PAYG amount,” 18 and also set out her tax file number underneath. She relies on these arrangements in support of the submission that she was in an employment relationship rather than one based on principal and independent contractor. However, this arrangement would also appear to be consistent with a contractor who does not provide an ABN, but requests that the PAYG amount to be deducted in order to have them manage their tax by making contributions towards their expected income tax liability.

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

[29] As indicated, Ms Seaver provided an invoice after the work was completed in respect of each publication. She generally worked for around 34 weeks each year and did not receive any payment or remuneration in respect of those periods of time when she was not providing services related to the publication.

Whether the worker is provided with paid holidays or sick leave

[30] It does not appear that Ms Seaver received paid holiday leave or paid sick leave, or any of the other entitlements normally associated with an employment relationship.

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

[31] Ms Seaver was clearly a specialist and an experienced professional in terms of the graphic design work she was required to carry out.

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

[32] There is no evidence to indicate Ms Seaver intentionally did anything to create goodwill or other assets that could be sold or passed on to another entity. However, her contribution to the content of the publication obviously created value for the business.

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

[33] There was no evidence provided about this consideration, however, it can be assumed Ms Seaver was entirely responsible for the expenses she incurred in regard to the purchase and operation of the computer equipment she used, and any other expenses associated with operating from home.

Conclusion

[34] The Full Bench indicated in the decision in French Accent that the range of relationships at work presents as a spectrum. Some can be more clearly identified as one of principal and contractor and others as one of employer and employee, while in other cases the nature of the relationship is harder to delineate.

[35] However, I am satisfied in this case that the relationship can be considered to be one of principal and independent contractor. It is accepted that Ms Seaver would generally be provided with direction about what was required of her in respect of each publication, although this would often be provided relatively close to deadline. However, it was then her responsibility to simply get the job done utilising her skills and abilities and her equipment. She decided what hours would be worked and when those hours would be worked in order to achieve this outcome, as well as the manner in which the work was performed. Her work was only associated with the publication schedule and at other times she was not required to provide any services to the business. The nature of these arrangements is very different to those which would normally be found in an employment relationship.

[36] She also worked from home using all of her own “tools of trade,” which she purchased and maintained. She was also responsible for all other home office expenses incurred. It had also been agreed that she would provide an invoice in respect of the work performed and PAYG would be deducted from the amount paid to her. This again is consistent with the circumstances involving a contractor who does not have an ABN.

[37] There is also no evidence indicating that she received any of the entitlements normally associated with an employment relationship, such as paid leave entitlements.

[38] As indicated, I have given consideration to each of the indicators identified in the decision in French Accent that appear relevant in the circumstances involved in this matter. I am satisfied, in conclusion, in all the circumstances that the nature of the relationship between Ms Seaver and KC Bell Enterprises was one of principal and independent contractor, rather than employer and employee, and Ms Seaver was involved in the provision of services to the business.

[39] Given Ms Seaver was not an employee of KC Bell Enterprises it follows that she is not a person protected from unfair dismissal under s.382 of the Act. Her application is accordingly dismissed.

COMMISSIONER

Appearances:

K Seaver on her own behalf.

K Bell on behalf of the Respondent.

Hearing details:

2018.

Melbourne and Wodonga (via telephone):

April 26.

Printed by authority of the Commonwealth Government Printer

<PR609162>

 1   Fair Work Act 2009 (Cth) s 382.

 2   Transcript, 26 April 2018, PN 98.

 3   See Respondent’s submissions, dated 15 March 2018, Attachment, “Invoice”, dated 26 October 2016.

 4   Transcript, 26 April 2018, PN 119.

 5   Applicant’s submissions re jurisdictional objection, filed 23 March 2018, question 6a.

 6   Ibid, question 6b.

 7   Transcript, 26 April 2018, PN 105.

 8   Respondent’s submissions, dated 15 March 2018, p 1.

 9   Ibid, p 2.

 10   Transcript, 26 April 2018, PN 248.

 11   Transcript, 26 April 2018, PN 250.

 12   [2011] FWAFB 8307.

 13   Ibid, [25].

 14   Ibid, [30].

 15   Applicant’s submissions re jurisdictional objection, filed 23 March 2018, question 6a.

 16   Respondent’s submissions, dated 15 March 2018, p 2.

 17   Transcript, 26 April 2018, PN 250.

 18   Respondent’s submissions, dated 15 March 2018, Attachment, “Invoice”, dated 26 October 2016.