| [2019] FWC 4586 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Stephanie Prosdocimi
v
Addiction Treatment T/A Dayhab
(U2019/3166)
COMMISSIONER LEE |
MELBOURNE, 30 JULY 2019 |
Application for unfair dismissal remedy - jurisdiction - whether Applicant employee or independent contractor for relevant period - whether Respondent was a small business at the time of the dismissal - whether Applicant had completed the minimum employment period at the time of dismissal - determined that Respondent not a small business at time of dismissal - determined that the Applicant was an employee during the entire period of engagement with the Respondent – determined the Applicant had completed the minimum employment period at the time of dismissal.
[1] On 21 March 2019, Ms Stephanie Prosdocimi (the Applicant) made an application to the Fair Work Commission (the Commission) under s.394 of the Fair Work Act (the Act) for an unfair dismissal remedy in respect of the termination of her employment by Addiction Treatment T/A Dayhab (the Respondent). The Respondent asserts that the Applicant is not a person protected from unfair dismissal as she was engaged as an independent contractor, from 8 February 2018 to 3 December 2018 and was only employed by the Respondent from 4 December 2018 to the date of her dismissal, 12 March 2019. If this is correct, the Applicant does not meet the minimum employment period and is not a person protected from unfair dismissal. This decision deals with the Respondent’s jurisdictional objection only.
[2] The matter was listed before me on 21 June 2019. At the conclusion of the hearing, I issued an ex tempore decision noting that the Respondent had conceded there was not sufficient evidence to demonstrate that the Respondent was a small business. I also determined that it was clear on the evidence before me that the Applicant was engaged as an employee during the period 8 February 2018 to 3 December 2018. 1 It was not in contest that the Applicant was an employee from 4 December to 12 March 2019 and it is not in contest that the Applicant ’s service as a purported contractor was continuous from 8 February 2018 to 3 December 2018 . On the day of the hearing I stated as follows:
“It would be hard to find a clearer case where the indicia were so strong as suggesting this to be an employment relationship and not a contractor relationship. I think it is abundantly clear that this was a sham contracting arrangement and that is my finding. It's not a difficult one to reach given the state of the evidence.” 2
[3] It follows from that, the Applicant was employed for more than 12 months (i.e. from 8 February 2018 to 12 March 2019) and therefore was employed for the minimum employment period.
[4] I did not provide reasons for the decision on the day of the hearing and I advised the parties I would provide written reasons subsequent to the hearing. What follows are the reasons for the decision.
[5] At the hearing of the jurisdictional objection, I granted both the Applicant and the Respondent permission to be represented by a legal representative, Mr Fowler and Mr Guest respectively, as I determined that it would enable the matter to be dealt with more efficiently taking into account the complexity of the jurisdictional objection. The Applicant gave evidence on her own behalf. Ms Houston, a counsellor engaged by the Respondent also gave evidence on behalf of the Applicant. Mr Hall, Director, and Ms Green, Business Manager, gave evidence on behalf of the Respondent. Evidence by way of a statutory declaration was also provided by a Ms. Hayley Peverley. Ms. Peverley did not appear during the proceedings and I have had no regard to, nor placed any reliance on that evidence.
[6] Section 394 of the Act provides that a person who has been dismissed may make an unfair dismissal remedy application to the Commission. Section 390 of the Act provides that the Commission may only order a remedy if satisfied the person was “protected from unfair dismissal” at the relevant time. Under s. 382 of the Act, one of the requirements for a person to be “protected from unfair dismissal” at the relevant time is that the “person is an employee” at that time. In this matter, it is not in contest that the Applicant was an employee at the time she was dismissed on 12 March 2019. What is in contest is whether the Applicant was an employee between 8 February 2018 to 3 December 2018. If the Applicant was not an employee during that time period, the period of employment would have only been three months or thereabouts and the Applicant would not meet the minimum employment period jurisdictional requirement pursuant to s. 382 (a) of the Act.
[7] An alternative proposition canvassed by the Applicant was that the Applicant was an employee from 8 February 2018 to 12 March 2019 and, if the Respondent is a small business within the meaning of the Act, then this would meet the minimum employment period. It was not necessary in the circumstances to deal with this alternative proposition. In any case, the Respondent ultimately conceded that I could not be satisfied on the evidence that the Respondent is a small business. 3
The facts
[8] The Applicant was dismissed on 12 March 2019. The Respondent concedes that the Applicant was an employee from 4 December 2018 to 12 March 2019. I note that the version of the “Employment Agreement” 4 in evidence is not signed or dated, however as the Respondent concedes that the Applicant was an employee from 4 December 2018, this is of little consequence. The role the Applicant performed during the 4 December 2018 to 12 March 2019 period was that of Administration Officer/Intake Assistant, according to the unsigned employment contract in evidence.5
[9] The Applicant was engaged on 8 February 2018, purportedly as an independent contractor who provided support services to clients of the business. 6 The business of the Respondent involves services relating to rehabilitation and addiction treatment. The Applicant was primarily responsible for the coordination and provision of care for clients undertaking the DayHab Residential Program.7 Mr Hall gave evidence that the Applicant knew she was an independent contractor as she had read and signed the Independent Contractor Agreement (the Contractor Agreement) on 8 February 20188 The Agreement had a six-month period of operation and there was no evidence that it was renewed. Mr. Hall maintained that despite the contract not being renewed that “the agreement between us, stayed the same..”9
[10] Ms. Green was asked to explain what she understood the difference to be between a casual employee and an independent contractor and answered to the effect that the difference was the type of duties undertaken. She elaborated as follows:
“Could you elaborate on that?---Well, its contractors are basically, it's just supervision of clients, you know, effectively similar to let's say babysitting, for example. So they're supervising and just making sure that everyone's okay, overseeing that.” 10
[11] Further, Ms Green also gave evidence to the effect that a contractor has an ABN and submits invoices. 11
[12] The Applicant provided invoices to the Respondent for the work she completed during her purported engagement as a contractor. A selection of five invoices were tendered into evidence by the Respondent. 12 They covered the period for April, May, June, September and November. The Applicant confirmed she was required to submit invoices on a monthly basis, by a particular date. The invoices, beyond providing an ABN number and personal banking details of the Applicant, simply record a series of days and corresponding number of hours for each date. The invoices have no number. The invoice numbers simply refer to the relevant month.
[13] The ABN details for the Applicant are in evidence. 13 The entity name for the Applicant is Stephanie Lee Prosdocimi. The ABN type is detailed as “individual/ sole trader.”
[14] Mr Hall claims that the Applicant, when she was an independent contractor, told Ms Green, the business manager when she was available to work, that the Applicant was free to work in other businesses and that the Applicant turned down work with the Respondent and completed work with other businesses during the period she was a contractor. 14 The Applicant’s evidence on the point was:
“I was never given the opportunity to choose my hours. A monthly roster was emailed. If I was ill I would communicate with Sarah.
Text message communication was how all staff communicated with Sarah Green.
The Contract was given to me but neither party had signed the contract as I never agreed to work overtime and not be paid. I worked a lot of overtime and have never been paid for it even after raising it with Dayhab. I was working an average of 10 hours per day with weekend and overnight shifts.
I was made to put in an invoice at the end of every month. I had no say when I could invoice and I was told what hours I could invoice.” 15
[15] Ms Green says that the Applicant receieved an induction but was not provided any formal training as she was expected to have the necessary skills. 16 The Applicant gave evidence that she “was trained to be a support worker, what we were expected to do throughout the shift.”17
[16] The Contractor Agreement set out at Schedule 2, that the Applicant was a support worker and it listed the duties she was required to perform. 18 Ms Green said that her and the Applicant communicated by text message about the Applicant’s availability and that the Applicant was “unavailable” on a “few occasions.”19 However, the text messages do not support the evidence of Ms Green as to the nature of the relationship.20 The text messages demonstrate that the Applicant would advise Ms Green if she was swapping shifts. For example:
The Applicant at 11:05 on Thursday, 12 July 2018:
“Hey sarah me and Karl are swapping weekends. His going to do this weekend and I’m going to do next weekend for him! I’ll see you this afternoon! X”
Ms Green:
“Ok thanks Steph” 21
[17] The text messages also demonstrate that the Applicant would advise the Respondent if she was unwell and make efforts to “to get it covered.” 22 The text messages show that the Applicant was offered shifts which she commonly accepted.
Ms Green at 9:44 on Tuesday, 12 June 2018:
“Hi Steph are you able to work 3-10 tomorrow”
The Applicant:
“Yes” 23
[18] There is a single occasion where the Applicant indicates a reluctance to work as she was “at her other job tomorrow.” 24
[19] It is also clear from the text message exchanges that the Applicant is on a roster and on one occasion, notes she is not on a particular roster, but advises the Respondent of her availability. 25
[20] The reference to a staff roster is consistent with the staff rosters in evidence. 26 Rosters were provided for March, April, May and June 2018. They are headed “House Staff Roster.” It is clear that the Applicant was included in that roster on a regular basis.27
[21] The Respondent’s evidence is that the Applicant was free to determine her hours of work. Mr Hall’s evidence was that the rosters were “shifts of availability.” 28 The evidence of the rosters suggests otherwise. The rosters in evidence have names assigned to each shift. The Applicant’s evidence on her requirement to present for work was:
“What basis, could you tell the Commissioner, do you believe that you were an employee? What were the factors that made you believe that?---Commissioner, I was sent monthly rosters from Sarah Green. I was required to wear a uniform, which was a black DayHab polo that had the logo on it, and also a black zip-up jacket that had the logo on it at the front and the back. I was given training for the job. I always done relatively the same shifts - you know, if I couldn't work for some reason I had to tell Sarah Green. I couldn't just not come to work. What else? Yes, so I always performed the work at the same address.” 29
[22] The Applicant’s evidence is that she worked full time hours plus numerous overtime hours which she was not paid for. 30 However, this is not consistent with the hours specified in the invoices provided. That is, the hours specified are less than full time hours. It may be the case that the Applicant worked more hours during the months the rosters have not been provided for.31 However, the Applicant claims that she was told what hours she could invoice.32 This evidence was not contradicted.
[23] The Applicant gave evidence that she would perform her designated shifts in accordance with the monthly roster, with the exception of being unwell. The Applicant’s evidence is that she was never given the opportunity to choose her hours. A monthly roster was emailed. If she was ill, she would advise the Respondent. The Applicant’s evidence on cross examination was:
“Sorry, so to clarify, an initial roster was issued to you. Once that roster was issued there was nothing you could do about changing those shifts, is that correct?---If I was unable to work because I was unwell I would message Sarah or I would call or I would speak to her face to face. I would also arrange someone else to work or she would. We had to cover our shifts.
So to clarify, you didn't have to work any of those shifts, it was to your discretion?---No, we did have to work those shifts. If we didn't rock up for our shifts we wouldn't have had a job.” 33
[24] The Applicant’s evidence is that she was required to wear a uniform which was supplied by the Respondent:
“You were given a uniform of your own volition and at no point it was offered to you? Sorry, and at no point you requested a further uniform?---No, at no point I requested it. It was given to me.
When was it given to you?---I actually received - I think it was after my first shadow shift I received the uniform.
Who handed you that uniform?---Michael.”
What did he say when he handed it to you, best of your recollection?---"This is your uniform. You can wear this to your shifts as you're representing DayHab." 34
[25] Mr Hall’s evidence on this was “she could wear a shirt with a DayHab logo on it if she wanted to but was under no circumstances was she required to.” 35 Mr Hall’s evidence in relation the Applicant providing her own tools and equipment was that “her tools and her equipment are her mind and actually being there.”36 The Applicant also used her own car on some occasions, though her evidence was that was “…not so much..” when she was a support worker, more towards the end of her employment.37
[26] Ms Houston also gave evidence on the requirement to wear a uniform and work designated hours in accordance with a roster. 38 Ms Houston’s evidence was that both her and the Applicant were employees of the Respondent as they performed the exact same duties.39
Key findings of fact
[27] The Applicant was a most credible witness. I found Ms Houston similarly credible. Both women were succinct in their answers and forthright. In contrast, I found the evidence of Mr Hall and Ms Green to be somewhat self-serving and inconsistent. For example, the claim of Mr Hall that the Applicant “called the shots when she wanted to work, didn’t want to work” 40 does not at all align with the evidence, particularly the staff rosters and Mr Hall’s own evidence that the Applicant had to work a certain number of hours on the days she worked.41 Similarly, Mr Hall in his sworn statement claimed that on the day of the termination, the Respondent employed 14 people who were full time and part-time or casual (receiving regular shifts).42 When shown rosters for February 2019 which clearly contradicted that evidence, Mr Hall was evasive, claiming he could not comment on the rosters because he was not involved in putting them together or alternately, that they were not correct.43 Mr Hall was a most unreliable witness. Ms Green’s evidence regarding the working arrangements, such as the claim that the rosters where “a suggestion of hours that needed to be covered but could be declined” was not supported by her own evidence, particularly the text messages.44 Where there is conflict on the evidence of Mr Hall and Ms Green on the one hand and the Applicant and Ms Houston on the other, I prefer that of the Applicant and Ms Houston.
[28] I am satisfied the Applicant was regularly rostered to work. This is demonstrated in the staff house rosters. She did not control her hours or her means of work. She was under the direction of supervisors. 45 The Applicant was required to complete all the shifts on the roster, subject to being unwell.46 I am satisfied the Applicant was required to wear a uniform. The evidence of the Applicant and Mr Hall is not consistent on this point, however I prefer the evidence of the Applicant that she was required to wear the uniform. I also prefer the Applicant’s evidence that the Respondent provided her with training on how to be a support worker.47
[29] It is apparent on the evidence of the rosters that the Applicant was a regularly rostered employee. It is also the case that the Applicant agreed to work additional shifts offered. She was not, as suggested by Mr Hall, “calling the shots,” as to her hours of work. She was rostered and expected to work the hours set in that roster. The Applicant had to advise the Respondent of absences and could not just “not show up.” 48
[30] The suggestion of Mr Hall that the Applicant was working as a business is not supported by the evidence before me. He conceded on cross examination that there was not some sort of business enterprise going on. 49 There is no evidence that the Applicant was sub-contracting her work. What she was doing was swapping shifts on the existing roster which was set by the Respondent. There is no evidence whatsoever that the Applicant was operating a business. For at time at the commencement of her engagement with the Respondent she had a second job as a retail employee.50
[31] I also note that it was conceded there was no break in the engagement from 8 February 2018 to 3 December 2018, despite the Agreement elapsing on 8 August 2018. 51
Consideration
[32] Whether the Applicant was an independent contractor or an employee of the Respondent for the period of February2018 to December 2018 for the purposes of an application for unfair dismissal remedy is one of jurisdictional fact.
[33] In Tong Van Nguyen v Prestige Automotive Services Pty Ltd, 52 his honour Deputy President Gostencnik succinctly sets out the relevant law which is reproduced below:
“There are well established case law principles that have been developed by the courts and this tribunal to determine whether an individual is an employee. The courts have developed a multi-factorial approach, in which there is no single decisive criterion, to determine whether a contractual relationship is one of employment or one subject to a contract for services.53 That approach is usually applied in two areas where the distinction is important: first in disputes about the duties and obligations owed by the contracting parties to each other; secondly in disputes about whether one party is liable to a third party for injury caused by the other party in the performance of the contract.54 The usual premise for the application of this approach is the existence of a contract whereby one person is engaged and paid by another for the provision of work or services, thus requiring the contract to be properly characterised in order to determine the parties’ rights and obligations. The various indicia which are considered under the multi-factorial approach, were set out in Jiang Shen Cai trading as French Accent v Do Rozario55, and have to a significant degree been shaped by that employee/independent contractor dichotomy.
In French Accent56, a Full Bench of Fair Work Australia helpfully summarised the general law approach to distinguishing between employees and contractors 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.”57
[34] I will now consider these indicia in the context of this case.
Control
[35] The evidence is that the Applicant performed the support worker role within the parameters set by the Respondent. 58 It is clear that the Applicant was “under the direction of supervisors.”59 The Applicant engaged with Ms Green as to when she could attend the workplace and did so either in accordance with the roster or in response to the offer of additional shifts. There is no evidence the Applicant had any significant control over the hours of work she performed beyond her capacity to swap shifts or refuse additional work offered if she was unavailable.
[36] The Applicant’s work role is set out at Schedule 2 of the Contractor Agreement. Schedule 2 shows little opportunity for the Applicant to exercise control and reads like a position description. 60
[37] Ms Green provided the following evidence as to what the Applicant’s role entailed:
“So they transport clients to the residential facility, and they just oversee - you know, ensure their safety whilst they're there. They work fairly autonomously and are able to sort of make decisions on whether - you know, sometimes they might take them to a 12-step meeting and they usually can decide which one they will go to. It's just basically overseeing the welfare of the (indistinct) treatment.” 61
[38] This rather vague evidence does not indicate there is any significant autonomy of the applicant over the work she performed.
[39] Clause 10 of the Contactor Agreement provides that the Applicant was required to abide by the policies and procedures of the organisation that may be implemented or varied. 62 This is further evidence of a degree of control the Respondent exercised over the Applicant.
[40] The significant degree of control over the Applicant by the Respondent weighs in favour of finding the Applicant was an employee.
Performs work for another
[41] The Agreement provides at clause 9:
“9. Restrictions on Other Business Activity
9.1 The Contractor agreed that it will not set itself up in or engage in private business or undertake other employment in direct competition with the Organisation using knowledge or materials gained in its engagement with the Organisation during the term of this Agreement.” 63
[42] To that extent, even if the Applicant was operating as a business, she was restrained from working in competition with Respondent “with knowledge” she had gained from the Respondent. The Applicant’s evidence is that she worked as a casual retail employee for three months. 64
[43] As the Applicant was a support worker in the drug and alcohol rehabilitation area, this clause would act to severely limit her ability to carry on a business using her skills in that field.
[44] Other than restraining the Applicant from working in direct competition, the Contractor Agreement does not confer any express right on the employee to perform work for another.
[45] The Applicant’s evidence was that she expected to work in accordance with rosters and worked full time hours and additional overtime. I accept the Applicant’s evidence. As a practical matter, the Applicant was not in a position to work for another. This weighs in favour of a conclusion the Applicant was an employee of the Respondent.
Delegation or sub-contracting
[46] The Agreement does not provide a right to delegate or subcontract the work. There is nothing in evidence to suggest there was any practical capacity to subcontract the Applicant ’s work as a support worker. The swapping of shifts with other people on the staff roster was just that. It was not subcontracting or delegating. This weighs in favour of finding the Applicant was an employee.
Uniform
[47] For the reasons noted above, I accept the evidence of the Applicant that she was required to wear a uniform while she was engaged as a support worker. It was supplied by the Respondent. This weighs in favour of finding that the Applicant was an employee.
Salary and tax
[48] It is clear that the Applicant provided a monthly invoice to the Respondent. Each invoice simply recorded the hours worked for each particular day. The invoices are not numbered. They simply refer to a month. There was no evidence as to the taxation arrangements, however, I have assumed that no PAYG tax was deducted. The evidence is that the Applicant was paid monthly, after the production of an invoice for her work. 65 The Contractor Agreement provides that the Applicant be paid $30 per hour.
[49] It is hardly surprising that the invoice arrangement and the method of payment was consistent with a contractor relationship since that is what the Respondent at least sought to achieve. The absence of tax withholding is a product of that which the Respondent sought to achieve. Little weight is given to matters that have the trappings of an independent contractor relationship in the circumstances of this case.
Description of relationship
[50] There is certainly a signed contract that describes the relationship as a “contractor” relationship. However, through the description of the relationship is important, it is not determinative of that which is relevant is the substantive of the relationship and not its form. 66
Tools or equipment
[51] Other than the Applicant occasionally using her own car, all tools and equipment were supplied by the Respondent. 67 This weighs in favour of a finding that the Applicant was an employee.
[52] In Tong Van Nguyen v Prestige Automotive Services Pty Ltd, 68 his honour Deputy President Gostencnik made the following observation with which I agree:
“[40] It should now be uncontroversial that a multi-factorial assessment is required in evaluating whether a person providing personal services is an employee or alternatively an independent contractor. This is because it is “the totality of the relationship” which is to be considered, not just its form.69 It may also be accepted that the distinction between an employee and an independent contractor is “rooted fundamentally in the difference between a person who serves his employer in his, the employer’s, business, and a person who carries on a trade or business of his own”.70 As North and Bromberg JJ observed in Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd71 this difference was referred to by Wilson and Dawson JJ in Stevens v Brodribb Sawmilling Company Proprietary Limited72as a characterisation of “the ultimate question”.73 That point of distinction has been elsewhere referred to as the “ultimate question” posed by the totality approach or “the focal point” of that approach.74
[41] If an independent contractor is a person like the Applicant who the Respondent says in effect, operates a business, it is necessary to consider the hallmarks of a business. Some businesses have complex operations. Others adopt a lean or simple form. Some of the typical indicia of a business will be more relevant in some settings than in others. Businesses of the kind alleged to have been conducted by the Applicant are more likely to have a simple and less sophisticated structure. However, even a small, simple commercial enterprise will have some of the fundamental hallmarks of a business, though modest they may be. As North and Bromberg JJ also observed in Quest:
“. . . The pursuit of profit is at the core of entrepreneurship and to be regarded as one of the primary hallmarks, if not the primary hallmark, of a business. A commercial enterprise, no matter how small, is an undertaking in which time, money, and effort are risked in the hope of making a profit. Unlike the employee, who will be content to be remunerated with a wage which reflects the value of the personal services provided, the entrepreneur providing commercial services will want to be remunerated by making a profit. In pursuit of a profit, the independent contractor will not merely seek remuneration commensurate with the value of the personal services or work provided, but will want a return on the risk and expense involved in running a business.”75
[42] Apart from the pursuit of profit, the nature of the economic activities and the organisational structures of an enterprise will tend to distinguish it as a business. The following indicators were distilled from the authorities in On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3):76
• Do the economic activities of the putative business involve the taking of risk in the pursuit of profits?77
• Does the putative business engage in a repetitive and continuous manner with purchasers of its services?78
• Does the putative business employ or engage persons other than the owner/operator to carry out its economic activities?79
• Is goodwill (name, brand and reputation) being created by the economic activities of the putative business?80;
• Is the putative business promoted as a business to the public through advertising or other promotional means?81
• Does the putative business have tangible assets such as buildings and equipment which are utilised to support its economic activities?82
• Does the putative business have the basic transactional systems that are common of a business of that kind? For instance: invoicing systems; standard rates and terms and conditions of trade; insurance coverage; payment and debt collection systems; appropriate financial records; budgeting or forecasting systems; business based arrangements with a bank or other financial institution;83
• Do the services provided by the putative business involve the provision of labour of sufficient skill to be suggestive of the pursuance of a profession or trade through a business?84
• Are the regulatory requirements of a business (including business name registration, taxation, GST and ABN registration and compliance) being met by the putative business?85”
[53] Further, the Full Bench in the 4 yearly review of modern awards – Casual employment and Part-time employment made the following observation:
“[57] In Cetin v Ripon Pty Ltd t/as Parkview Hotel, 86 a Full Bench of the AIRC (Ross VP, as he then was, Duncan SDP and Roberts C) considered whether an Applicant for relief in respect of termination of employment was a “casual employee engaged by a particular employer for a short period” within the meaning of reg.30B(1)(d) of the WR Regulations (in the form that it then was) and thus excluded from the AIRC’s jurisdiction. The Full Bench applied the reasoning in Hamzy to the facts of the particular case to reach the conclusion that the Applicant did not fall within the exclusion in reg.30B(1)(d), and said (footnotes omitted):
“[60] At the time her employment was terminated Ms Cetin was regularly working four shifts per week on Thursday, Friday, Saturday and Sunday evenings. It was understood between the parties that Ms Cetin was expected to turn up for work every week on those nights. If Ms Cetin was unable to work on a particular night she was obliged to give notice. Since November 2002 any fluctuation in Ms Cetin’s hours was due to fluctuation in the restaurant’s closing time on a particular night. Ms Cetin’s employment could not reasonably be said to be informal, uncertain or irregular. To the contrary, her employment was regular and systematic, and would have given rise to a reasonable expectation of continuing employment.
[61] In the matter before us the parties characterised Ms Cetin’s employment as casual and her employment was classified as casual under the Award. But in our view it would be wrong in principle to treat the character ascribed by an award to particular employment, and adopted by the parties, as conclusively determining the character of the employment for the purpose of regulation 30B(1)(d). Nor is the fact that Ms Cetin was paid a casual loading in lieu of sick leave, annual leave and public holidays determinative of whether or not she was a casual employee for the purpose of regulation 30B(1)(d). Each of these incidents is a consequence of the characterisation chosen by the parties. Rather than being conclusive, each of these matters are simply factors to be taken into account in determining the true character of the employment. As Lee J observed in Gurran v Tarbook Pty Ltd:
‘If parties to an employment contract have attempted in the terms of their contract to describe their relationship in a manner that does not accord with the facts, the relationship established by the facts will prevail.’
[62] Similarly as counsel in Re Porter put it: the parties cannot create something which has every feature of a rooster, but call it a duck and insist that everybody else recognise it as a duck.” 87
[54] In the case before me, there is virtually no evidence of the Applicant involving herself in the activity of taking risk in order to pursue a profit. There is no evidence that the Applicant was involved in any business with other customers who might purchase her services. 88 The Applicant was assigned shifts on a roster and accepted other shifts as they were offered. She would swap shifts with others engaged by the Respondent. The Applicant wore the Respondent’s uniform at work and there is no evidence of any assets that belong to ‘her business.’ The evidence of Mr Hall was that the Applicant used the Respondent’s vehicle to transport patients, however the Applicant ’s evidence was that she was occasionally required to use her personal vehicle.89
[55] There was no suggestion the Applicant employed anyone in any business she conducts. It does not appear that the Applicant had registered any business name. There was no evidence of any advertising or promotional activities undertaken by the Applicant
[56] The Applicant did generate invoices, though they record nothing more than the number of hours worked per month. The Applicant of course provides skilled labour, a key input for a business, but the services provided by the Applicant though her skilled labour show none of the characterises of a business.
[57] The Applicant did not conduct her own business. The equipment used was predominantly supplied by the Respondent, including a motor vehicle used to transport clients. The Applicant used her own vehicle only occasionally.
[58] The Applicant wore the uniform of the Respondent. The Respondent exercised a high degree of control over the work. There was no practical capacity for the Applicant to delegate or subcontract. The Applicant worked according to a staff roster that the Respondent prepared, she asked for permission to swap shifts and was occasionally rostered for additional shifts offered. She was paid for the hours she worked, rather than by task or job by job basis. 90
[59] Taking all of this into account, it is apparent that the Applicant was an employee of the Respondent. The consideration of the indicia clearly weighs towards a finding the Applicant was an employee of the Respondent. While the relationship was described as a contractor relationship and the taxation arrangements point to contract for service relationship, the parties cannot alter the true nature of their relationship by putting a different label on it. The indicia point overwhelmingly towards a finding that the relationship is one between an employer and employee.
[60] For the reasons set out above, I find that the Applicant was an employee of the Respondent between 8 February to 3 December 2018. There is no dispute she was an employee between 4 December 2018 to the time of her dismissal on 12 March 2019. The Respondent agrees that the Applicant performed work on an on-going basis from 8 February 2018 to 12 March 2019. 91 Therefore, the Applicant was employed by the Respondent from 8 February 2018 to 12 March 2019. This is a period greater that 12 months, therefore the Applicant was employed for longer than the minimum employment period irrespective of whether the Respondent was a small business within the meaning of the Act at the time of dismissal.
[61] I note that during the proceeding, the Respondent did not provide evidence that could satisfy me that the Respondent is in fact a small business at the relevant time and conceded that was the case. Therefore, I have determined that the Respondent was not a small business at the time the Applicant was dismissed.
[62] The Respondent’s jurisdictional objections are therefore dismissed. The application for unfair dismissal remedy will be remitted to the UDCMT for further allocation.
[63] I also note that at the conclusion of the hearing I determined that this was a clear case of sham contracting. I also indicated that I would refer the matter to the Fair Work Ombudsman (FWO) as I was concerned that the Respondent may have a number of support workers engaged on a similar arrangement to that of the Applicant. I confirm that this decision will be referred to the FWO General Manager with a recommendation from me to make the FWO aware of this decision and to undertake any investigation of the Respondent they consider appropriate.
COMMISSIONER
Appearances:
Mr Fowler for the Applicant
Mr Guest for the Respondent
Hearing details:
21 June 2019.
Printed by authority of the Commonwealth Government Printer
<PR709918>
1 PN1052.
2 PN1052.
3 PN1003 – PN1004.
4 Exhibit A6, Employment Agreement Between Addiction Treatment Pty Ltd and Stephanie Prosdocimi, Undated, Unsigned.
5 Ibid.
6 Exhibit A1 Witness Statement of Michael Clive Hall; PN268 – PN280.
7 Exhibit A2 Independent Contractor Agreement Between Addiction Treatment Pty Ltd trading as Dayhab and Stephanie Prosdocimi dated 08 February 2018.
8 Ibid.
9 PN405.
10 PN672.
11 PN671; PN679.
12 Exhibit A4 Five Invoices Between 27/04/2018 and 26/11/2018
13 Exhibit A3, ABN Lookup Extract Dated 28 May 2019.
14 Exhibit A1, Witness Statement of Michael Clive Hall
15 Exhibit B1, Witness Statement of Stephanie Prosdocimi [4] – [7].
16 Ibid.
17 PN802.
18 Exhibit A2 Independent Contractor Agreement Between Addiction Treatment Pty Ltd trading as Dayhab and Stephanie Prosdocimi dated 08 February 2018.
19 Exhibit A10, Witness Statement of Sarah Green.
20 Exhibit A11, Screenshots - 10 Pages of SMS Messages Between Ms Green and the Applicant.
21 Exhibit A11, Screenshots - 10 Pages of SMS Messages Between Ms Green and the Applicant, 12 July 2019.
22 Ibid, 28 May 2019.
23 Ibid, 12 June 2018.
24 Ibid, 11 April 2019.
25 Exhibit A11, Screenshots - 10 Pages of SMS Messages Between Ms Green and the Applicant.
26 Exhibit A7, March, May and June House Staff Rosters
27 PN745- PN749.
28 PN284.
29 PN735.
30 Exhibit B1, Witness Statement of Stephanie Prosdocimi at [4] – [7].
31 PN321 - PN324.
32 Exhibit B1, Witness Statement of Stephanie Prosdocimi at [7].
33 PN812 – PN813.
34 PN824 – PN827.
35 PN715.
36 PN304.
37 PN801.
38 PN868.
39 PN870 - PN871.
40 PN313.
41 PN291.
42 Exhibit A1, Witness Statement of Michael Clive Hall.
43 PN153.
44 PN628.
45 PN286.
46 PN810.
47 PN802.
48 PN317.
49 PN303.
50 PN742.
51 PN405.
53 Stevens v Brodribb Sawmilling Co Proprietary Limited (1986) 160 CLR 16 at 24 per Mason J.
54 ACE Insurance Limited v Trifunovski [2013] FCAFC 3; (2013) 209 FCR 146 at [26]-[27] per Buchanan J.
57 Ibid at [30].
58 Exhibit A2 Independent Contractor Agreement Between Addiction Treatment Pty Ltd trading as Dayhab and Stephanie Prosdocimi dated 08 February 2018.
59 PN280 - PN286.
60 PN810 - PN812.
61 PN652.
62 Exhibit A2 Independent Contractor Agreement Between Addiction Treatment Pty Ltd trading as Dayhab and Stephanie Prosdocimi dated 08 February 2018 at [10].
63 Ibid at [9].
64 PN742.
65 PN307.
66 Re Porter (1989) 34 IR 179 at [184].
67 PN732-PN737
68 Gostencik decision
69 Hollis v Vabu Pty Limited [2001] HCA 44; (2001) 207 CLR 21 at [24].
70 Ibid at [40]; Marshall v Whittaker’s Building Supply Co [1963] HCA 26; (1963) 109 CLR 210 at 217 per Windeyer J; Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] FCAFC 37; (2015) 228 FCR 346 at [177] per North and Bromberg JJ
71 [2015] FCAFC 37; (2015) 228 FCR 346 at [178]
72 [1986] HCA 1; (1986) 160 CLR 16
73 Ibid at [35]
74 Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] FCAFC 37; (2015) 228 FCR 346 at [178]; On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) (2011) 214 FCR 82 at [207] (Bromberg J); to similar effect in ACE Insurance Ltd v Trifunovski [2011] FCA 1204; (2011) 200 FCR 532 at [29] (Perram J); and on appeal ACE Insurance Ltd v Trifunovski [2013] FCAFC 3; (2013) 209 FCR 146 at [93] and [102] (Buchanan J, with whom Lander and Robertson JJ agreed).
75 Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] FCAFC 37; (2015) 228 FCR 346 at [181]
76 (2011) 214 FCR 82 at [207]
77 Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd & Anor [2005] HCA 9 at [39]; Hope v Bathurst City Council (1980) 144 CLR 1 at 9; Roy Morgan Research Pty Ltd v Commissioner of Taxation [2010] FCAFC 52; (2010) 184 FCR 448 at [47]; Yaraka Holdings Pty Limited v Giljevic [2006] ACTCA 6; (2006) 149 IR 339 at [41] and [49]; City of Montreal v Montreal Locomotive Works Ltd [1947] 1 DLR 161 at 169; Market Investigations Ltd v Minister of Social Security [1969] 2 QB 173 at 184; Lee Ting Sang v Chung Chi-Keung [1990] 2 AC 374 at 382.
78 Hope v Bathurst City Council (1980) 144 CLR 1 at 9; Hungier v Grace (1972) 127 CLR 210 at 216–217; Puzey v Commissioner of Taxation [2003] FCAFC 197 at [48]; Commissioner of Taxation v Sleight [2004] FCAFC 94; (2004) 136 FCR 211 at [48].
79 Stevens v Brodribb Sawmilling Company Proprietary Limited (1986) 160 CLR 16 at 26 and 38..
80 Hollis v Vabu Pty Limited [2001] HCA 44; (2001) 207 CLR 21 at [48]; Stevens v Brodribb Sawmilling Company Proprietary Limited (1986) 160 CLR 16 at 37; Roy Morgan Research Pty Ltd v Commissioner of Taxation [2010] FCAFC 52; (2010) 184 FCR 448 at [46]; Re Porter; Re Transport Workers Union [1989] FCA 226; (1989) 34 IR 179 at 186..
81 Hope v Bathurst City Council (1980) 144 CLR 1 at 9; Abdalla v Viewdaze Pty Ltd (2003) 122 IR 215 at [35]; Yaraka Holdings Pty Limited v Giljevic [2006] ACTCA 6; (2006) 149 IR 339 at [35].
82 Stevens v Brodribb Sawmilling Company Proprietary Limited (1986) 160 CLR 16 at 37; Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd & Anor [2005] HCA 9 at [39]..
83 Hollis v Vabu Pty Limited [2001] HCA 44; (2001) 207 CLR 21 at [54]; Sweeney v Boylan Nominees Pty Ltd [2006] HCA 19; (2006) 226 CLR 161 at [31]; Hope v Bathurst City Council (1980) 144 CLR 1 at 9; Wesfarmers Federation Insurance Ltd v Wells [2008] NSWCA 186 at [42]; Ferguson v Federal Commissioner of Taxation [1979] FCA 51 at 311..
84 Hollis v Vabu Pty Limited [2001] HCA 44; (2001) 207 CLR 21 at [48]; Stevens v Brodribb Sawmilling Company Proprietary Limited (1986) 160 CLR 16 at 36–37; Yaraka Holdings Pty Limited v Giljevic [2006] ACTCA 6; (2006) 149 IR 339 at [51].
85 Wesfarmers Federation Insurance Ltd v Wells [2008] NSWCA 186 at [39] – [42].
86 [2003] AIRC; (2003) 127 IR 205.
88 PN741.
89 PN654 – PN656; PN736 – PN738.
90 PN401; PN663 – 664.
91 PN287.