Fair work law; employee or contractor?

This is an extract from a recent case of a senior bench of the Fair Work Commission which deals with the legal factors at play when determining whether a person is an employee or a contractor.

“Consideration

[37] We have read and considered all the material filed by the Appellant and Respondent on

appeal. We are not satisfied that the Appellant has identified any instance of appealable error

in the Decision. We consider that the Deputy President’s approach to dealing with the

Appellant’s application was correct and open to him on the facts and evidence before him. We

agree with the Deputy President’s ultimate conclusion that the Appellant was not an employee

of the Respondent and therefore reject Grounds 1 and 2 of this appeal. Further, we are satisfied

that the Deputy President properly applied the correct legal principles to determine whether the

Appellant was an employee or independent contractor of the Respondent, as brought down in

Personnel Contracting and Jamsek.

[38] However, given the appeal raises questions regarding the interpretation and application

of the recent High Court approach to determining whether a person is an independent contractor

or employee, in circumstances where the contract is entirely oral, we will address the

Appellant’s remaining grounds of appeal.

Grounds 3 and 4: Post-contractual Conduct

[39] Grounds 3 and 4 are, in our view, the most contentious grounds of appeal. Both grounds

challenge the Deputy President’s findings regarding recourse to post-contractual conduct. The

Appellant alleges that the circumstances of the present appeal differ from Personnel

Contracting, Jamsek and other High Court decisions as it relates to an unwritten contract which

was partly oral and partly implied. The Appellant agrees that the approach taken in Personnel

Contracting and Jamsek applies to oral contracts and submits that such an approach allows

recourse to post-contractual conduct. Ground 3 alleges that the Deputy President erred by

finding it was “unnecessary to consider post-contractual conduct for proof of the terms of the

contract”, especially as he found at [153] of the Decision that the contract was not

comprehensive, although we consider that when paragraph [153] is read as a whole, it is

apparent that the Deputy President used of the word “comprehensive” to indicate that the terms

of the contract were not voluminous. The Appellant furthers this assertion by contending that

post-contractual conduct can be relevant to construing and interpreting the terms of the contract.

Specifically, Ground 3 alleges that the Deputy President erred by failing to find that wearing a

uniform, attending staff meetings, needing approval for absences and other work practices were

terms of the contract as varied in January 2017.

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[40] The Respondent submits that the Appellant mischaracterised the Deputy President’s

reasoning. They say that the Deputy President reasoned, consistent with Personnel Contracting

and Jamsek, that post-contractual conduct may only be relevant and available in limited

exceptions. We agree with the Respondent. The Deputy President did not indicate that postcontractual conduct is “unnecessary”. To the contrary, the Deputy President accepts that postcontractual conduct can be used when there is doubt about contract formation or whether it was

a sham, to ascertain the scope of the terms of an oral contract and to prove variation in the

contract. However, the Deputy President held that the terms of the contract, as varied in January

2017, cannot be added to, or subtracted from by reason of post-contractual conduct. We note

that this would be, in effect, reverting back to the multi-factorial test which focuses on the

indicia of employment as opposed to the parties’ rights and duties under the contract as it was

formed.

[41] In support of the Deputy President’s approach, we have had regard to the recent Federal

Court decision of Secretary, Attorney-General’s Department v O’Dwyer [2022] FCA 1183. At

[28]-[29], Goodman J confirmed that Personnel Contracting and Jamsek apply where there is

no wholly written contract and expressly rejected the applicability of the multi-factorial

approach in such cases. Accordingly, we are satisfied that the Deputy President’s approach to

post-contractual conduct in this matter is reflective of the High Court’s reasoning in Personnel

Contracting and Jamsek and we find no error as alleged in Ground 3.

[42] Ground 4 alleges that the Deputy President erred by refusing to consider conduct after

the January 2017 variation to determine whether there was an imposition of work practices that

gave rise to a contractual right of control. From the conclusion above, it follows that Ground 4

cannot succeed. We have confirmed the Deputy President’s approach to post-contractual

conduct was correct and therefore he did not err by failing to consider whether post-contractual

conduct evinced a contractual right of control.

[43] Accordingly, we reject Grounds 3 and 4.

Grounds 5 and 6: Right of Control

[44] Ground 5 asserts that the Deputy President erred at [135] of the Decision by finding that

the evidence of the parties’ conduct or work practices did not manifest an assumption of a right

of control over the Appellant. The Appellant submits that he was subject to the Respondent’s

authority and right to exercise control over his performance at work, for example, by performing

the tasks he was directed to perform during a routine fulltime working week. The Respondent

submits that Ground 5 is no more than a bare assertion that the Deputy President’s conclusion

with respect to this issue was wrong. We note that these submissions were already put to and

dealt with by the Deputy President at first instance. The Deputy President’s findings on this

issue are set out at [134] and [135] of the Decision:

“[134] I accept there were some work practices suggestive of an increased level of control or

power. They included the Applicant’s use of an email address and the (likely) wearing of a

uniform. The regularity of Mr Muller’s hours and the participation by Mr Muller in staff team

meetings (c.f. 16 December 2016) are similarly suggestive of an increasing level of control. The

meeting minutes of 16 December 2016 describe Mr Muller’s role somewhat more broadly to

include “Media Coordinator”, which was not a task expressly referred to in the Contract (cf.

photography, videography and marketing).

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[135] However, when assessed against the evidence as a whole during this period, I do not

consider that the evidence of the parties’ conduct or work practices during this period rises to

such a level that it manifests an assumption of a right of control over Mr Muller by the

Respondent that was sufficiently different from the terms of the Contract originally agreed.

[136] I do not consider that recourse to the post-contractual conduct occurring after the Variation

assists, other than I have set out above. In those circumstances, I do not consider those matters

appropriate to have regard to in characterisation of the Contract or the Variation.

[45] We find no error in the Deputy President’s findings on this issue. We do not agree that

the Deputy President erred by focusing on whether an assumed right of control over the

Appellant by the Respondent was ‘sufficiently different’ from the terms of the contract as

originally agreed. As we have stated above, the emphasis on the terms of the contract as

originally agreed aligns with High Court precedent and reflects the Deputy President’s approach

to not consider post-contractual conduct in a way which amends the terms of the contract after

it was varied.

[46] Ground 6 alleges that the Deputy President erred by finding that it was not a term of the

contract that the Appellant was unable to reject a direction to perform duties or a direction on

how he should perform those duties. The Appellant submits that this finding is inconsistent with

the Deputy President’s other findings at [139] and [142] of the Decision. Paragraph [142] of

the Decision is set out as follows:

“[142] The Applicant’s submissions stated that the work performed was as directed by the

Respondent. I consider that proposition is generally correct in what was to be performed and

when. However, and relevantly, it was not the case that the Respondent dictated how the work

was to be undertaken, other than it remained the case that work needed to be performed to a

requisite standard.”

[47] Having regard to the Appellant’s second contention, we note that the Deputy President

explicitly rejected at [142] that the Respondent dictated “how” the Appellant’s work was to be

undertaken, and we are of the view that such a finding was open to him on the evidence and is

not infected with error.

[48] As for the Appellant’s first contention, we do not consider that the Deputy President’s

finding that the Respondent directed “what was to be performed and when” contradicts the

finding that there was no contractual term that the Appellant was unable to reject a direction to

perform duties. Further, we do not agree that [142] evinces that such a term must exist in the

contract. We consider that in both employment and contracting relationships, the Respondent

would likely direct work to the Appellant and there would be general guidance about when such

work would be performed. Having regard to [139], the Deputy President considered that it was

likely that, in some circumstances, the Respondent might ask the Appellant to perform other

tasks, incidental to the particular services the Appellant had been contracted to perform. We

agree with the Deputy President that this often speaks to an employment relationship, but do

not find that this contradicts the Deputy President’s finding that the Appellant was unable to

reject a direction to perform duties.

[49] Therefore, we do not find any error in Grounds 5 and 6 and we dismiss these grounds

of appeal.

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Grounds 7 and 8: Own Business/Employer’s Business Dichotomy

[50] Grounds 7 and 8 allege that the Deputy President erred in failing to find that after the

variation of the contract, the Appellant was not conducting his own business as distinct from

serving in the Respondent’s business. The Appellant points to the fact that the Deputy President

found that the Appellant was performing more work for the Respondent’s business than his

own business and that the Appellant was not working for anyone else, except for sporadic

weekend work at weddings. Further, the Appellant submits that the consequence of the variation

and the Appellant’s hours becoming full time is that the Appellant was subordinate to the

Respondent’s business.

[51] The Respondent rejects this proposition. The Respondent submits that by the initial

contract terms, the Appellant was free to work elsewhere or for others, so long as it did not

conflict with the contracted time which would be devoted to the Respondent’s work. The

Respondent submits that there was no term in the contract which required the Appellant to

present himself as an employee of the Respondent or that the Appellant was required to work

exclusively for the Respondent during weekdays. The Respondent contends that the effect of

the January 2017 variation was that the Appellant’s availability to perform work increased from

three to five days and that there were no other express amendments.

[52] We agree with the Respondent. The Deputy President found that the only express

contractual variation from January 2017 was that the Appellant’s workdays increased from

three to five. The Appellant’s reliance on the fact that, after the variation, he was not working

for anyone else is again an attempt to take post-contractual conduct into account. Accordingly,

we are satisfied there is no inconsistency in the Deputy President’s findings, and we find that

the Deputy President did not fall into error. Grounds 7 and 8 are therefore dismissed.

Grounds 9 and 10: Variation

[53] Ground 9 alleges that the Deputy President erred in failing to find that the effect of the

variation was that the Appellant’s “hours of work increased from part time to full time” and

that this materially increased the Respondent’s right of control over the Appellant such that the

Appellant’s capacity to work in his own business was diminished. We are of the view that this

ground is merely a rewording of the Appellant’s previous grounds of appeal and submissions.

We have dealt with the contractual right of control in Grounds 5 and 6 and the own

business/employer’s business dichotomy in Grounds 7 and 8. The Appellant has raised no new

contentions that have not already been put to the Full Bench in other grounds and we see no

utility in reventilating these issues. As discussed above, the Deputy President’s findings on

these matters are not infected by error and we dismiss this ground of appeal.

[54] Ground 10 asserts that the Deputy President either failed to consider or failed to find

that there was a further variation to the contract after January 2017, and that this variation gave

rise to an employment relationship. While the Appellant submits that they put this submission

to the Deputy President at first instance, this was not asserted in their outline of submissions

from first instance and in their final oral submissions at first instance, the Appellant confirmed

their case relied on the terms of the contract as they existed at its inception and as at the January

2017 variation.6 The Appellant has failed to identify any evidence that supports that a variation

[2023] FWCFB 42

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of the contract after January 2017 occurred, and nor has the Appellant identified what terms of

the contract might have been varied after January 2017. Therefore, apart from the Appellant

seeking to advance a submission not made at first instance when there was the opportunity to

do so, this ground of appeal is without substance and does not disclose any error, let alone

appealable error, and is accordingly dismissed.

Grounds 11: Labels

[55] Ground 11 takes issue with the Deputy President’s consideration of the labels used by

the parties to describe the nature of their relationship. The Appellant asserts that the Deputy

President erred at law by giving unreasonably high regard to the label assigned by the parties

to their relationship at [152]-[155] of the Decision. The relevant paragraphs of the Decision are

set out as follows:

“[152] While the recent High Court authorities make it clear that recourse to the parties’

description or “label” of the arrangement should be approached cautiously – and in many cases

not at all – the case before me is a matter where I consider it appropriate to have regard to the

parties’ own characterisation of the Contract (unchanged upon the Variation). I do so not as a

“tie breaker” nor as a determinative factor, but as a factor relevant to the “whole of the contract”

and which, in this case, “can shed light on the objective understanding of the operative provisions

of their contract”.

[153] Here, the contract is not comprehensive and – indeed – is entirely oral in relation to the

limited express terms that were agreed, and the description given by the parties of their

relationship in this context is not merely a label or descriptive gloss but, in the bargain struck

by the parties before me, states in a short-hand way the very outcome that the parties were

seeking to achieve.

[154] The Respondent was originally recruiting for an employee. However, the bargain of the

parties consciously proceeded in a different direction – at the Applicant’s behest – where they

agreed a “contractor” relationship would ensue. The context for this was that the Applicant was,

at that time, working only as a contractor, he had his own existing business and customers, and

he wanted to preserve and continue them. I consider that this context helps “assist in identifying

the purpose or object of the contract” as it was made (and, other than the Variation, remained

unchanged).

[155] The absence of a formal documented agreement lends significance to the parties’ own

characterisation of the arrangement between them in these circumstances and reflects the

purpose or object of the contract they sought to achieve. That object was for the Applicant to

remain a contractor, but while working on fixed days for the Respondent.” (citations omitted)

[56] The Appellant submits that the Deputy President gave “too high a regard to ‘contractor’

labels assigned by the parties” and incorrectly considered that labels were a “relevant factor” in

construing the contract as a whole. The Appellant contends that the Deputy President should

have instead “recognised that the terms of the contract were more in common with a traditional

contract of employment and, further, were incomplete.”

[57] The Respondent identified, correctly in our view, that the Appellant has not challenged

the Deputy President’s identification of the relevant principle in terms of the relevance of labels

to determining whether a relationship is one of independent contractor or employee. We note

that the Deputy President acknowledged that caution ought to be taken towards any

[2023] FWCFB 42

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consideration of characterisation applied by parties to a work relationship at [96], [97] and [152]

of the Decision. We are satisfied that the Deputy President applied such caution in the Decision

and that he did not place too much weight on the parties’ own description of their relationship.

Accordingly, we find no error and dismiss this ground of appeal.

Ground 12: Assumptions of the Parties

[58] Ground 12 alleges that the Deputy President erred by finding that the mode of

remuneration, tax arrangements, payment of a flat hourly and the lack of paid leave were each

suggestive of an independent contracting relationship at [148] of the Decision. The Appellant

submits that “these considerations are merely consequential upon the ‘lay’ labelling adopted by

the parties about a contractor arrangement and are of no or little bearing.” The Appellant relied

on the following passage from ACE Insurance Limited v Trifunovski (ACE)7 which the Full

Bench considered had not been overtaken by Personnel Contracting in Deliveroo Australia Pty

Ltd v Franco8

at [41]:

“It is also difficult, in my view, to give much independent weight to arrangements about taxation,

or even matters such as insurance cover or superannuation. These are reflections of a view by

one party (or both) that the relationship is, or is not, one of employment. For that reason, in my

view, those matters are in the same category as declarations by the parties in their contract (from

which they often proceed). They may be taken into account but are not conclusive. These matters

are less important than the adoption by the parties (where this occurs) of rights and obligations

which are fundamentally inconsistent with basic requirements of a contract of employment, such

as the ability to delegate the discharge of obligations under a contract to another person, or where

there is a lack of control over how work is done.” (emphasis added)

[59] We have considered the Appellant’s submissions and find no inconsistency between the

Deputy President’s findings and the reasoning in ACE above. We do not agree that ACE

suggests that these aspects of the contract should be deemed to have little or no bearing or that

they are simply a consequence of the parties’ own labels of their relationship. Rather, we find

that ACE holds that “[labels] may be taken into account but are not conclusive”. Consistent

with ACE, the Deputy President took these factors into account and found them to be suggestive

of an independent contracting relationship. The Deputy President did not deem these factors

were conclusive evidence that the Appellant was an independent contractor and not an

employee. As is clear from the Decision, the Deputy President considered a myriad of evidence

and aspects of the contract which pointed towards an independent contracting relationship, and

importantly, he also considered other aspects which leaned towards an employment

relationship. The Deputy President took all these considerations into account in characterising

the contract and making his ultimate finding that the Appellant was not an employee. Therefore,

we are satisfied that the Deputy President’s findings are sound and disclose no error. We dismiss

this ground of appeal.

Conclusion

[60] Given that we have found that the Deputy President did not err by finding that the

Appellant is not an employee of the Respondent, there is no need for us to consider the alternate

outcome posed in the Decision.”

 

Muller v Timbecon Pty Ltd [2023] FWCFB 42 delivered 24 February 2023 per Catanzariti VP, Clancy DP and Yilmaz C