Fair work laws; employee or contractor?

In this extract from a recent decision of the Fair Work Commission can be found an excellent summary of the current legal principles which apply in Australia when determining whether a person is a contractor or an employee.

“Applicable principles – employee or contractor

General principles

[80] Unsurprisingly, the parties addressed me on the applicable principles, as recently stated by the High Court in its decisions of CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 (Personnel Contracting) and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2 (Jamsek).

[81] The Applicant relied upon – which the Respondent concurred with – the following summary recently set out by Deputy President Anderson in Waring v Hage Retail Group Pty Ltd [2022] FWC 540 2 (footnotes omitted):

“[52] In two judgements delivered on 9 February 2022 the High Court of Australia pronounced on the law that applies in determining whether, absent a specific statutory rule, a person is an employee or contractor. In doing so, the Court reviewed past decisions of the Court (and other courts) and set out afresh relevant legal principles.

[53] In important respects the law as expressed by the High Court in Jamsek and Personnel Contracting has modified, if not replaced, former approaches. In particular, the past approach of the Commission (itself based on past court authority) as outlined in the leading full bench case of French Accent is, with some limited caveats, no longer good law.

[54] The High Court, via the combination of judgements in both Jamsek and Personnel Contracting, has largely rejected an approach whereby the relationship between parties across its life span is examined (including how the relationship operates in practice). The Court has stated that contractual terms and not performance, where those terms can be ascertained and where the contract is not a sham, will determine the true nature of the relationship. However, the Court has observed that the manner in which the relationship is worked in practice may be relevant for certain limited purposes, such as to find contractual terms where they cannot otherwise be ascertained or to determine the nature of any variation to agreed terms.

[55] Indicia (such as those identified in earlier cases in the Court) may be relevant but only insofar as the terms of the contract give voice to them. One approach, to be used as a guide, is to look at whether, under the contract, the worker is engaged to work in the business of another, though this may not necessarily be useful in all cases. The extent of a contractual right to control, as evident from the terms of the contract itself, remains a major signifier of an employment relationship. That an arrangement was brought about by the superior bargaining power of one party has no bearing on the meaning and effect of the contract.

[56] Amongst the caveats expressed by the Court, is that a mere label acting as a subterfuge to the true nature of the contractual relationship will not determine the status of the parties. In this respect at least, the law remains unchanged by these recent decisions.”

[82] As is often the case, the principles were not themselves in controversy, but the application of those principles was in issue. In addition to the general question of characterisation, there were discrete issues of controversy in the matter before me: the use of post-contractual conduct to assist in determining the terms of an oral contract; the use by the parties of ‘labels’ to describe the legal character of the arrangement between them; and the terms of the contract itself.

Oral contracts

[83] A point of distinction in the matter before me and Personnel Contracting was that the contract between the parties in the matter before me contained terms that were wholly oral (and to be implied). The parties did not suggest – correctly in my view – that different principles to those set out in Personnel Contracting would apply, although there are some particular matters concerning post-formation conduct and variation that I will address.

[84] Where there is a wholly written contract whose terms are not disputed, there is usually no difficulty identifying those terms for the purpose of undertaking the exercise in characterisation (although the task of characterisation may still be a difficult one). Where the contract is not wholly in writing, it is necessary at the threshold level to identify the terms of the contract, the parties to it, and when it was formed. Many aspects are often not in dispute but in all likelihood, some will be, given the nuance of the characterisation exercise that will derive from those terms. Where (as is the case here) a variation occurs, it is also necessary to identify the scope of any variation and when it occurred.

[85] The principles applicable to proof of oral contracts was stated by Hammerschlag J in John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 3 at [93]-[94]. At [93], Hammerschlag J was referring to when an oral contract could be accepted as being made. The making of an agreement is not in dispute in the matter before me. However, I consider his Honour’s observations are apposite in identifying the terms of an oral agreement. At [94] – [95], his Honour stated:

“94 Where a party seeks to rely upon spoken words as a foundation for a cause of action, including a cause of action based on a contract, the conversation must be proved to the reasonable satisfaction of the court which means that the court must feel an actual persuasion of its occurrence or its existence. Moreover, in the case of contract, the court must be persuaded that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding. In the absence of some reliable contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved. The seriousness of an allegation made, inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question of whether the issue has been proved to the reasonable satisfaction of the court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony, or indirect inferences: see Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; Helton v Allen (1940) 63 CLR 691 at 712; Rejfek v McElroy (1965) 112 CLR 517 at 521; Watson v Foxman (1995) 49 NSWLR 315 at 319.

95 The sensation of feeling an actual persuasion, after a contest, that an event has happened or that something exists is one which is well known and recognised by experienced trial judges for what it is.”

[86] As to the implication of terms into an oral contract, I consider the relevant principles are those initially advanced by Deane J in in Hawkins v Clayton (1987) 164 CLR 539 at 571 and later developed by McHugh J and Gummow J in Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 442. In the latter case, their Honours stated (citations omitted, emphasis added):

“In such situations, the first task is to consider the evidence and find the relevant express terms. Some terms may be inferred from the evidence of a course of dealing between the parties. It may be apparent that the parties have not spelled out all the terms of their contract, but have left some or most of them to be inferred or implied. Some terms may be implied by established custom or usage, as described above. Other terms may satisfy the criterion of being so obvious that they go without saying, in the sense that if the subject had been raised the parties to the contract would have replied “of course”. If the contract has not been reduced to complete written form, the question is whether the implication of the particular term is necessary for the reasonable or effective operation of the contract in the circumstances of the case; only where this can be seen to be true will the term be implied”

[87] As with written contracts, recourse may be had to external events, where appropriate, as explained by Gordon J in Personnel Contracting at [175] (citations omitted, emphasis added):

“Recourse may be had to events, circumstances and things external to the contract which are objective, which are known to the parties at the time of contracting and which assist in identifying the purpose or object of the contract. The nature of the specific job that the purported employee applied for as well as the nature and extent of the equipment to be supplied by that purported employee for that particular job may well be relevant to the question of characterisation of the contract. Indeed, it is often relevant, but not determinative, to observe that the purported employee must supply some uniform, tools or equipment. But again that observation must be made in context. The context is the nature and extent of what is required to be provided under the contract. In many forms of employment, employees provide their own uniform and bring their own tools to work.”

Characterisation – traditional indicia

[88] As Wigney J recently stated in JMC Pty Limited v Commissioner of Taxation [2022] FCA 750 (JMC v COT) at [23], the task of characterising the terms of the contract, once properly identified, is often informed by two particular considerations:

“The first consideration is the extent to which the putative employer has the right to control how, where and when the putative employee performs the work: Personnel Contracting at [73]-[74] (Kiefel CJ, Keane and Edelman JJ); [113] (Gageler and Gleeson JJ); see also Brodribb at 24 (Mason J) and 36-37 (Wilson and Dawson JJ). The second is the extent to which the putative employee can be seen to work in his or her own business, as distinct from the business of the putative employer – the so-called “own business/employer’s business” dichotomy: Personnel Contracting at [36]-[39] (Kiefel CJ, Keane and Edelman JJ); [113] (Gageler and Gleeson JJ); cf [180]-[183] (Gordon J). Neither of those considerations are determinative and both involve questions of degree.”

[89] In relation to the element of control, as stated by Kiefel CJ, Keane and Edelman JJ in Personnel Contracting at [73] (and see also JMC v COT at [24]):

“ … the existence of a right of control by a putative employer over the activities of the putative employee serves to sensitise one to the subservient and dependent nature of the work of an employee, so as to assist in an assessment of whether a relationship is properly to be regarded as a contract of service rather than a contract for services”

[90] As for the “own business/employer’s business” dichotomy, Wigney J summarised the matter thus in JMC v COT at [25] (original emphasis):

“ … it also “usefully focusses attention upon those aspects of the relationship generally defined by the contract which bear more directly upon whether the putative employee’s work was so subordinate to the employer’s business that it can be seen to have been performed as an employee of that business rather than as part of an independent enterprise”: Personnel Contracting at [39] (Kiefel CJ, Keane and Edelman JJ); cf [180]-[182] (Gordon J). Another way of framing the question, which focusses more directly on the terms of the contract, is whether the person “is contracted to work in the business or enterprise of the purported employer”: Personnel Contracting at [183] (Gordon J) (emphasis in original). One consequence of answering that question in the negative may be that the person is not an employee.”

[91] While the elements of control and the own/employer’s business dichotomy are significant matters, it remains appropriate to consider the “totality” of the relationship between the parties albeit – importantly – as framed by the rights and duties established by the parties’ contract. As stated by Kiefel CJ, Keane and Edelman JJ in Personnel Contracting at [61] (citations omitted, emphasis added):

“The foregoing should not be taken to suggest that it is not appropriate, in the characterisation of a relationship as one of employment or of principal and independent contractor, to consider “the totality of the relationship between the parties” by reference to the various indicia of employment that have been identified in the authorities. What must be appreciated, however, is that in a case such as the present, for a matter to bear upon the ultimate characterisation of a relationship, it must be concerned with the rights and duties established by the parties’ contract, and not simply an aspect of how the parties’ relationship has come to play out in practice but bearing no necessary connection to the contractual obligations of the parties.”

[92] With the important limitation placed upon recourse to the “various indicia” being established from the terms of the parties’ contract, the indicia described in Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 (Stevens) at 24 per Mason J remain relevant (citations omitted, emphasis added):  4

“But the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The approach of this Court has been to regard it merely as one of a number of indicia which must be considered in the determination of that question:… Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee.”

[93] To similar effect, Wilson and Dawson JJ said in Stevens at 36 – 37 (emphasis added):

“The other indicia of the nature of the relationship have been variously stated and have been added to from time to time. Those suggesting a contract of service rather than a contract for services include the right to have a particular person do the work, the right to suspend or dismiss the person engaged, the right to the exclusive services of the person engaged and the right to dictate the place of work, hours of work and the like. Those which indicate a contract for services include work involving a profession, trade or distinct calling on the part of the person engaged, the provision by him of his own place of work or of his own equipment, the creation by him of goodwill or saleable assets in the course of his work, the payment by him from his remuneration of business expenses of any significant proportion and the payment to him of remuneration without deduction for income tax. None of these leads to any necessary inference, however, and the actual terms and terminology of the contract will always be of considerable importance.”

Characterisation – the use of “labels”

[94] The Respondent places some importance on the fact that the parties called the relationship a contracting relationship. The Applicant’s written submissions state that “the High Court has held that the label ascribed by the parties to the engagement is of no consequence”. I do not accept the Applicant’s submission that the High Court made such a definitive statement, although I accept the parties’ own descriptions cannot be determinative.

[95] Regarding the “label” issue, the Applicant’s written submissions relied upon the following paragraphs from Personnel Contracting: per Kiefel CJ, Keane and Edelman JJ at [58], [63]-[66], [79]: Gageler and Gleeson JJ at [127]; and Gordon J at [184]. At [66], having just referred to a statement in Chaplin to the effect that ambiguity in the character of a relationship might be removed by a provision whereby the parties agreed on terms descriptive of their status or relationship, Kiefel CJ, Keane and Edelman JJ stated (emphasis added):

“As a matter of principle, however, it is difficult to see how the expression by the parties of their opinion as to the character of their relationship can assist the court, whose task it is to characterise their relationship by reference to their rights and duties. Generally speaking, the opinion of the parties on a matter of law is irrelevant. Even if it be accepted that there may be cases where descriptive language chosen by the parties can shed light on the objective understanding of the operative provisions of their contract, the cases where the parties’ description of their status or relationship will be helpful to the court in ascertaining their rights and duties will be rare.”

[96] Hence, while Kiefel CJ, Keane and Edelman JJ stated that recourse to the parties’ own descriptions would be “rare”, Gordon J, with whom Steward J agreed on this matter, stated the matter with some difference in emphasis. It is clear that Gordon J considered that any recourse to the parties’ own descriptions should not be given excessive weight – let alone being determinative – and that the whole of the contract is to be construed, including whatever labels the parties have used. Gordon J stated at [184] (citations omitted, emphasis added):

“This Court has previously cautioned against ascribing too much weight to “labels” used by parties to describe their relationship. The whole of the contract is to be construed including whatever labels the parties have used to describe their relationship, but those labels are not determinative: “parties cannot deem the relationship between themselves to be something it is not”. Adopting and adapting what was said by Gleeson CJ, Gummow, Kirby, Hayne and Crennan JJ in Bluebottle UK Ltd v Deputy Commissioner of Taxation in relation to a clause of deeds of assignment headed “Equitable and Legal Assignments”: the classification adopted by the parties in the contract is not determinative. The classification turns upon the identification of the nature and content of the rights created by the contract and the identity of those parties which enjoyed those rights. The contract can have no greater efficacy than that given by the rights which provided its subject matter.”

[97] I consider that the principle enunciated by Gordon J regarding labels is similarly reflected by the joint judgment of Gageler and Gleeson JJ, who state at [127] (citations omitted, emphasis added):

“The third of those principles, although stated by means of a quotation from an earlier English decision, was entirely in accordance with the common law as then understood in Australia. Legal characterisation of a relationship into which parties have entered under a written contract has never been thought to be controlled by the contractual language chosen to describe the relationship. The characterisation must turn on the substantial relations between the parties, which might be informed but cannot be altered by the presence in the contract of “elaborate provisions expressed in terms appropriate to some other relation”. Michael Black QC pithily encapsulated that understanding in an employment context in the submission that “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”.”

Characterisation – evidence of post-contractual conduct

[98] The second matter relates to whether evidence of conduct occurring after the formation of the contract might be had regard to in characterising the contractual relationship. I consider the judgments of Kiefel CJ, Keane and Edelman JJ at [45], and Gordon J (Steward J concurring) at [176] make it clear that such conduct cannot, as a general rule, be admitted for the purpose of construing the contract as made.

[99] There are exceptions to the admission of post-contractual evidence, although I consider them confined. In the case before me, the terms of the contract between the Applicant and Respondent were constituted wholly by oral terms (and terms that might be implied). Perhaps with an eye to those matters, the Applicant relied upon the following proposition from Personnel Contracting (a case concerning a wholly written contract) by Kiefel CJ, Keane and Edelman JJ at [42] (footnotes omitted):

“A contract of employment may be partly oral and partly in writing, or there may be cases where subsequent agreement or conduct effects a variation to the terms of the original contract or gives rise to an estoppel or waiver. In such cases, it may be that the imposition by a putative employer of its work practices upon the putative employee manifests the employer’s contractual right of control over the work situation; or a putative employee’s acceptance of the exercise of power may show that the putative employer has been ceded the right to impose such practices.”

[100] Similarly, reliance was placed by the Applicant on statements by Gordon J at [177] and at [183]. Paragraph [177] of her Honour’s judgment is as follows (citations omitted, original emphasis):

“Of course, the general principle against the use of subsequent conduct in construing a contract wholly in writing says nothing against the admissibility of conduct for purposes unrelated to construction, including in relation to: (1) formation – to establish whether a contract was actually formed and when it was formed; (2) contractual terms – where a contract is not wholly in writing, to establish the existence of a contractual term or terms; (3) discharge or variation – to demonstrate that a subsequent agreement has been made varying one or more terms of the original contract; (4) sham – to show that the contract was a “sham” in that it was brought into existence as “a mere piece of machinery” to serve some purpose other than that of constituting the whole of the arrangement; and (5) other – to reveal “probative evidence of facts relevant to rectification, estoppel or any other legal, equitable or statutory rights or remedies that may impinge on an otherwise concluded, construed and interpreted contract”. The relevance of subsequent conduct for the purposes of a particular statutory provision, legislative instrument or award was not in issue in this appeal.”

[101] The relevant part of paragraph [183] of her Honour’s judgment relied upon by the Applicant was (footnotes omitted):

“ … That does not detract from the fact that where the contract is oral, or partly oral and partly in writing, subsequent conduct may be admissible in specific circumstances for specific purposes – to objectively determine the point at which the contract was formed, the contractual terms that were agreed or whether the contract has been varied or discharged.”

Consideration

[102] Before setting out my conclusions about the terms of the contract between the parties (as varied), it is necessary to make some observations regarding the case before me, having regard to the High Court’s statements on recourse to post-contractual conduct.

[103] The Applicant’s case relied upon the contract initially formed between the parties in September 2016, as it was varied in about January 2017 when the days to be worked were changed from three days to five days. It was a matter specifically confirmed for the Applicant in closing address.

[104] What follows from this is that I consider that conduct occurring after those points in time cannot be relied upon to establish the terms of the contract, as varied, except to demonstrate that there was a particular term at either of those points in time. Taking the five matters listed by Gordon J in paragraph [177] of Personnel Contracting, it was not suggested that there was doubt about “formation” (although the identity of the parties to the contract that was formed was initially in dispute), nor was a “sham” asserted and nor was rectification or estoppel in issue (c.f. Personnel Contracting at [177]).

[105] As to post-contractual conduct to prove a contractual “variation”, it was agreed between the parties that, in about January 2017, the days required to be worked changed from three days to five days. It is not necessary to have recourse to post-contractual conduct for proof of that variation. I accept that does potentially leave available post-contractual conduct to assist in determining if there were other variations to the contract that occurred between September 2016 and January 2017 and I set out my findings on those matters below.

[106] I also accept that post-contractual conduct in the matter before me is potentially capable of resolving a dispute where that dispute concerns the “existence” (and, I consider it follows where an oral term is concerned, the “scope”) of a particular term in the initial contract or that contract as varied.

[107] But with those exceptions aside, I do not consider that the terms of the contract, as varied in January 2017, might be added to or subtracted from by reason of post-contractual conduct occurring after those events unless I consider that conduct was factually reflective of the statements and conduct occurring at the time the contract was originally agreed and upon variation. Put another way, the fact that certain practices might have been occurring in November 2021 is not determinative of them having been in place in November 2016.

The contract – formation and parties

[108] I now set out my findings as to the terms of the contract. I refer to my findings of fact set out above.

[109] I find that the initial contract was formed during, or shortly following, the discussion held between Mr Muller and Mr Haswell on 23 September 2016. As Mr Muller had begun purchasing equipment by 18 October 2016, I am satisfied it occurred by then. It is improbable that Mr Muller would have been purchasing equipment and sending an invoice for reimbursement if, by that point, he and Mr Haswell had not struck a deal.

[110] In the material that was initially filed, there was a level of dispute regarding the identity of the contracting parties. The Respondent’s material states that there was an “interposition” of third-parties between the Applicant and Respondent, namely “Living in Pictures” until April 2018 and then the partnership “N. Muller & S. Muller” from then on. The Respondent also asserted that the Applicant ought be estopped from now denying that the Respondent was contracting with the partnership of N. Muller & S. Muller.

[111] As to the identity of the contracting parties, I find that the contract was between the Respondent and Mr Muller. While the Respondent’s submissions contend that there were interposed entities – initially Living in Pictures – none of those entities were discussed on 23 September 2016 or beforehand. There is no evidence of that entity being referred to earlier than the invoice dated 18 October 2016 and, as stated, I find that a contract had already been arrived at by then.

[112] The Respondent’s written submissions contend, in substance, an estoppel by representation to the effect that the contracting parties are (or, more accurately, were altered to become) Living in Pictures and, later, the partnership of N. Muller & S. Muller. While the argument was not pressed by counsel for the Respondent, lest there be confusion about the matter not being addressed, I am not satisfied that any estoppel arises. At its highest, the contention relies on the delivery of invoices (initially in the name of Living in Pictures) as constituting a ‘representation’ of the contracting party. Even were that the case (and in the matter before me, I doubt this) there would need to be detrimental reliance. I consider that the relevant state of mind for reliance is Mr Haswell’s. It is sufficient to note that he gave no clear evidence indicating such a reliance. To the contrary, Mr Haswell’s witness statement exhibits an email exchange between himself and Mr Madden in November 2021. The substance of that exchange was a failure of a hard-drive controlled by Mr Muller for his work (and the absence of back-up systems and the request by Mr Muller for the Respondent to “assist” Mr Muller’s efforts for that material to be recovered). In the email exchange, Mr Haswell described “Shelton” as a contractor. While that part of the email was not written in formal terms, there was nonetheless no reference to any other contracting entity.

The contract – express terms

[113] I find from the evidence there were express terms of a contract (Contract) as follows:

  1. The Applicant would primarily perform photography, as well as videography and other marketing tasks, as supplied by the Respondent.
  2. The Applicant would be paid at an hourly rate of $39 per hour, plus any GST.
  3. The Applicant would work on a time-structure basis, three days per week on days to be agreed as needed but expected to be Wednesdays, Thursdays and Fridays.
  4. The Applicant would issue invoices for his work, which were to be issued on a fortnightly basis in accordance with the Respondent’s pay cycle.
  5. Except for the days when the Applicant was working at the Respondent, he could work elsewhere for other clients or work.
  6. The parties agree that Applicant would be engaged as a contractor.
  7. The Respondent would supply the Applicant for use with a suitable laptop and other photography equipment on agreement.
  8. The Respondent would reimburse the Applicant for specific equipment purchases that he would use for his work, as agreed.

[114] In relation to the term concerning the supply of the computer and other selected equipment, I note that the evidence does not disclose any specific discussion about them. However, as there was an email dated 8 November 2016 to arrange for the laptop, I consider it highly likely that the parties had discussed those matters previously and agreed that it would be supplied. The evidence refers to the Respondent supplying a “DSLR camera”. The value of this item is unclear, although I infer it was modest (and possibly around the value of the computer, noting Mr Haswell’s complaint that Mr Muller did not use the supplied camera and instead used his own equipment). The Respondent would not have purchased a camera nor would have arranged for such a specific computer to be procured without having considered there was a need for it in the first place. For similar reasons, I consider it also highly likely that the parties discussed at least in general terms the other items of the equipment Mr Muller indicated he would require (as reflected in the invoice dated 18 October 2016), and that prior to Mr Muller purchasing them, he had obtained approval for their reimbursement if purchased.

The contract – implied terms

[115] I find that the following terms were implied into the Contract. These are terms that I am not satisfied the evidence demonstrates were actually discussed or were expressly agreed upon but I consider necessary for the reasonable or effective operation of the Contract:

  1. The hourly rate was the total amount payable to the Applicant by the Respondent and no annual leave, sick leave, superannuation or other amounts would be payable.
  2. The Applicant would perform the tasks directed by the Respondent and to the standard expected of the Respondent, as might be advised or directed from time to time.
  3. The Applicant would apply his professional skill to the tasks at hand.
  4. The Applicant would not delegate his work nor allow another person to perform his contracted obligations without prior permission.
  5. The Applicant would notify the Respondent if he was, or was likely to be, absent.
  6. The Applicant would supply his own equipment for photography and videography, save for equipment supplied or made available by the Respondent.
  7. The Applicant’s expenses would be paid, where approved, and any modest expenditure required discussion and agreement before the expense was incurred.
  8. The Applicant granted the Respondent a bare licence to use any photographic or video works he created for the purpose that they were created (such as publication on the Respondent’s website.).
  9. Termination of the Contract would be upon either party giving reasonable notice.

[116] While I consider the implied terms stated above are mostly uncontroversial, there are potential exceptions. I would make the following brief observations.

[117] In relation to the term concerning (non) payment of any amount in addition to the hourly rate for matters such as leave, it is unclear on the evidence whether it was specifically discussed or possibly just assumed as an obvious criteria, although given the time that has since elapsed since that initial conversation, this is not levelled as a criticism. It is for this reason I do not consider this term was expressly agreed. It would in any case appear to have been obvious to both parties after the first invoice was issued that, if either party had a different view, it would have been clear from then. Neither party suggested to the contrary.

[118] In relation to the term regarding the tasks to be performed and the standard at which they were to be undertaken, I am not satisfied the evidence discloses any specific discussion about those matters. That said, there was clearly discussion between the parties as to the needs of the Respondent. Those needs, which I accept were discussed, were content creation for the Respondent’s website and marketing, primarily being in relation to the Respondent’s business of selling woodworking tools.

[119] In relation to the term regarding notification for absences, while I am not satisfied such a term was discussed, I consider such a term is necessary where it was contemplated that work would be performed on specific days. The Applicant’s evidence asserted he was required to seek “permission” to be absent. As I noted in my findings, I do not accept there was such a requirement and, for completeness, I would not imply a term to that effect. If he did not work, he would not be paid.

[120] In relation to the term for delegation, the Respondent contended that the Applicant was free to delegate work and the Applicant contended the opposite. The matter is resolved by reason of the absence of an express term permitting delegation to (or, perhaps more realistically in the case before me, vicarious performance by) a third person. The law does not permit – without prior agreement – an agent to assign, delegate or to have performed those obligations for which personal skill and competence is required. 5 I consider that the performance of the photography and videography work (being the core functions for the Applicant) required personal performance. There being no prior (express) agreement permitting, it follows that a term permitting that very activity will not be implied.

[121] In relation to the term regarding the supply by the Applicant of his own equipment, such a term necessarily follows from the fact that while the Respondent supplied some limited equipment it did not appear comprehensive. So far as other equipment was required or the Applicant preferred to use it, he would supply that himself unless specific requests were made.

[122] In relation to the implied term for reimbursement, the Applicant’s written submissions contend there was a term that the Applicant “would be” reimbursed for expenses during his work. I do not consider the evidence reflected that was agreed upon and I do not consider it commercial – let alone necessary – to imply a term that the Applicant “would” be reimbursed for items in the absence of the Respondent first being notified before those costs were incurred.

[123] In relation to the term for the licensing of works, this follows from the absence of any express term dealing with intellectual property rights. While each party gave evidence that they considered that the Applicant did not retain any “intellectual property rights”, this is a conclusion or assumption by those parties and did not reflect any discussion, let alone an express term.

[124] Any photographs or videos created by Mr Muller are “works” within the meaning of the Copyright Act 1968 (Cth) (Copyright Act). To give a straight-forward example, if Mr Muller took a photograph – even one he was specifically instructed to take – that photograph is, under the Copyright Act, an “artistic work” for which Mr Muller is the “author”. As the author, Mr Muller is also the “owner” of the work unless modified by agreement: Copyright Act, s.35(2) – (3). While ss.35(4) – (6) of the Copyright Act allows for, in effect, automatic ownership of copyright by a person who is not the author (e.g. an employer, where there is an employee-employer relationship, or paintings commissioned for private purposes), I do not consider they apply unless the Applicant is an employee. Further, an assignment of copyright is of no effect unless it is in writing and it will not be implied. 6 There was no written assignment. By contrast, a licence need not be in writing and (in the absence of the Applicant being an employee) I consider it necessary for the operation of the Contract that an implied licence exist such that the Respondent can use the artistic works authored and owned by the Applicant for the purpose for which they were created.7

[125] For the term regarding notice upon termination, I consider an implied term of reasonable notice is a necessary term in circumstances where no express term was arrived at.

The contract – terms not included

[126] There were a number of other terms advanced, primarily by the Applicant in his written submissions, with many that I do not consider were terms of the Contract. They are:

  1. The Applicant’s miscellaneous duties that he was required to perform included:

(i) cleaning duties pursuant to a roster;

(ii) managing company meetings;

(iii) photography duties for other companies for which the Respondent would be paid.

  1. the Applicant was required to perform his duties personally and could not delegate tasks;
  2. the Applicant was unable to reject a direction to perform duties or a direction on how he should perform those duties;
  3. all the intellectual rights to the material created by the Applicant remained with the Respondent;
  4. the Applicant was required to present himself as an employee of the Respondent to third parties and other employees of the Respondent by:

(i) using a company email address and signature;

(ii) wearing a uniform with the Respondent’s branding;

(iii) bring referred as “staff”.

  1. the Applicant was required to work exclusively for the Respondent during weekdays;
  2. the Applicant was required to comply with the Respondent’s policies and procedures;
  3. the Applicant’s performance would be managed by the Respondent;
  4. the Applicant would be provided with the equipment needed for his work by the Respondent; and
  5. the Applicant would be reimbursed for expenses incurred during his work.

[127] I have addressed a number of these matters already. Of the list of terms above, I find that none of them were expressly discussed at the initial meeting(s) – other than as I have set out above – and could not be an express term of the Contract. I have also addressed some of these matters above regarding delegation, intellectual property, equipment supply, reimbursement of expenses, and management of performance (and tasks to be performed) above.

[128] The “exclusivity” term I consider misplaced – it is not necessary to imply it for the reasonable operation of the agreement and it was not discussed. Having regard to the express terms that the Applicant could perform business elsewhere, I do not consider it appropriate to imply a term inconsistent with an express term. I accept, however, that a consequence of the requirement for the Applicant to work for the Respondent during the periods agreed (initially 8:00am to 5:00pm, for three days in a week and later becoming five days) necessarily meant that the Applicant would not be working for anyone else during those periods. He was contracted to perform work on those days.

[129] For the other terms said to form part of the Contract, I also do not consider them necessary to be implied into the agreement for its reasonable operation, particularly where they were not discussed. On those matters, the Contract was – at least initially – silent.

The contractual variation

[130] I consider now to what extent the contractual terms above were modified or added to between the period of contractual formation and the variation of the Contract in January 2017 (Variation).

[131] It is uncontroversial, and I find, that the Contract was amended, commencing effective around January 2017, for Mr Muller to work five days instead of three days. These amendments were express, made orally. I accept Mr Haswell’s evidence that there was no discussion about any other aspects and I find there were no further express amendments.

[132] I have considered whether – to adopt the statement of Kiefel CJ, Keane and Edelman JJ at [42] in Personnel Contracting – there was an “imposition” by the Respondent of its “work practices” upon Mr Muller that “manifests the employer’s contractual right of control over the work situation” or whether Mr Muller’s “acceptance of the exercise of power” may show that the Respondent was “ceded the right to impose such practices”.

[133] This requires consideration of the conduct of the parties between formation of the Contract and its variation.

[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).

[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.

Characterisation of the contract

[137] The circumstances surrounding the entry into the Contract were relied upon by the parties for different reasons. The Applicant relies upon the fact that Mr Haswell was, in his email dated 14 September 2016, initially seeking to engage an employee, beginning part-time on a “time-structured” basis and most likely moving to full-time. I accept that this factor is suggestive that the relationship being sought by the Respondent was one where the degree of control he would exercise would reflect the degree of control present in an employer/employee relationship.

[138] For similar reasons, I consider the contractual requirement to work on fixed days for, in substance, fixed times conveys a greater sense of control by the Respondent and an indication that the Applicant was working in the business of the Respondent, rather than his own business. Initially, the number of days was three per week and changed to five.

[139] In my view, it is these terms which speak most strongly of an employment relationship, as they suggested a foundation where – from the Respondent’s perspective – it was paying a person to be available at set times to perform services supplied by the Respondent from time to time. In short, the Respondent was obliged to pay for fixed blocks of the Applicant’s time per week at a flat hourly rate, and it would appear improbable that the Respondent would have allowed the Applicant to sit around during idle times without being allocated other incidental work. This suggests that it was likely that in circumstances where the Respondent did not have core work immediately available to perform, or it had some other pressing priority, it might ask the Applicant to perform other tasks, such as taking the minutes of the meeting on 16 December 2016. There were hallmarks of this practice, at least the case by the time of the Variation.

[140] Further, the work to be undertaken by the Applicant was also to be performed personally. There was no express right of delegation and, as set out above, such a term cannot be implied. These are also matters suggestive of an employment relationship, although the authorities I referred to regarding the inability to imply a term of delegation were, I note, not matters concerning an employee relationship. Although I note that, in a practical sense, such delegation or performance by a third party was unlikely to happen. I say that because the Applicant was remunerated on what was essentially a fixed-time arrangement. He could only delegate work he was contracted to perform. If he delegated work, or arranged for someone else to perform that work for him, he would not be entitled to charge for additional work at the same time. Any work performed by a third party would, unless paid at a rate less than his own hourly rate, be remuneration that the Applicant would not receive. For completeness, I also consider that this is an answer to the Applicant’s evidence about his request in 2019 for his wife to perform work to enable deadlines to be met. In substance, what the Applicant was requesting at that time was for additional work to be undertaken, not simply that the existing work that the Applicant would charge for would be performed by her instead of him.

[141] Those aspects cannot be considered in isolation, however.

[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 8, other than it remained the case that work needed to be performed to a requisite standard.

[143] The terms of the Contract (unchanged on Variation) required the Applicant to perform specialised photography and videography work. I would make the observation that it is well-known that many photographers can operate as independent contractors or as employees. There is nothing inherent to the nature of photography work that determinately points one way or the other. The engagement of a photographer is certainly capable of – and frequently is – based as an independent contracting relationship but the same can be said of employee photographers. The mutually known background to the parties recorded that Mr Muller had been operating as a photographer for approximately 35 years. A significant majority of that period was as an independent contractor.

[144] The term of the Contract (unchanged on Variation) that Mr Muller would perform “marketing” tasks is perhaps closer on the spectrum to traditional employment than the more specialised profession of a photographer. However, in the context of the parties at the time, caution needs to be exercised in generalisations. The Respondent at the time was a very small business, with about five employees. As a small business, it is unsurprising that some tasks were outsourced simply because the business did not have the present time or expertise to perform them inhouse. The evidence shows that marketing functions themselves were being outsourced at the time to a third-party entity. The emails between the parties on 14-15 November 2016 reflects their respective comments on the cost of one of those arrangements.

[145] Notwithstanding that it was Mr Haswell’s initial intention to engage a photographer inhouse as an employee, in all the circumstances there is nothing in the terms regarding the photography/videography/marketing work, and the professional skill that Mr Muller would apply to them, that I consider points strongly in one direction or the other for the characterisation task.

[146] I consider that the issue of equipment points slightly more in favour of an independent contracting arrangement. Ordinarily, I would consider the supply of equipment – particularly high-value, specialist equipment – by the putative employee would be a greater indicator of an independent contracting arrangement. The cost of some other equipment was reimbursed by the Respondent but a number of those items nonetheless appeared to remain the property of the Applicant (albeit, being reimbursed for them). Muting the impact of this factor, however, is that some of that equipment (such as a computer) was supplied by the Respondent. I do not consider that the arrangements for reimbursement of (agreed) cost items points strongly in either direction, given the relatively modest value of those items.

[147] However, the supply of equipment is not itself inconsistent with an employment relationship. “In many forms of employment, employees provide their own uniform and bring their own tools to work.” 9 As noted, the Respondent was initially looking to engage a photographer inhouse and the evidence suggests that the equipment that would have likely been used would be a combination of (lower cost) equipment supplied by the Respondent or, more likely, the employee photographer using his own equipment and being reimbursed for costs from time to time.

[148] As to the “mode of remuneration” 10, “deduction of income tax”11, and the term for payment of a flat hourly rate with (any) GST, these features – together with the implied term that no amounts such as annual leave, sick leave and the like were payable – are suggestive of an independent contracting relationship. These matters were unchanged upon the Variation. The amounts received following the issuing of an invoice had no income tax deducted, which is also a factor suggestive of an independent contracting relationship.12 I do not consider that the requirement for the Applicant to notify the Respondent of his absence points in either direction.

[149] On the question of intellectual property, the express terms were silent on those matters. A consequence of this is that the Applicant retained ownership in the works he created (subject to the implied licence I have described), which is more strongly suggestive that those works are assets of the Applicant’s business. While that may be the legal position, however, in reality neither party expressly turned their mind upon the question in any discussion between them and both appeared to operate on a contrary assumption.

[150] At the commencement of the engagement in September 2016, Mr Muller had his own clients and business. This was a key reason why the parties – at Mr Muller’s initiation – agreed to describe Mr Muller as a “contractor” and to work initially at three days per week only to ensure that Mr Muller would be able to continue and preserve his business in that respect. In terms of the “own business” dichotomy, I also see no reason why the work of the Applicant for the Respondent, as contemplated by the Contract, would not improve the reputation and goodwill of Mr Muller’s existing photography business generally. However, it would appear that the contracted activities of the Applicant were more within the Respondent’s business, than the Applicant’s business.

[151] Nonetheless, as stated by Gordon J in Personnel Contracting, it should be recognised that “both employees and contractors can work “for the benefit of” their employers and principals respectively, and so that, “by itself”, cannot be a sufficient indication that a person is an employee” (original emphasis).

[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” 13 nor as a determinative factor, but as a factor relevant to the “whole of the contract” 14 and which, in this case, “can shed light on the objective understanding of the operative provisions of their contract”.15

[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” 16 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.

[156] When considering the totality of the relationship between the parties having regard to all the matters above, I conclude that the correct characterisation of the Contract as it was formed in around 23 September 2016 was that of an independent contracting arrangement. The characterisation was not changed by the Variation. Other than the increase of the days to be worked, I am not satisfied there is evidence that the parties expressly sought to alter to or detract from the terms of the Contract by the Variation and I am not satisfied from the evidence that there was a manifestation of control 17 that would other change the character of the Control by those practices, together with the Variation.

[157] It is for this reason that I find that the Applicant is not an employee and, accordingly, his application must be dismissed.

If the Applicant was an employee

[158] With some element of self-interest, I would briefly echo the observations of Logan J in Fair Work Ombudsman v Avert Logistics Pty Ltd [2022] FCA 841 18, which were to the effect that the matter before me was a harder one than the matter in Jamsek (or Personnel Contracting) appeared to be. With that observation, and having regard to the time and effort by the parties in litigating the matter to date, I would state my conclusions briefly in the event that I am wrong in relation to my primary conclusion above.

[159] Shortly stated, if Mr Muller was an employee then it is uncontroversial that he was “dismissed” for the purposes of s.385(a) and s.386 of the Act.

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Muller v Timbecon Pty Ltd (2022) FWC 1685 delivered 6 October 2022 per Bell DP