Fair work tests; volunteer or employee?

This is a most interesting case which contains an excellent summary of the legal principles which apply when the Fair Work Commission is required to determine whether a person is an employee of an organization or a volunteer member of it.

 

“Consideration

 

[46]    I have considered the submissions made by the parties and all the evidence in my determination of this matter and the conclusions I have reached.

 

[47]    Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (CFMMEU)2 and ZG Operations Australia Pty Ltd v Jamsek (ZG Operations)3 are the most recent High Court authorities in relation to the employment relationship.

 

[48]    These cases held that where the parties’ relationship was comprehensively committed to a written contract, the validity of which was not challenged as a sham, and the terms of which were not varied, waived or the subject of an estoppel – the question of whether a person was an employee or an independent contractor was to be resolved solely by a consideration of the terms of the contract and not by reference to performance of the contract.4

 

[49]    Where the terms of the relationship between the parties has not been committed comprehensively to a written agreement, the characterisation of a relationship as being either one of employment or one of principal and independent contractor is to be determined by reference to “the totality of the relationship between the parties”.5 In examining the totality of the relationship between the parties, relevant matters include 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 enterprise6 and the existence of a right of control by a putative employer over the activities of the putative employee.7

 

[50]    Other matters which may be relevant in determining the nature of the relationship include the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work, the provision for holidays, the deduction of income tax and the delegation of work.8

 

[51]    In the current case, the dispute is not whether Mr Mifsud and Mr Webster performed work for the FRNSW Band as employees or independent contractors, but rather whether Mr Mifsud and Mr Webster were employees or volunteers.

 

[52]    It is well established that an employment relationship exists only where a person agrees to perform work pursuant to a ‘contract of service’ or contract of employment. If there is no contract of employment identified between the parties, then Mr Mifsud and Mr Webster cannot be employees of the Respondent.9

 

[53]    Numerous decisions of this Commission refer to the basic essential requirements for an agreement to be legally enforceable as a contract as being:

 

(a)      The parties must have reached agreement as to the terms of the contract.

(b)     The agreement must involve the provision of “consideration” by each party.

 

 

 

(c)      The agreement must be intended by the parties to be legally enforceable.

(d)     The terms of the agreement must be certain and complete and there must be no element of illegality or any other vitiating factor that would deprive the agreement of legal effect.10

 

[54]    Prior to the Respondent being incorporated on 26 May 2022, the FRNSW grant money that was used to pay band members was administered by the Band Manager and Conductor. Mr Mifsud submits that he was an employee of the FRNSW Band from October 1986. However this is not possible because at that time, the FRNSW Band was not a legal entity, but a group of individuals who were led by the Band Manager and Conductor.

 

[55]    Mr Mifsud and Mr Webster do not allege that prior to 26 May 2022, their employer was the Band Manager and/or Conductor, or any other person. There is no evidence before me which establishes that there was a contract of employment between each of Mr Mifsud and Mr Webster and another legal person. I have therefore considered the matter on the basis that the alleged employment relationship commenced when the FRNSW Band was incorporated on 26 May 2022.

 

[56]    The effect of incorporation appears to be that Mr Mifsud and Mr Webster became members of the Respondent on 26 May 2022 as existing band members were regarded as members of the ‘unincorporated body’ immediately before registration of the Respondent and as such were taken to be a members of the Respondent upon incorporation under paragraph 4 of the Constitution. The Constitution does not appear to limit membership of the Respondent to band members only, however it appears from reading both the Band Protocol and Constitution together that all band members are members of the Respondent.

 

[57]    Mr Mifsud and Mr Webster claim that the contract of employment is the Band Protocol. The Band Protocol has been revised a number of times since Mr Mifsud and Mr Webster have been members of the FRNSW Band and existed prior to the Respondent being incorporated. Mr Webster’s evidence is that he signed two Band Protocols, whereas Mr Mifsud said he had signed about three Band Protocols. Mr Mifsud’s evidence was that the changes that have been made to the various versions of the Band Protocol over the years have not been significant. The most recent version of the Band Protocol which is in evidence came into existence after the FRNSW Band was incorporated.

 

[58]    The Band Protocol is referred to in the Respondent’s Constitution. The Constitution provides that the Band Protocol outlines the rules and requirements for a Band member, that the Committee may from time to time amend the Band Protocol as it sees fit and that any breach by a Band member of the Band Protocol will be deemed to be a breach by that member of the Constitution. Mr Mifsud has raised issues in relation to the validity of the Constitution however there is no evidence before me that establishes the Constitution is invalid.

 

[59]    On the face of the document, the Band Protocol is not a contract of employment. It is not the product of a negotiation between each of Mr Mifsud and Mr Webster and the Respondent which has resulted in an offer being made by the Respondent which has been accepted by Mr Mifsud and Mr Webster.

 

 

 

[60]    The Band Protocol is an instrument created by the Respondent pursuant to paragraph 47 of the Constitution. Its purpose is to outline the rules and requirements for each band member. It was devised, apparently without input from its members, and presented to members as an obligation of joining or remaining in the Band. As the Constitution permits the Committee to amend the Band Protocol from time to time, the Respondent is able to do this unilaterally. This is different to a contact of employment, which can only be varied by agreement between the parties. According to the evidence, Mr Mifsud and Mr Webster and other Band members were informed that there was no obligation to sign the Band Protocol, but if they did not, they could not be in the Band.

 

[61]    The Band Protocol refers to ‘membership’ of the Band, not employment. It provides for ‘honorariums’ rather than wages. Whether an agreement is intended by the parties to be legally enforceable depends upon the objective intentions of the parties.11 The evidence shows that it was the intention of the Respondent to create a legal entity to satisfy the funding requirements of FRNSW and for band members to participate in the Band as members of the Respondent rather than employees. Both Mr Mifsud and Mr Webster had performed in bands before joining the FRNSW Band. They both clearly have a love for music and performance. Mr Mifsud said that the FRNSW Band was more prestigious than other bands that he had performed in and Mr Webster spoke of wanting to be in the FRNSW Band because it was regarded as a good band. Although Mr Webster was partly attracted to playing in the Band because of the payment provided, both Mr Webster and Mr Mifsud confirmed that the playing in the Band was not their major source of income. They both worked in roles outside of the music and live performance industry. The Respondent produced evidence that shows Mr Mifsud was paid $2,460 for the 2021/2022 financial year and $3,510 for the 2022/2023 financial year and further that Mr Webster was paid $855 and $1,455 for the same periods.

 

[62]    There is no evidence that supports a finding that Mr Webster and Mr Mifsud each commenced playing in the band with the intention of entering into a legally enforceable contract. Further this is simply not possible given that the Band was not a legal entity until May 2022. There is no evidence that at the time of incorporation, Mr Webster and Mr Mifsud decided at that stage that they would enter into a legally enforceable contract with the Respondent or that there was any negotiation between each of them and the Respondent in relation to terms and conditions of employment.

 

[63]    In relation to Mr Mifsud’s role as Librarian, Mr Mifsud’s evidence was that a person was ‘elected’ to this position at every AGM until incorporation, then a person was appointed to this position by the Committee. Clause 5.2.1 of the Band Protocol provides that nominations for the position of Librarian will be called for at the AGM from persons interested in holding the position for the coming twelve month period or may be appointed by the Respondent. Since at least 1986, the role of Librarian was treated by both the FRNSW Band (then the Respondent when it came into existence) and Mr Mifsud as an office rather than an employee.

 

[64]    Mr Mifsud ceased being the Librarian when he was removed from that position by the Committee on 23 August 2023. Mr Mifsud and Mr Webster ceased performing in the FRNSW Band when they were expelled as members from the Association under Clause 14 of the Constitution. Although there is a dispute between the parties about whether the expulsion was justified or warranted, there is a clear power under the Constitution for the Respondent to expel members. It is this power that the Respondent relied upon in removing Mr Mifsud and Mr

 

 

 

Webster from the FRNSW Band. The Respondent did not purport to terminate the employment of Mr Mifsud and Mr Webster.

 

[65]    I accept the submissions of Mr Mifsud and Mr Webster that some of the obligations under the Band Protocol are akin to the obligations of an employee towards their employer. These include requirements in relation to attendance, following directions, taking leave and the wearing of a uniform. I also accept that the payment of expenses, and provision of equipment (such uniforms and instruments) are common features of an employment relationship.

 

[66]    However, there were aspects of the arrangement which were inconsistent with the existence of an employment relationship, such as the payment of honorariums rather than wages and the fact that these payments were not declared to the Australian Tax Office by either Mr Mifsud or Mr Webster. The honorariums were set at a fixed rate which did not increase for many years and were significantly less than the amount that would be paid to Mr Mifsud or Mr Webster if they were employees. In this regard, I note that the minimum hourly rate for a casual musician in Clause 40.1 of the Live Performance Award 2020 is $59.41. The quantum of the honorarium was determined by the Executive Officer under Clause 14.1 of the Band Protocol. It was not subject to negotiation in the way that remuneration would be in an employment relationship.

 

[67]    The Respondent did not deduct tax from the payments or pay superannuation. The expected attendance rate at rehearsals was 80%, not including leave. This is in contrast to an employee who would be expected to attend work if not taking approved leave and would be likely to face disciplinary action in circumstances of any absences while not on approved leave. There was also evidence that although employees were expected to advise the Respondent if they were not attending a rehearsal, this did not always occur which is inconsistent with the usual expectations of an employment relationship.

 

[68]    In any event, matters which may be indicia of an employment relationship are of no consequence if the existence of a contract of employment cannot be established.

 

[69]    In my view the only aspect of the relationship between the parties which supports a contractual relationship was the provision of ‘consideration’ by each party. This requirement was met by the Respondent’s payment of $15 per hour to Mr Mifsud and Mr Webster for rehearsals and performances and the payment of $15 per hour and a $2000 annual retainer to Mr Mifsud in relation to Librarian duties.

 

[70]    However I do not accept that the parties reached agreement as to the terms of the contract, that the terms of the agreement are certain and complete and that the agreement is intended by the parties to be legally enforceable. This is because Mr Mifsud or Mr Webster rely upon the Band Protocol as being the contract in circumstances where the Band Protocol is an instrument created by the Respondent under the Constitution which can be unilaterally varied and which applies to members rather than employees. In my view the Band Protocol is not a contract between each of Mr Mifsud and Mr Webster and the Respondent. Mr Mifsud and Mr Webster have not pointed to any other written documents or verbal agreements that they say constitutes a contract of employment.

 

Conclusion

 

 

 

 

[71]    As I have found that the basic requirements for an agreement to be legally enforceable as a contract have not been met, it follows that there was no contract of employment between each of Mr Mifsud and Mr Webster and the Respondent. Mr Mifsud and Mr Webster were therefore not employees of the Respondent and are not protected from unfair dismissal. I dismiss the applications, but in doing so, wish to make some final observations in relation to the applications.

 

[72]    The circumstances that bring these matters before the Commission are most unfortunate. It appears that problems started to emerge in the FRNSW Band after it was incorporated as a requirement of receiving ongoing funding from FRNSW. Given that FRNSW is a NSW government agency, it is likely that the requirement for incorporation was to ensure that the funds it provides to the FRNSW Band were accounted for in accordance with contemporary governance and compliance standards.

 

[73]    There were always rules and requirements that Band members were required to follow in relation to attendance, rehearsals and uniform in various versions of the Band Protocol. However, with incorporation came a Committee which had powers that previously were not able to be exercised by the FRNSW Band leaders. These powers were used to expel Mr Mifsud and Mr Webster from the Band. For Mr Mifsud, this ended a 37 year association with the Band which started soon after he left school. Whatever the reasons for the expulsion, it is likely that it caused significant distress to both Mr Mifsud and Mr Webster. While it may be understandable that Mr Mifsud and Mr Webster wish to challenge the decision to expel them the Commission is not the appropriate forum, given my findings that Mr Mifsud and Mr Webster were not employees. However these findings should not be construed by the Respondent or FRNSW as endorsing their approach to engage band members as volunteers.

 

[74]    The FRNSW Band has a long history and has been financially supported by FRNSW for many years. It is clear from the objects of the Respondent’s constitution that the FRNSW Band plays an essential role in promoting FRNSW, creating public awareness in respect of fire safety and performing at FRNSW ceremonies, parades, marches and concerts and at community functions. This is highly skilled, valuable and important work and raises the question of whether it is appropriate to have volunteers undertaking such work particularly as other NSW Government agencies have adopted an employment model with respect to the engagement of band members. At a time that FRNSW has sought to modernise the structure of the FRNSW Band, it may be appropriate to review its approach to the remuneration and engagement of its musicians, without whom the FRNSW Band would not be able to continue making its significant contribution to FRNSW and the wider community.”

 

Mifsud & another v Fire And Rescue NSW Band Incorporated (2024) FWC 853 delivered 3 April 2024 per Wright DP