Today I have come across this decision of the Federal Circuit Court dealing with a general protections case which involved at first instance a need to determine whether the applicant was an employee or a contractor. The decision is a good summary of the basic elements of how this issue is resolved by the courts on a factual basis.
“THE COURT ORDERS ON A FINAL BASIS:
- That the Application filed 17 August 2018 is dismissed.
REASONS FOR JUDGMENT
(Delivered Ex tempore)
- Around 11 October 2017, the Applicant, Philip Parker, contacted Michael Gleeson inquiring about a position of which he had become aware. Mr Gleeson was a director of the three Respondents in this matter; those three Respondents being HG Innovations Pty Ltd, Alpha Financial Services Pty Ltd and Rideshare Solutions Pty Ltd. According to the Applicant, Mr Gleeson explained that he was looking for a “gun finance broker” to join his team in a finance, sales role.
- The Applicant said that Mr Gleeson explained that the position will be primarily to handle finance leads from his advertisement on the Uber marketplace for a business called Rideshare Solutions which helped Uber drivers secure automotive finance on vehicles.
- After this discussion, Mr Gleeson received an email from the Applicant that attached his resume. On 18 October 2017, the Applicant sent to the Respondents his ABN number. Mr Gleeson said on 21 October 2017, he had a conversation with the Applicant relating to his engagement. He said that they discussed the remuneration package and then he forwarded an email to the Applicant. That email is a very significant document. It is marked as MG2 to the affidavit of Mr Gleeson.
- Relevantly, the document says this by Mr Gleeson to the Applicant:
My thought would be to set up a contractor agreement like we do with other brokers on the standard package but with a twist around the Rideshare Solutions/Rentals business.
$1K a week
15% of finance deals you write from our leads
40 % of deals you find and settle yourself
$ figure for rent2own deals you get
$ figure for rental contracts on the road (or % of rental income)
other opportunities to be discussed.
I have potential opportunities from other dealerships that we can discuss for short term money if you need as well and I am about to open Southside MG at Moorooka next week as discussed and am launching a car brokerage from the Springwood site in the next period.
- On 23 October 2017, the Applicant replied to Mr Gleeson. In that email, he said this:
I’m excited by the opportunity and challenge of innovation in this sector. I have a few ideas to run by you and think we can definitely grow Rideshare Solutions into a great profit centre. I’m okay with the $1000 retainer. Is this excluding GST? When would you want to start? Would be great if I could see a contract and first pay this week if possible. I did get interviewed on Friday by Michael from Westpoint and I think we hit it off. He was going to reference me and come back to me with an offer today. Ideally, as I need to earn some cash in the short term, if I come on board with you, maybe you could offer me to locum for him occasionally as I think he is just short staffed for only a bit and this would substitute my commission shortfall for a bit while we get Rideshare Solutions booming.
- The next day, Mr Gleeson sent a standard contractor agreement to the Applicant. The standard contractor agreement, that was sent, did have the name of another person in the areas for the person’s particulars. The Applicant gave evidence today that, because it had someone else’s name, he didn’t bother to open it, or read it, because he thought it was private.
- As with a lot of the Applicant’s evidence, I totally reject this explanation. It was obvious the subject of the email was a standard contractor agreement and that Mr Gleeson, having given the terms of the agreement, was giving the Applicant the standard contractor agreement so that they could discuss at a later time. As I said, the Applicant had already given the ABN number to the Respondents.
- As can be seen from this evidence so far, the exact role was somewhat inchoate. This is not unexpected given that the business was, to use the words of Mr Gleeson, a “startup”. The Applicant himself conceded, in his evidence today, that the role was different at the end of his time than it was at the beginning. This also is consistent with what was said in those emails at the beginning that this was an opportunity to do something quite different.
- The Applicant sent a text message to the Respondent on 2 November 2017 which, relevantly, read:
Mate, if you don’t think this will work, I understand. Just give me the heads up. I’m not interested in brokering and I’m invested in the rideshare space so I will go do my own thing.
- The Applicant was paid $1000 every week. Whilst Mr Gleeson concedes that he didn’t ever answer the question as to whether the $1000 was inclusive of GST, given that the payment was made, and made into the Applicant’s bank account every week without fail, it is obvious that the question was answered in the positive. Every month, the Applicant would calculate what it was that his commissions were and he would send that sum to the Respondent and the Respondent would pay that sum.
- It would seem on the evidence that the Applicant wanted to have other people work with him to assist him and that those people would be part of his contract. They were a woman called Monica and a person called Andrew. At one stage, the Applicant asked for those two persons to be put on the books as PAYG employees.
- On 31 May 2018, the Applicant wrote an email which was received by Mr Gleeson. It read:
missed two calls,
5 booking requests online
2 people texting me from referrals as early as 6 am this morning.
4 current renters looking for available cars for their friends
5 walk ins
Problem: Well it’s a good problem to have however as Monica has been given 40 fines to stat declare and they are all time sensitive so that leaves me alone to prepare the rego requests and booked hire licence transfers load the cars to RCM, key tag and store books and spares and then rent them. So even though I have 8 camrys here I’ve only managed to register 4 and will have to wait till the phone stops to get the rest of the paperwork done.
I understand everyone is busy but if you have any ideas to help me out other than pulling a 14 hour day that would be great.
If you’re wondering why we are busy many of the large providers are struggling to handle the new laws so they are down sizing or just not answering the phone. Keyz have also started to run out of cars.
Should I increase prices?
- Mr Gleeson emailed back the next morning saying:
Sounds like a job to me…
If too hard -let’s just shut the gate and close up.
I’ll sort out next week.
I’m easy but sick of the whinging for 79 rental cars
Let’s do a handover this arvo with you and Monika and we’ll move on.
Divert phones to my mobile and we’ll do what we did for the first 2 years.
- That was, in effect, a termination of whatever the arrangement the Applicant and the Respondent had.
- On 17 August 2018, the Applicant filed an application in this Court alleging that the Respondent had engaged in adverse action; that is, that he was dismissed because he made a complaint. In other words, what the Respondents have done is to terminate his employment because he was, to use the words of the Respondent, whinging about 79 rental cars.
- The law is quite clear. Adverse action occurs when a person acts in a way such as, to terminate the person’s employment or to put the other person in a position that is prejudicial to that other person. If adverse action occurs because someone has exercised a workplace right, then, pursuant to s.340 of the Fair Work Act 2009 (Cth) (“the FW Act”), there is a breach of the Act. But for a complaint to amount to a workplace right that had been exercised, it must be with regards to a complaint about employment; that is, an employee complaining to the employer.
- In this case, the Applicant has said that he was the employee of the Respondents; the Respondents have denied this and have claimed that the Applicant was not an employee.
- It is trite to say that it is for the Applicant, who has brought this claim, to prove that he was an employee.
- One does then have to go through all of the circumstances to ascertain the status of the Applicant.
- The Applicant, in effect, concedes that he had never asked for any form for PAYG tax to be taken out of the amount paid to him by the Respondents; that he had never asked for superannuation to be paid into any account for him; and, that he had not ever asked to be an employee.
- The Applicant attests in his affidavit that he knew that he was under a contract, but he claims that it was a sham contract. He says that he had opportunity to raise these matters but knew that if he did raise those matters with the Respondents and, in particular, Mr Gleeson, that he would have had his work terminated on the spot. He relies upon the indicia of the relationship he had with the Respondents to show that the relationship was one of employer and employee, notwithstanding what the Respondents would say.
- To this point, he correctly states that, under the law, a Court must look at all of the circumstances and ask themselves the question as to whether the person was working in their own business or were they really working in the business of another.
- The Applicant claims that he was the general manager of the Respondents. He says that, as a general manager, he must be employed.
- The Applicant says that Mr Gleeson referred to the Applicant being a rental car broker and that there is no such position known to law and, so, therefore, the Applicant must be an employee.
- The Applicant points to what he says is the degree of control that Mr Gleeson had; that is, that Mr Gleeson could direct him to do things and that the Applicant would have to obey.
- The Applicant says that the Respondent was the ultimate paymaster for him.
- The Applicant says that he had to comply with policies.
- The Applicant says that he had no capacity to bargain and that Mr Gleeson had all the power.
- The Applicant said that he had no other business interests, and even if he had, there was nothing to say that he was able to gain any revenue from them.
- The Applicant also points to the fact that he was given a uniform.
- The Applicant and the Respondents have, to my mind, properly quoted the law and properly quoted what it is that the Court must actually look for in assessing whether or not there was a true employee-employer relationship.
- It is instructive then to really go through the history. I have already spoken of the way in which the Applicant came to perform duties and it is clear that Mr Gleeson had offered a contract arrangement; that is, that the Applicant would work for a retainer of $1000 a week and then there would be specific percentages of trades and then they were to discuss other figures for rent to own deals or rental contracts and so on.
- The Applicant was obviously accepting this arrangement because he gave his ABN number and he asked whether the figure excluded GST. This is important because a wage does not attract GST, but, if it is that a contractor is asking for payment of services, they must charge the GST and the person who has contracted the contractor must pay the GST. It would seem then that the payment was properly $1000 including GST, which would equate to $909 as far as the actual payment plus $91 GST – rounding up figures.
- The contract that was sent to the Applicant was a standard contractor’s contract. The Applicant did not ever ask for an employment contract. He would seem to have not made any reply to having been sent that contract in the first place. However, one can see that Mr Gleeson has asked his general manager, a Mr Doug Taylor, on 3 December 2017, this question:
Did we end up getting the contractor agreement signed in the Phil entity? We will need some invoices as well at some stage.
- Mr Taylor then wrote later that day, 3 December 2017 at 7.12 to both Mr Gleeson and Mr Parker where he said:
No contractor agreement in place yet, can organise this week. Just confirm entity we want to put it in mate.
Phil, can you send me your entity and abn etc to prepare it in please.
The Applicant’s reply, some 27 minutes later, it was:
Probably just go sole trader till June 30. Is it a big deal to switch to company/trust later?
- It does not look as though anything further was done on this. Mr Gleeson said that this was a matter for Mr Taylor to chase up as that was Mr Taylor’s part to play in the company. But he says, as the person who realistically owns the business, it is something that he should have seen to.
- However, the lack of the written agreement does not derogate at all from this because it would seem that the Respondent paid the Applicant the $1000 retainer and the Respondent also paid the Applicant whatever it was that the Applicant said at the end of the month he had earned by way of commission or any other payment. In effect, these communications as to what the Applicant earned by way of commissions and other arrangements were the equivalent of invoices, even though they weren’t formally that.
- So it would seem that the parties had agreed on the contract and were both acting in accordance with this. I had previously spoken of the woman Monica and the other person Andrew. It would seem, at the time that Monica came on board, she was in a romantic relationship with the Applicant. On 22 February 2018, the Applicant wrote to Mr Gleeson and said in an email, amongst other things:
Also can you put the $400 for Monika’s services in one lump with mine moving forward as im going to transition to a partnership abn for tax off setting this year.
- That would indicate what the relationship between the parties was. On 28 April 2018, the Applicant wrote to Mr Gleeson with the subject heading, Putting Monica and Andrew on the Books PAYG. He wrote:
Can we chat about this soon.
I am fine to stay as we are as I control the work I do and have other business ventures but they don’t and I think it would be good to consider moving them over.
- On 31 May 2018, before the Applicant had sent the email (that led to the end of the working relationship between the Applicant and the Respondents), the Applicant wrote to Mr Gleeson in these terms:
Monika has said that you have only paid her $400 can you please correct this to the $1,000 as I promised this to her. I am arranging for a singular ABN for our written contract for you so this will mean you can claim GST. It will actually work out to be $47,272.73 EXC GST per year or $52,000 including for you and ill ensure to back invoice you for everything before EOFY.
Once again, we definitely need to sit down and nut out the small details on paper…
- Those communications clearly show what the employment relationship was at that time.
- The evidence from the Applicant was, in many ways, very unsatisfactory. He spoke of the title “general manager” that he said that he had. He said that he was employed as a general manager and that, therefore, he was working for the company. However, there is an email that was sent by Mr Gleeson to a number of people associated with the company, but specifically to the Applicant. This was written on 17 November 2017 around the same time of some of those other emails that I had spoken of earlier. Mr Gleeson wrote:
Many apologies it has taken me this long to reply to this email trail
I have been away from the office and only just catching up and have no phone access currently
On behalf of Rideshare Rentals please take this apology for wasting your collectively time
Somewhere along the line Phil (the Applicant) has clearly mistaken my message to investigate the current legislation and prepare a business model to see if we will continue – not reinvent and take over our business.
This report is yet to be furnished to me and as such please do not accept any direction or a request from Phil until further notice if ever.
The system for vehicles and preparation will remain with current lines…
Phil- I will discuss with you but can I AGAIN ask that you slow down and don’t waste staff time until we have discussed. I don’t need to repeat this again. The girls have much more on their plate then random requests without proper authority. I understand your trying to help but your causing more grief than good currently.
Please also be aware the rental cars are not YOURS and are in fact HG Innovation and play a small role in a much bigger picture that we are setting up and I will not tolerate a system of not being followed. The RISK v Reward we spoke of is tipping against you.
I trust I am very clear here and happy to discuss with all and sundry when back in the office and have phone access.
- It would seem that if the Applicant was the general manager then he did have the right to talk to, and request other information from, other employees. But, clearly, Mr Gleeson is letting everybody know that that is not the case; that the Applicant doesn’t have the authority because he is not any employee of the business; he is a contractor who is doing his own work. That seems to be clear from the reply that the Applicant gave to this email some 35 minutes later:
We have spoken about registering this car USED Audi Q7 for UBER. Perhaps I should have let you know I will do it today. Understand the business modelling but we currently don’t have any used cars on the list other than a Camry and a I30 that were already registered. We have spoken at length about getting 20 cars ready irrespective of any report. I am using the channels you provided to me and was under the impression I had the authority to request cars be registered.
My sincerest apologies that I was unclear.
Linda was just asking about it as its different. The girls just need the CTP class added to a dropdown box. Trying the systems out is part of the investigation.
Will Paul be arranging for my cars to be registered as well?
I need clarity on Dara and where you want me.
I am a bit a taken back by this email [sic].
Trying my best to be fluid, I don’t want to disrupt anything but this is new water and some processes are going to need to be forged which is why I thought I was hired.
A lot is changing and I apologise if it seems I am taking over, just trying to get a handle on the rental side and get it right from the start. I would have preferred you email me direct with your opinions on my performance.
Ill provide my report Monday as promised. Given your email I have removed my title from my email and will await your discussion surrounding my future employment.
Lets put something on paper so in your absence I can refer to something surrounding my duties and responsibilities.
- Two things are evident from this. Before this time, the Applicant was putting the title general manager at the end of his email signature block. In the email that he sent on 17 November at 4.42, he said that he will take that off the email and he accordingly does it at the end of that particular email. This, to me, is an indication that the Applicant realised that he is not the general manager, that he does not have the authority regarding the business and that he had, in effect, overstepped his mark because he was a contractor to do what it was that he was contracted to do and that was all.
- The other aspect is that he asked whether Paul will be arranging for his cars to be registered as well. The reference to his cars shows that there is something other than simply the business of the Respondents that is going on, because, one would think, that the person Paul would be registering every car of the business otherwise. Strangely enough, though, the evidence of Mr Gleeson before me today was that the Applicant gave himself the title of general manager. This was not a title that the Respondents had ever given to him. He simply gave it to himself.
- What is interesting in the email of 17 November is that the Applicant not only takes away that title but says that the Respondent or Mr Gleeson and he should put something in paper so that he can refer to something surrounding his duties and responsibilities. That was something that the Applicant was putting on his plate to start with Mr Gleeson. On the evidence before me, that was never done. But strangely enough, in other emails sent after this time, the Applicant has started referring to himself again as the general manager. He certainly has done so in an email on 26 April where he talked about putting Monica and Andrew on the books. There seems to be no reason why he has done that and there is no explanation as to how it is that the email that was written in November 2017 (where he voluntarily took the general manager title away from himself) has been now superseded with some other authority that lets him call himself “general manager” again.
- In evidence before me today, the Applicant said that he removed the title general manager as a form of protest or complaint about the way in which he was treated by Mr Gleeson in that email that he had sent 35 minutes previously. I do not accept this explanation at all. It does not make sense.
- The other aspect is that the Applicant said that he feared that if he had ever asked Mr Gleeson to make him an employee that he would have been fired immediately because Mr Gleeson was engaging in sham contracting. The Applicant said that, by asking him, he would have, in effect, blown the whistle and caused Mr Gleeson to fire him – or at least that was his fear.
- That explanation also does not make any sense when one looks at the email of 26 April 2018 where it is that the Applicant is asking that the persons Monica and Andrew, who are on contracts, be put on the books. It beggars belief that the Applicant would have the courage to ask a person, whom he truly believes is engaging in sham contracting, to put two people who are on these “sham contracts” into full time employment – or at least part time employment – but he is too scared to ask for himself. I do not accept the evidence of the Applicant on that point. I do accept the evidence of Mr Gleeson who said, quite candidly in his cross-examination by the Applicant, that:
If you had wanted to be an employee, I would have put you on as an employee.
- The Applicant has said that when he said to Mr Gleeson that the words, “I am fine to stay as we are as I control the work I do and have other business ventures,” he was lying to Mr Gleeson. He said that this was the way in which he knew that if he said that he had other business ventures, this would keep his position safe.
- I do not accept that evidence either. It is nonsensical. It is also contrary to the un-contradicted evidence of Mr Gleeson who, when asked by the Applicant as to this question, “It is true, isn’t it, that I only ever rented out HG vehicles?” Mr Gleeson answered, “No, you also rented out your own Jaguar.” That answer was not challenged. That is consistent with what the Applicant has written in the email of 26 April 2018.
- The Applicant has claimed that he did not have the capacity to bargain and that Mr Gleeson had all the power, yet, in a number of these emails, Mr Gleeson says that he is happy to discuss matters. The Applicant himself says, “Can we chat about this soon,” and, “We need to nut these things out.” It does not seem to me, in any way, that these emails display or illustrate an incapacity to bargain.
- The Applicant says that the Respondent was the ultimate paymaster. Well, that must be so because the Respondent has contracted the Applicant to do work. The Applicant is on the retainer and is paid and when the Applicant tells the Respondents every month how much work he has done and what it is that he is owed, he is paid.
- The Applicant attempted to hint that, originally, there were two aspects to his job: one working for the Respondents as a wage earner and employee and another to be the broker. He attempted to infer that, for the former position, he was an employee and for the latter position he was a contractor. If that were so then one could look at all of those things that had been discussed in the beginning as being evidence of the contractual nature of his brokerage business. But upon his relinquishing the broker aspect of his duties in November, he was attempting to infer that he then became an employee as he was getting the wage and that both parties knew that.
- I reject that explanation if it were that this was what the Applicant was trying to convey.
- Generally, as I said, I did find his evidence unsatisfactory. I listened very carefully to the way in which he answered questions and I also watched him very carefully over the monitor. I have the benefit of actually seeing him in a far better way than I would if he had been in the witness box. Many of the answers that he gave were answers where, if the question was too hard, he was simply making an answer up on the spot. An example of that was that even though he had seen other employees transition from contracts to employment contracts, he didn’t write or ask Mr Gleeson for that to happen to him because he said that he met with other employees who “gave me the lowdown on how to stay employed in this place”.
It seems to me, when looking at all of these circumstances, namely, the Applicant never asking about his tax, never asking for his superannuation,