The legal test of employees, agents and volunteers

This extract from a recent decision of the Fair Work Commission in an unfair dismissal case contains a very useful summary of the legal test which distinguishes the relationship of employer and employee from others such as principal and agent and host and volunteer.

“Consideration

 

[35]    Part 3-2 of the Act concerns unfair dismissal protections which apply to a national system employee. An employee means a national system employee26 and the Object of the Part concerns employers and employees.27

 

[36]    Section 382 of the Act provides that a person is protected from unfair dismissal, if at the time of being dismissed the person met the minimum employment period and an industrial instrument applied or their annual rate of earnings is less than the high-income threshold. Section 382 refers to a person that is dismissed and certain conditions apply. Relevantly s.385 of the Act provides that in order for the Commission to be satisfied a person has been unfairly dismissed the person firstly needs to havebeen dismissed. The threshold issue is whether the person was dismissed from their employment as defined pursuant to s.386 of the Act. Therefore, the Unfair Dismissal protections are for employees that have been dismissed.

 

[37]    Mr McClelland is a natural person, operating as a sole trader in New South Wales. An employee of McClelland, Matthew Laird, trading as Wildwalks would be a national system employee. Mr Lake commenced his submissions by raising the question whether he was an employee or independent contractor. Having assessed the materials tendered by both parties, the relationship is unlikely to be one of principal and independent contractor.

 

[38]    The legal principles of whether a person is an employee or independent contractor was considered by the High Court in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd 28(Personnel Contracting) and ZG Operations Australia Pty Ltd v Jasek29 (Jamsek). Where the rights and duties of the persons (independent contractor and principal) are exclusively in a written contract and the terms are not challenged as a sham or varied, the contract is to be the decisive factor.30 The central premise is the obligations of the parties under the contract at the time the contract was entered into, and not how the relationship has “come to play out in practice but bearing no necessary connection to the contractual obligations of the parties.”31 Established principles of contractual interpretation are important32 and consideration of subsequent conduct is for the purpose of assessing legal rights and obligations.33 The High Court further made observations of the judgement in Stevens v Brodribb Sawmilling Co Pty Ltd (Stevens),34 where the totality of the relationship must be considered finding that the discussion was to emphasise the right of one party to control another was not the only factor, but it also was not an invitation to broaden the inquiry beyond contractual rights and duties. The Court noted that in Stevens the relationship was not confirmed in writing.35

 

[39]    In this matter, no rights and obligations were reduced to writing prior to the commencement of the relationship, nor is there any evidence of any verbal agreement to engage as principal and sub-contractor. The facts do not support a principal and sub-contractor relationship, nor do the parties advocate that such a relationship was formed.

 

[40]    Mr Lake has made this application with the objective of seeking a remedy for unfair dismissal. To access a remedy, a person has the protections if they have been dismissed. An employee can be dismissed. Mr McClelland submits that Mr Lake was a volunteer and not an employee. Volunteers are not captured by the protections for unfair dismissal.

 

[41]    It is not in dispute that Mr Lake applied his professional skills (his labour) to sub-edit the digital Magazine held on the bushwalk website, a website owned by Mr McClelland. Mr Lake submits that the payment of $1 per year was the remuneration provided for his labour and formed an employment relationship. Under the Act, in an employment relationship, an employee is entitled to a minimum wage, the National Employment Standards and any terms that may be applicable under any modern award or enterprise agreement where it applies. Neither party identified a modern award or enterprise agreement, clearly no minimum wage applied over the course of the relationship and no application of the National Employment Standards was evident.

 

[42]    Where there is an employment relationship, the parties are subject to the minimum conditions under the Act, even where the parties agree to conditions less than the minimum required. Unpaid work or conditions less than those prescribed by the Act may only be permissible where there is no employment relationship.

 

[43]    In 2013, after reading the first edition of the digital Bushwalk Magazine, Mr Lake contacted Mr McClelland offering his services as a volunteer to help improve the quality of the Magazine. The evidence shows that Mr Lake was motivated by their shared interest in bushwalking and environmental conservation. It is reasonable to conclude on the evidence of the parties that remuneration at this stage was not a motivator, instead the motivations were altruistic.

 

[44]    It was not until mid 2015 that Mr Lake expressed his ongoing enjoyment of sub-editing each edition and he proposed to invoice Mr McClelland $1 per edition, a small nominal sum in order to truthfully acknowledge his work with the Magazine. Each of Mr Lake’s reasons for sub-editing the Magazine cannot objectively be identified as financial or legal in nature. Those reasons included enjoyment in belonging to a shared community, giving back, promoting shared values, actualisation and meaningfully engaging with his community online due to his physical limitations. All of these reasons are moral- notable and significant in their own right, but do not give rise to legal obligations in an employment relationship.

 

[45]    In 2013 and 2014 Mr Lake was a volunteer consistent with the definition – ‘someone who enters into any service of their own free will, or who offers to perform a service or undertaking for no financial gain.’36 In 2015, Mr Lake proposed a payment unrelated to his hours of work. While an agreement was struck to pay $1 per edition, Mr Lake only invoiced $1 per year from 2015 with the exception of 2021. If the hours of work were 10 – 20 per week as Mr Lake describes, the $1 per year is hardly considered wages or financial gain on any objective basis.

 

[46]    While a volunteer may work for no wages/ financial gain, at times a benefit may be applicable which is more aptly described as an honorarium- this may take the form of a stipend, allowance, gift,37 grant, lodgings,38 reimbursement of expenses39 or other benefit.

 

[47]    Despite what appears to be a volunteer relationship, it is apt to assess whether a binding employment relationship is met against the four key elements:

 

Intention to reach agreement as to the terms of the contract

[48]    Where a contract is not evidenced in writing, the tribunal or court must infer from the parties conduct whether they reached agreement.40

 

[49]    Upon reading the first edition of the Magazine Mr Lake approached Mr McClelland the editor and offered his services to improve the Magazine. Unprompted Mr Lake sent edited pages and a suggested style guide. The Magazine is a free resource for the bushwalking and conservation community, of which both Mr Lake and Mr McClelland are actively engaged and share the interest.

 

[50]    Even though the Magazine does not produce a financial return, Mr Lake realised a value in connection with its production. Mr Lake wrote “I would like to say that I work for BWA. This entails payment, and I’m hoping that $1.00 per edition would not be an undue impost. Can you please advise if this is possible?” In response Mr McClelland wrote: “Great – glad you are enjoying it – It has been great to have your help and encouragement. Sure happy to do the payment – no worries – how about you invoice me (wildwalks) each edition as ‘Freelance Sub editor’ and I can organise the payment.”41 The Magazine is a benefit to the bushwalking community but is not an integral part of Mr McClelland’s small business. Rather his income is derived from his consultancy work and publication of books. The website Wildwalks and Bushwalk are depositories of free resources available to the community at large. Other than the plan to issue 6 editions per year, there were no firm agreed terms or conditions between the parties. While Mr Lake applied his skill at a high standard, this standard was not measured or required by the Respondent. Both parties acknowledge that Mr Lake had scope to apply his skills as he saw fit. It was also optional for Mr Lake to continue to provide his services as long as he wanted to do so. The value of the Magazine appears to be altruistic for both Mr Lake and Mr McClelland.

 

[51]    No evidence of legally binding employment conditions were agreed at any stage between the parties,except for in the form of personal satisfaction in the product. The agreement to pay $1 per edition or per year does not satisfy conditions of an employment relationship, it is best characterised as an honorarium.

 

The agreement must involve consideration by each party

 

[52]    Each party must agree to provide a benefit or reward in exchange to the other. Ordinarily the worker provides labour and the employer provides remuneration/ wages in return in satisfaction of the hours worked. The employer in an employment relationship benefits from the labour, although in this matter there was no financial or business benefit. No such valuable consideration is evident on an objective basis in this matter. Mr McClelland described the Magazine in the following terms: “I had hoped to sell advertising space in the magazine when I started, but I was not able to make that viable. People seemed to really enjoy contributing to and reading the magazine, so I continued to publish it as it seemed a helpful and fun project for the bushwalking community.”42

 

The agreement must be intended to be legally enforceable between the parties

[53]    To be enforceable, clear terms and conditions are necessary. Neither party identified clear terms, other than their own expectations in terms of how they contributed. Mr Lake had his standards which he maintained in the delivery of his profession. Mr McClelland was grateful for any help he had in getting a Magazine that provides community information in an enjoyable format out to the public 6 times per year. The $1 per year was also not a term or condition of the relationship, Mr Lake asked if it was possible, but based on the relationship did not expect it from Mr McClelland and he himself did not require it as a reward. No material gain in the relationship is evident for either party.

 

The terms of the agreement must be certain and complete and there must be no element of illegality

 

 

 

[54]    Neither party identified certain and complete terms characteristic of an employment relationship. No minimum conditions of employment provided for under the Act were identifiable in the relationship.

 

Conclusion

 

[55]    The relationship between the parties evolved since 2013 when Mr Lake expressed an interest to volunteer his editorial skills to enhance the Magazine for the bushwalking and conservation community which represented their shared values. The Magazine was not and is not a business, both contribute not for financial gain, but altruistic benefits. I am not satisfied that the parties at any stage intended to create an employment relationship.

 

[56]    I am satisfied that Mr Lake was a volunteer consistent with the definition – ‘someone who enters into any service of their own free will, or who offers to perform a service or undertaking for no financial gain.’43 Had it not been the case that the parties disagreed on matters concerning the editing of the Magazine, both parties would still be enjoying their collective contribution to the Magazine and its non-monetary rewards.

 

[57]    I am also satisfied that the payment made of $1 per year to Mr Lake is an honorarium and does not change the legal status of volunteer.

 

[58]    Having read the emails between the parties, it was pleasing to see the respect and joy between the parties. While it is unfortunate that the collaboration on the Magazine has ended, it is positive to see that the differences have been respectfully set aside for ongoing collaboration on other projects that benefit the community broadly and the parties, albeit for altruistic reasons.

 

[59]    Consequently, having considered the submissions and material submitted by the parties, I have taken them into account in my assessment and find that Mr Lake was not an employee and was not dismissed pursuant to s.386 of the Act and therefore is not subject to the unfair dismissal protections under Part 3-2 of the Act.

 

[60]    Accordingly, the application for an unfair dismissal remedy is dismissed.

[61]    An order44 to that effect will be issued with this decision.”

 

Lake v Wildwalks  [2024] FWC 1344 delivered 22 May 2024 per Yilmaz C