[2025] FCA 663
General information, not legal advice.
Federal Court of Australia
2025-06-23
Snaden J
Original judgment source is linked above.
(1) Mr Cropper was engaged as a permanent employee between 20 January 2006 and 28 February 2020;
(2) throughout the period of that engagement (and, for present purposes, so much of it as was not the subject of limitation), Mr Cropper was entitled to absent himself from work without loss of pay on public holidays and occasions where he took carer's leave;
(3) upon the termination of his engagement, EAAPL was obliged to pay Mr Cropper:
(a) an amount equivalent to the value of his accrued but untaken annual leave; and
(b) an amount in lieu of reasonable notice, which, in the circumstances was three months;
(4) EAAPL is entitled to set off against its obligation to pay Mr Cropper in lieu of reasonable notice of his dismissal the amount that it actually paid to him in lieu of notice;
(5) EAAPL is not otherwise entitled to set off from the entitlements recognised above the amounts that it paid to Mr Cropper throughout his engagement; and
(6) no issue of mitigation arises.
And what was discussed about the arrangement between yourself and Energy Action during [the meeting just referred to]?---That I would be doing it on hourly rate. I would come in as a contractor. I would give them invoices from time to time. The - I couldn't give them a fixed timetable because at that point we didn't know what the problem was or how long it would take to fix. But I said to them, next week I will come by and start investigating it. I will produce invoices as we go. You can pay those invoices, and it will be $50 an hour.
And was it you that said that your rate would be $50 per hour?---Yes. And they accepted that.
Thank you for your time yesterday when we reviewed our commercial arrangements. As requested, here is a summary of the outcome.
· Our existing arrangement has been in place since January 2005.
· Effective 1st January 2007, the hourly rate is to be $55.00 ...
· ... with the intention of including a rate of $60 in the budget for the financial year starting July 2007.
· Options for restructuring the arrangement to be considered with the aim of minimising overheads.
Hi John
As discussed, can you please confirm the following?
When you first joined Energy Action, how many days per week were you working for us?
2. What approximate date did you work for Energy Action 100% of your time?
Kind regards
Maddy
Hi Maddy,
After some digging, here is a summary of my first few years with Energy Action.
- Ÿ First discussions re EnAct in Jan 2005, with first release of EnAct in March 2005 and development continuous from that time. At the time I was working full-time at IBM.
- Ÿ Came on to the Energy Action payroll in Jan 2006, part-time hourly paid, when it was obvious that the work at Energy Action would be ongoing and significant.
- Ÿ Resigned from full time employment with IBM April 2006 to enable full time commitment to Energy Action, where I would be able to make a real difference, unlike my contribution to a company the size of IBM.
- Ÿ Hours at Energy Action during first few years:
- Ÿ Work outside Energy Action:
- Work with IBM detailed above.
- All other such work was also from arrangements that pre-dated January 2005 when I started work with Energy Action.
- Other work was scaled down progressively with last arrangement ending Sept 2013.
Thanks John, this is really helpful.
I have one more question. When did you stop invoicing Energy Action and we started paying you directly through the payroll?
The last invoice from your company (Logged Hours schedule listing Energy Action as your client) was December 2010.
Kind regards
Maddy
Hi Maddy,
I went on to the payroll in January 2006. Up until then I was providing monthly invoices. (I had an ABN, but not a company. I was just a sole trader).
At the time, Energy Action did not have a work log system nor did they give me a timesheet to fill in so I just kept using my own work log system to record my hours and simply printed out an existing report each month to serve as a timesheet. Then there was a period of no timesheet, just an email with total hours. It was not until relatively recently (2015) that Energy Action provided me with its own timesheet format and even more recently that we in IT started entering our hours in a company work log system.
Cheers,
John
Hi Maddie,
As per the email from Link below, it seems I am missing from the list of employees eligible for the share offer. Is there anything I need to do to get that fixed or can you help, please?
Thanks,
John
Hi John
Unfortunately this offer is only available to permanent full time and permanent part time staff. As a contractor you're not eligible to participate in this share offering.
Kind regards
Maddy
Thank you for getting back to me, Maddy, though as you know I'm actually not sure that that is the case. Was that what you found when you checked into it at the beginning of the year? I don't think I had heard the outcome from those discussions.
Cheers,
John
Hi John
Your employment status has been confirmed as that of a contractor. As you have been remunerated as a contractor for all hours worked since joining Energy Action you're deemed a contractor not an employee.
Kind regards
Maddy
Thanks, Maddy. I appreciate you passing that on back to me although I'm not quite sure what it means - it does seem a bit circular, doesn't it?
And it also seems strange that I was eligible to be offered shares as an employee at the time of our IPO back in October 2011 but not now?
Is there any chance they might reconsider before the share offer closes on Friday?
Cheer[s],
John
Hi Maddy. Welcome back!
It has been some time since we last touched on this subject back in August/September and you advised that I might find it worthwhile to check out such sources as the FWA and ATO websites or even to get some independent advice to help me to better understand my position.
After a very busy 2nd half of 2017, I have finally been able to get some further research done, including reviewing the sources you suggested. Everything I am finding is indicating that no single factor determines whether a person is an employee or a contractor - the various sources all agree that there is a range of considerations to be taken into account and on balance, I am not sure that these support the company's current view.
Happy to sit down with you and run through them if you'd like.
Cheers,
John
Hi John
Have you been able to come to a position regarding the termination payment and finish date, I am expecting Maddy to chase me for an update shortly.
Kind regards
Troy Davis
Dear John
Your Contractor Agreement with Energy Action (Australia) Pty Ltd
We refer to the above matter and discussion with your manager, Troy Davis and Madeline Sedrak, Head of Human Resources on Tuesday 18 February 2020 and the CEO update to all staff on Thursday 20 February 2020. We confirm that on those days, you and other staff were consulted about upcoming changes to the business.
The purpose of this letter is to confirm that as a consequence of the Business Transformation Program going live, the Company no longer requires the services of a Senior Application Developer.
At your request, we reviewed our organisational structure and future IT needs and regretfully advise that the Company does not have any associated entities into which you could be assigned and nor does it have any suitable alternative positions available.
Therefore, we will be terminating your engagement as a contractor.
However, we understand your concerns about sufficient time to find alternative work, and to assist you in this difficult period, and as a gesture of good faith for your years of dedication as a contractor to the Company, we will pay you the same amounts that we would pay to our permanent employees in this position, despite you being a contractor and therefore not having these entitlements:
- Ÿ 5 weeks' notice of termination pay;
- Ÿ 12 weeks' long service leave; and
- Ÿ 12 weeks' redundancy pay.
You are not required to work through the entire 5 week notice period. Your manager, Troy Davis, will discuss an appropriate handover period with you in order to determine your last day in the office. You will be paid your ordinary wages up to and including your last day in the office, and will be paid in your final pay, the remainder of your notice period, up to and including 3 April 2020.
To further support you during this transition period, the Company has also provided counselling services for you with an external outplacement company. Their contact details are contained in this letter and you can reach out to them when you are ready.
The Company reminds you of your employment obligations with respect to the Company's confidential information and maintaining the confidentiality of the Company's business affairs. Note, these confidentiality obligations continue to apply to you despite the cessation of your employment with the Company, and will continue to apply during the notice period.
As advised previously, outplacement services are available for your use immediately to assist you with this career transition. Our contact at Outplacement Australia is Adrian Kelly and you can reach him on 0435 002 960 any time, or SMS if you'd like Adrian to call you.
Please contact Madeline Sedrak, Head of Human Resources on 02 9633 6408 if you wish to discuss the content of this letter.
Yours sincerely
John Huggart
Chief Executive Officer
(1) upon the termination of his employment, he was entitled by operation of ss 44(1) and 90(2) of the FW Act to receive - but EAAPL did not pay to him - amounts equal to the value of his untaken annual leave accrual, which he calculates to be 54.97 weeks;
(2) throughout his employment (or, at least for the six years prior to the commencement of this action), he was entitled by operation of ss 44(1), 96(1) and 116 of the FW Act to be absent from work without loss of pay on the occasions that he took personal leave or was absent from work on public holidays; but EAAPL wrongly withheld those payments from him; and
(3) upon the termination of his employment, he was entitled to receive - but EAAPL did not pay to him - an amount in lieu of reasonable notice thereof, which he calculates as 12 months (or, in the alternative, lesser periods of six or three months).
(1) that he was employed on a casual basis, such that he did not accrue any entitlements to annual leave, personal leave or public holiday pay;
(2) that he was not entitled to reasonable notice of the termination of his engagement because no such term was implied by law or otherwise into that contract; and
(3) in any event, that the sums that it paid to Mr Cropper throughout the course of his engagement were sufficient and intended to meet any obligations that it owed to him by force of the FW Act, such that it is entitled to set off against those latter entitlements what was, in fact, paid and received.
44 Contravening the National Employment Standards
An employer must not contravene a provision of the National Employment Standards.
Note: This section is a civil remedy provision (see Part 4-1).
86 Division applies to employees other than casual employees
This Division applies to employees, other than casual employees.
87 Entitlement to annual leave
Amount of leave
(1) For each year of service with his or her employer, an employee is entitled to:
(a) 4 weeks of paid annual leave; or
(b) 5 weeks of paid annual leave, if:
(i) a modern award applies to the employee and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards; or
(ii) an enterprise agreement applies to the employee and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards; or
(iii) the employee qualifies for the shiftworker annual leave entitlement under subsection (3) (this relates to award/agreement free employees).
Note: Section 196 affects whether the FWC may approve an enterprise agreement covering an employee, if the employee is covered by a modern award that is in operation and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards.
(2) An employee's entitlement to paid annual leave accrues progressively during a year of service according to the employee's ordinary hours of work, and accumulates from year to year.
Note: If an employee's employment ends during what would otherwise have been a year of service, the employee accrues paid annual leave up to when the employment ends.
...
88 Taking paid annual leave
(1) Paid annual leave may be taken for a period agreed between an employee and his or her employer.
(2) The employer must not unreasonably refuse to agree to a request by the employee to take paid annual leave.
(1) If, in accordance with this Division, an employee takes a period of paid annual leave, the employer must pay the employee at the employee's base rate of pay for the employee's ordinary hours of work in the period.
(2) If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.
96 Entitlement to paid personal/carer's leave
Amount of leave
(1) For each year of service with his or her employer, an employee is entitled to 10 days of paid personal/carer's leave.
(2) An employee's entitlement to paid personal/carer's leave accrues progressively during a year of service according to the employee's ordinary hours of work, and accumulates from year to year.
An employee may take paid personal/carer's leave if the leave is taken:
(a) because the employee is not fit for work because of a personal illness, or personal injury, affecting the employee;
or
(b) to provide care or support to a member of the employee's immediate family, or a member of the employee's household, who requires care or support because of:
(i) a personal illness, or personal injury, affecting the member; or
(ii) an unexpected emergency affecting the member.
Note 1: The notice and evidence requirements of section 107 must be complied with.
Note 2: If a female employee has an entitlement to paid personal/carer's leave, she may take that leave instead of taking unpaid special maternity leave under section 80.
If, in accordance with this Subdivision, an employee takes a period of paid personal/carer's leave, the employer must pay the employee at the employee's base rate of pay for the employee's ordinary hours of work in the period.
If, in accordance with this Division, an employee is absent from his or her employment on a day or part-day that is a public holiday, the employer must pay the employee at the employee's base rate of pay for the employee's ordinary hours of work on the day or part-day.
Note: If the employee does not have ordinary hours of work on the public holiday, the employee is not entitled to payment under this section. For example, the employee is not entitled to payment if the employee is a casual employee who is not rostered on for the public holiday, or is a part-time employee whose part-time hours do not include the day of the week on which the public holiday occurs.
15A Meaning of casual employee
(1) A person is a casual employee of an employer if:
(a) an offer of employment made by the employer to the person is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person; and
(b) the person accepts the offer on that basis; and
(c) the person is an employee as a result of that acceptance.
(2) For the purposes of subsection (1), in determining whether, at the time the offer is made, the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person, regard must be had only to the following considerations:
(a) whether the employer can elect to offer work and whether the person can elect to accept or reject work;
(b) whether the person will work as required according to the needs of the employer;
(c) whether the employment is described as casual employment;
(d) whether the person will be entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer or a fair work instrument.
Note: Under Division 4A of Part 2-2, a casual employee who has worked for an employer for at least 12 months and has, during at least the last 6 months of that time, worked a regular pattern of hours on an ongoing basis may be entitled to be offered, or request, conversion to full-time employment or part-time employment.
(3) To avoid doubt, a regular pattern of hours does not of itself indicate a firm advance commitment to continuing and indefinite work according to an agreed pattern of work.
(4) To avoid doubt, the question of whether a person is a casual employee of an employer is to be assessed on the basis of the offer of employment and the acceptance of that offer, not on the basis of any subsequent conduct of either party.
(5) A person who commences employment as a result of acceptance of an offer of employment in accordance with subsection (1) remains a casual employee of the employer until:
(a) the employee's employment is converted to full-time or part-time employment under Division 4A of Part 2-2; or
(b) the employee accepts an alternative offer of employment (other than as a casual employee) by the employer and commences work on that basis.
(1) Section 15A of the amended Act applies on and after commencement in relation to offers of employment that were given before, on or after commencement.
20 Meaning of ordinary hours of work for award/agreement free employees
Agreed ordinary hours of work
(1) The ordinary hours of work of an award/agreement free employee are the hours agreed by the employee and his or her national system employer as the employee's ordinary hours of work.
(2) If there is no agreement about ordinary hours of work for an award/agreement free employee, the ordinary hours of work of the employee in a week are:
(a) for a full-time employee - 38 hours; or
(b) for an employee who is not a full-time employee - the lesser of:
(i) 38 hours; and
(ii) the employee's usual weekly hours of work.
If the agreed hours are less than usual weekly hours
(3) If, for an award/agreement free employee who is not a full-time employee, there is an agreement under subsection (1) between the employee and his or her national system employer, but the agreed ordinary hours of work are less than the employee's usual weekly hours of work, the ordinary hours of work of the employee in a week are the lesser of:
(a) 38 hours; and
(b) the employee's usual weekly hours of work.
(4) For an award/agreement free employee who is not a full-time employee and who does not have usual weekly hours of work, the regulations may prescribe, or provide for the determination of, hours that are taken to be the employee's usual weekly hours of work for the purposes of subsections (2) and (3).
1.11 Meaning of ordinary hours of work for award/agreement free employees
(1) For subsection 20(4) of the Act, this regulation provides for the determination of hours that are taken to be the usual weekly hours of work of an award/agreement free employee who:
(a) is not a full-time employee; and
(b) does not have usual weekly hours of work.
Note: Under section 20 of the Act, the usual weekly hours of work of an award/agreement free employee are relevant to establishing the employee's ordinary hours of work.
(2) To work out the usual weekly hours of work for an employee who has been employed by the employer for at least 4 weeks:
(a) identify the total number of hours that the employee has worked during the previous 4 completed weeks; and
(3) To work out the usual weekly hours of work for an employee who has been employed by the employer for less than 4 weeks:
(a) identify the total number of hours that the employee has worked during the period; and
(b) divide the result by the number of completed weeks for which the employee has been employed by the employer.
...there is no single satisfactory test governing the question whether a person is an employee or is self-employed...The question is: does the [person] perform his services as a person in business on his own account? If he does, his work...must be regarded as performed under a series of contracts for services, entered into by him in the course of carrying on his own business. If he does not, his work must be regarded as performed under a series of contracts of employment with those companies.
In order to decide whether a person carries on business on his own account it is necessary to consider many different aspects of that person's work activity. This is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another.
Although technically it remains true that the question whether a person is engaged on a contract of service or for services is one of mixed law and fact, in reality the task of the trial judge in determining that question, in a case like the present one, involves the assessment and evaluation of evidence for the purpose of identification and isolating factors or indicia which are capable of pointing in one direction or the other, and then weighing or balancing those factors in accordance with established principles, none of which is conclusive, in order to reach a conclusion.
...in contemporary Australia, it is impossible to ignore, and difficult to deprecate, the taxation implications of the mode of operation which parties to a relationship have voluntarily adopted. In the past, the deduction of what are now called PAYG instalments was always treated, uncontroversially, as indicative of an intention that the relationship in question was one of employment. To any suggestion that the absence of such instalments tended to point to the relationship being one of principal and independent contractor, it was often rejoined that such an argument was circular, in the sense that a consequence of the relationship being one of employment was, under legislation, that such instalments had to be deducted. In contemporary times, however, there are legislative markers on both sides, as it were. It is no longer just the absence of PAYG deductions that may make it more difficult to characterise the relationship as one of employment, it is the presence of GST collections by the putative contractor, and his or her compliance with the regulatory requirements which apply to the provision of services by persons who are not employees, that point quite strongly against the relationship being characterised in this way...
(1) EAAPL was entitled to offer, and Mr Cropper was entitled to accept or reject, particular work;
(2) whether Mr Cropper was to work as required according to EAAPL's needs;
(3) whether the parties described the engagement as a casual engagement; and
(4) whether Mr Cropper was entitled to receive a casual loading or some equivalent thereof.
...for a [contractual] term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.
...the implication of an obligation to give reasonable notice was not necessary to give business efficacy to the appellant's employment contract. The existence of the award provision, albeit that it operated outside the contract, had the result that the employment arrangement was effective without any need to imply an obligation to give reasonable notice, ie there was no gap that needed to be filled. Furthermore, because of the existence of the award provision it could not be said that implication of such a term would have been accepted by the contracting parties as a matter so obvious as to "go without saying".
...What is in issue is what obligations are discharged by payments that have been made by an employer to an employee. As the reasons of the Full Court in Poletti v Ecob (No 2) (1989) 31 IR 321 identify at 332-333, there are different situations that may have to be addressed. Those situations often invite consideration of the common law rules of attribution governing payments by a debtor to a creditor. Where by operation of those rules a payment that is made by an employer to an employee is to be attributed to the discharge of a contractual obligation, a further issue is to identify the agreed purpose of the payments under the contract: Poletti v Ecob (No 2) at 332 (Keely, Ryan and Gray JJ). That issue is to be resolved by the application of principles relating to the identification of objective contractual intent, which involves an inquiry that must look to the objective purpose of the payments under the express or implied terms of the contract of employment set against the circumstances known to both parties, and the surrounding statutory framework, which amounts to determining what a reasonable person would have understood by the terms: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); Realestate.com.au Pty Ltd v Hardingham [2022] HCA 39; (2022) 97 ALJR 40 at [15] (Kiefel CJ and Gageler J), [43], [47] and [72] (Gordon J).
...a question of fact. The issue is not one of interpretation, because there are no definitive words to interpret; "we are here concerned not with construing a contract but with evidence as to what the terms of a contract were".
...Such conduct may be considered for the purpose of inferring not only whether a binding agreement had been reached, but also its subject matter and the identification of its necessary terms: Bell Group [Ltd (in liq) v Westpac Banking Corporation (No 9) and (No 10) [2008] WASC 239; [2009] WASC 107; (2008) 39 WAR 1] [2665]-[2672]; County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 [7]-[27], [45] (Spigelman CJ); Australian Estates Ltd v Palmer (Unreported, NSWCA, 22 December 1989). In the last mentioned case, Samuels JA (with whom Kirby P and Meagher JA agreed) said:
While it is true that a court cannot have regard to the subsequent conduct of the parties as an aid in the interpretation of a term in a written contract (see James Miller and Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583, Wickman Machine Tool Sales Ltd v L Schuler AG [1973] UKHL 2; [1974] AC 235), this is merely an application of the parol evidence rule. Thus, as Stephenson LJ (with whom O'Connor LJ and Sir Stanley Rees agreed) said in Meares v Safecar Security Ltd [1983] QB 54 at 77, dealing with an oral contract:
'There is nothing in those authorities which prevents the court from looking at the way the parties acted for the purpose of ascertaining what that term was. Commonsense suggests that their subsequent conduct is the best evidence of what they had agreed orally but not reduced to writing, though it is not evidence of what any written terms mean;'
...in the absence of a written contract, the established principles of inferring a contract from the acts and conduct of parties (as well as in the absence of their words), come into play, and such conduct may be considered not only for the purpose of inferring whether a binding agreement had been reached at some point in time, but also for the purpose of identifying its necessary terms.
...is to be resolved by the application of principles relating to the identification of objective contractual intent, which involves an inquiry that must look to the objective purpose of the payments under the express or implied terms of the contract of employment set against the circumstances known to both parties, and the surrounding statutory framework, which amounts to determining what a reasonable person would have understood by the terms...
I certify that the preceding two hundred and ten (210) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Snaden.
Cropper
Energy Action
Australian Blue Metal Ltd v Hughes [1963] AC 74
Australian National Hotels Pty Ltd v Jager [2000] TASSC 43; (2000) 9 Tas R 153
Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1; (2022) 275 CLR 165
County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193
EFEX Group Pty Ltd v Bennett [2024] FCAFC 35; (2024) 330 IR 171
Elliott v Kodak Australasia Pty Ltd [2001] FCA 807; (2001) 108 IR 23
Fazio v Fazio [2012] WASCA 72
Heldberg v Rand Transport (1986) Pty Ltd [2018] FCA 1141; (2018) 280 IR 93
Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21
James Turner Roofing Pty Ltd v Peters [2003] WASCA 28; (2003) 132 IR 122
Jess v Cooloola Milk Pty Ltd [2022] FCAFC 75; (2022) 292 FCR 284
Macauslane v Fisher & Paykel Finance Pty Ltd [2002] QCA 282; [2003] 1 Qd R 503
Realestate.com.au Pty Ltd v Hardingham [2022] HCA 39; (2022) 277 CLR 115
Tattsbet Ltd v Morrow [2015] FCAFC 62; (2015) 233 FCR 46
Wardman v Macquarie Bank Ltd [2023] FCAFC 13; (2023) 322 IR 278
(2000) 9 Tas R 153
(1996) 67 IR 162
(1995) 185 CLR 410
(2024) 330 IR 171
(2001) 108 IR 23
(2001) 207 CLR 21
(2003) 132 IR 122
(1989) 31 IR 321
(2022) 277 CLR 115
(2015) 233 FCR 46
(2022) 97 ALJR 40
(2008) 39 WAR 1
(2013) 209 FCR 146
(1977) 180 CLR 266
(2013) 120 SASR 11
(2022) 275 CLR 165
(2018) 280 IR 93
(2022) 292 FCR 284
(2023) 322 IR 278
(2021) 271 CLR 456
(2004) 219 CLR 165