Fair Work Act 2009

s.604 - Appeal of decision

Kailash Lawyers Pty Ltd T/A Kailash Lawyers and Consultants

Appeal against decision [2021] FWC 4167 of Commissioner McKenna at Sydney on 6 August 2021 in matter number U2020/11942 - application for an unfair dismissal remedy - whether applicant was an employee - permission to appeal refused

[1] Mr Prateek Patial (the Appellant) has lodged an appeal under s 604 of the Fair Work Act 2009 (Cth) (the Act), for which permission to appeal is required, against a decision and order made on 6 August 2021 by Commissioner McKenna[1] (the Commissioner).

[2] The Commissioner found that Mr Patial was not an employee of Kailash Lawyers Pty Ltd T/A Kailash Lawyers and Consultants (the Respondent), or in the alternative, his dismissal was consistent with the Small Business Fair Dismissal Code (the Code) and dismissed Mr Patial's application for an unfair dismissal remedy made pursuant to s 394 of the Act.[2]

[3] As this matter was listed for permission to appeal only, the Respondent was not required to file any material and it did not do so. The application for permission to appeal was heard by telephone on 8 October 2021.

[4] For the reasons that follow, permission to appeal is refused.

[5] The Commissioner commenced her decision by setting out the background to the matter as follows:

"[3] The applicant graduated from law studies in September 2018 as a mature-age student. The applicant has been admitted as a solicitor of the Supreme Court of NSW since December 2018. At all times relevant to this application, the applicant was a restricted legal practitioner as he had not completed the requisite period of legal supervision. Relevantly, the applicant wished to obtain and/or continue to obtain legal supervision in connection with practising requirements, as a precursor to becoming an unrestricted legal practitioner. The applicant obtained legal supervision for a period of time with a law firm named Gondwana Lawyers Pty Ltd ("Gondwana Lawyers") pursuant to signed arrangements between them titled "AGREEMENT FOR GENERAL USE" (upper case in original) ("the Gondwana Terms"). It appears those arrangements between the applicant and Gondwana Lawyers commenced on 17 January 2019. For reasons that are unclear (but seemingly related to an issue around payments), just a few months later, that is, around April 2019, the applicant wished to cease those arrangements with Gondwana Lawyers even though the Gondwana Terms indicated that the applicant was going to undertake supervised legal practice with Gondwana Lawyers for a year (i.e. until January 2020). The applicant sought to obtain legal supervision elsewhere. To that end, and relevantly to this application, the applicant made an unannounced visit to the respondent's premises in April 2019, at a time when the Gondwana Terms were still in place between the applicant and Gondwana Lawyers.

[4] What unfolded in connection with the subsequent commencement of the arrangements as between the applicant and Amit Pall, the director and principal of the respondent firm, was strongly disputed both on the facts and as to the characterisations. In any event, the applicant and the respondent, through Mr Pall, entered signed arrangements ("the Terms") which largely paralleled those that earlier had been made between the applicant and Gondwana Lawyers in the Gondwana Terms.

[5] In late-August 2020, the arrangements between the applicant and the respondent came to an acrimonious end - involving, among other matters, a heated discussion between the applicant and Mr Pall, and the applicant refusing to leave the respondent's premises when asked or told to do so by Mr Pall. There was ensuing police involvement as a result of Mr Pall and the applicant each separately telephoning for the NSW Police Force. No further action was taken by the police that day, or subsequently, in respect to the parties' allegations and counter-allegations. Exchanges of correspondence ensued. As will be outlined later in the decision, the relationship between the applicant and the respondent was formally terminated by Mr Pall on 28 August 2020."

[6] At paragraph [23] of the Decision, the Commissioner made the following findings with respect to the relationship between the Appellant and the Respondent:

• The applicant made an unannounced approach to the respondent/Mr Pall, seeking to obtain supervised legal practice. The applicant and Mr Pall had no prior association; the applicant approached the respondent firm, without any appointment, as a "walk-in", because, the applicant informed Mr Pall, he had googled Indian-based law firms.

• The respondent was not seeking to recruit either an employee or a contractor to work within the firm as a solicitor (or in any other capacity) at the time the applicant made his unannounced approach to the respondent/Mr Pall. The effect of the evidence of Mr Pall was that, based on his own personal experiences, he felt sympathetic towards the applicant.

• The applicant did not seek and Mr Pall did not offer employment within the firm; there was no offer and/or acceptance by either party in such respects. Mr Pall did not offer to the applicant employment on an employee remuneration package of around $60,000 per annum, plus superannuation and a "bonus" - or otherwise. As a corollary to this finding, I also find there was also no alleged reneging by Mr Pall on a purported agreement to engage the applicant as an employed solicitor within the firm on the basis of around $60,000 per annum, plus superannuation and a bonus, or any broadly similar terms of employment.

• It was the applicant who proposed to Mr Pall that the arrangements under which he would work with the respondent should be the same as, or akin to, the Gondwana Terms - albeit the respondent has, in years past, had arrangements similar to the Terms with an individual or individuals other than the applicant.

•Mr Pall agreed to the arrangements the applicant proposed to him concerning engagement under arrangements akin to those the applicant had with Gondwana Lawyers under the Gondwana Terms, save as to, I am satisfied, agreement reached between the applicant and Mr Pall principally and most relevantly concerning a different remuneration arrangement in the Terms. The agreed arrangement between the parties in such respects in the Terms was reflective of the discussion about the matters related to the respondent's own business exigencies (as against what Mr Pall understood to be the operations or size/business turnover of Gondwana Lawyers). The applicant was registered for GST and was responsible for managing his own taxation affairs in relation to his subsequent invoicing, notwithstanding those parts of the applicant's case which pointed to the fact that the Terms, on their face, did not specify that an Australian Business Number ("ABN") was required to be identified.

• Mr Pall did not coerce the applicant to enter the arrangements or exercise any other form of (however described) duress upon the applicant to enter the Terms - for example, as some form of arrangement designed by Mr Pall to avoid an employment relationship within the firm. Rather, it was the applicant who had proposed the Gondwana Terms to Mr Pall, and it was the applicant who provided a copy of the Gondwana Terms to Mr Pall for his consideration. The final form of the agreement between the applicant and the respondent under the Terms, including its remuneration structure, was, I am satisfied, freely agreed between the applicant and Mr Pall. I find Mr Pall had explained his business rationale for the remuneration provisions he proposed under the Terms, which differed from those in the Gondwana Terms. That rationale described by Mr Pall was, in turn, accepted by the applicant as part of the discussion which resulted in the parties' agreement to the Terms. If the applicant did not wish to have legal supervision under the arrangements in the Terms, he could, of course, have chosen not to sign.

• While the applicant emailed academic transcript-type details and a PDF copy of the Gondwana Terms to Mr Pall for his consideration, it was unclear who physically prepared/typed the final iteration of the Terms. It may be noted, in such respects, that the principal differences in the Terms, as against the earlier Gondwana Terms, were a different remuneration structure in clause 2(a) vii) and the insertion of an additional clause 2(a) ix) which addressed certain professional-type matters. There were some other miscellaneous differences, such as the insertion of words "(or any other time agreed between them)" in clause 2(a) i); the omission of the words "through its agent" in clause 2(a) ii); and the omission of the words "Similarly, Prateek does not owe any employee obligations to Gondwana Lawyers" in clause 2(a) vi). In any event, nothing turns on who physically prepared/typed the final version of the Terms that were co-signed by the applicant and, for the respondent, by Mr Pall, because I am satisfied the clauses within the Terms were genuinely reflective of the agreement reached between them.

• Had the applicant and Mr Pall, who are both solicitors and self-evidently capable of contracting on their own behalf, wished or intended to enter an employment relationship it would have been open to them to do so; they did not enter an employment relationship under the Terms and, moreover, they did not intend to do so. The applicant was an experienced businessman at the time he approached the respondent seeking legal supervision under a type of (broadly described) profit-share arrangement. I do not accept the applicant's submission that he was "brainwashed" by Mr Pall into signing the Terms.

• Further on the topic of alleged duress by Mr Pall, the applicant contended as follows:

"148. The Applicant submits to the Commission that the Applicant is a victim and Respondent is the Perpetrator in the Agreement.

149. The Applicant signed the Sham Agreement under DURESS (EMPHASIS ADDED) because the Applicant had resigned from his previous job and supervised training and had no other choice."

(Bold, upper case and words "(EMPHASIS ADDED)" in original)

As to the foregoing submission, it may be noted there was no evidence the applicant advised Mr Pall, or that Mr Pall otherwise was aware, the applicant had (however described) resigned from Gondwana Lawyers - albeit Mr Pall was aware from what the applicant informed him that some issue about payments or non-payment had arisen between the applicant and Gondwana Lawyers.

• About a year after signing the Terms, that is around April 2020, the applicant declined to accept an offer made to him by Mr Pall to become an employee of the respondent/an employed solicitor within the firm. While the circumstances surrounding the offer are strongly disputed, relevantly the applicant did not want to be, or become, an employee of the respondent firm; he determined instead to continue to work under the non-employee arrangements in the Terms.

• At all relevant times during the relationship between the parties, the applicant operated, in part or in whole on his own behalf, as a migration agent. The applicant's evidence was that he had "a full migration licence". The respondent did not provide supervision under the Terms in relation to the applicant's essentially independent operations in such respects. (Apart from having been a migration agent over the course of the operation of the Terms, by around the time of the hearing the applicant had his own firm named Santosh Migration and Education Consultants - but it was unclear on the evidence when the applicant established this business.)

• At all relevant times (at least following advice, properly given, by Mr Pall that the applicant's invoices should be properly-raised by him - as opposed to the informality of what the applicant initially submitted in connection with seeking payment under the Terms), the applicant invoiced the respondent approximately monthly for his percentage of the professional fees. The invoices identified the applicant's ABN, being an ABN the applicant had obtained in May 2014, several years before the arrangements under the Terms commenced with the respondent. The amounts invoiced fluctuated, depending on the matters or work in which the applicant had been involved. The applicant was remunerated in accordance with the invoices he submitted to the respondent for payment, albeit it appears the respondent ultimately was responsible for the charges made to the clients of the firm for the services provided by the firm/the applicant. The invoicing arrangements, and payment pursuant to them, continued until disputation of some description about payments arose towards the latter part of the arrangements between them. (Post-termination, the applicant also invoiced the respondent for work undertaken by him which was not legal in character - and thereby, presumptively, not comprehended by the Terms or the de facto continuation of the Terms in the period April to August 2020.)

• During 2020, when the Australian Government's JobKeeper arrangements were in place and during a time the applicant now contends he had been since April 2019, and continued to be until August 2020, a full-time employee of the respondent (working he said, an average of approximately 50-60 hours a week, with late hours, weekend work and sometimes seven days a week without a break) the applicant was in receipt of full JobKeeper payments arising from his directorship of, and/or employment with, a company of his own."

[7] Commencing at paragraph [38] of the Decision, the Commissioner referred to relevant authorities concerning whether a worker is an employee or independent contractor and applied the relevant indicia to the evidence before her.

[8] The Commissioner set out her conclusions regarding the relationship between the Appellant and Respondent as follows:

"[74] Here, a consideration of the indicia in the context of the nature of the work performed and the terms of the contract does not point one way, or overwhelmingly one way, to yield a clear result. True it is that the applicant was not strictly conducting a business on his own behalf in the sense typically described or understood. Nonetheless, again borrowing from French Accent, and painting a picture of the relationship between the applicant and the respondent from the accumulation of detail, the overall effect, appreciated by standing back and making a qualitative appreciation of the whole, the relationship between the applicant and the respondent was not one of employee and employer - and this is so notwithstanding labelling representations made by each of them to third parties such as the Law Society.

[75] Even allowing for some remaining ambiguity in the relationship, the parties themselves removed that ambiguity in the Terms, by declaring the relationship not to have the characteristic of employment. That is, the Terms provided: "It is expressly understood and stated that the parties do not form an employer-employee relationship." I have already found that the applicant proposed the Terms (albeit the remuneration provisions were amended, by agreement, I have also found). No amount of revisionism as advanced now in the applicant's evidence and his submissions can alter the fact that the applicant proposed the Gondwana Terms to Mr Pall (rather than an employment contract), not vice versa. The applicant and the respondent were freely-contracting parties, and the Terms were amended by consent and co-executed; the applicant was not, on any description of it, coerced by the respondent/Mr Pall into the Terms."

[9] The Commissioner then proceeded with an alternative finding if her primary conclusion that the Appellant was not an employee was wrong. In this respect the Commissioner concluded that she would have otherwise found that the termination of the Appellant's employment was consistent with the Code_._

[10] The Commissioner dealt with the alternative finding as follows:

"[82] If I am wrong in my conclusion that the applicant was not an employee of the respondent, I would, in the alternative, dismiss the applicant's application for an unfair dismissal remedy having regard to the provisions of the Code. In the consideration that follows, I proceed on the basis that the applicant was an employee of the respondent - albeit contrary to my finding the applicant was not an employee. I also proceed on the basis that the termination of the relationship constituted a dismissal from employment - again contrary to my finding the applicant was not an employee and, thereby, dismissal from employment did not arise in the circumstances of this case.

[83] The applicant remonstrated about the respondent's Code-related objection to his application, on grounds including that a Code-related objection was not identified in the respondent's initial Form F3 - Employer response to unfair dismissal application (rather, it may be noted, the respondent's objection to the application in its Form F3 focussed on its non-employee jurisdictional objection). The applicant's objections to reliance on the Code in such respects are rejected. By s.396 of the Act, the Commission must decide certain matters relating to an application for an unfair dismissal remedy before considering the merits of the application - and this is so regardless, for example, of whether a Code-related objection is identified in a respondent's Form F3...

[91] Drawing from the principles concerning the Code in authorities including Pinawin T/A RoseVi.Hair.Face.Body v Edwin Domingo and Ryman v Thrash Pty Ltd, the termination of the relationship between the applicant and the respondent - if it constituted a dismissal from employment - was, I find, Code-compliant. To return to the text of the Code, the summary dismissal provisions provide that "It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal. ...". The applicant's purposeful actions objectively gave cause for Mr Pall's belief on reasonable grounds that the applicant's conduct was sufficiently serious to justify immediate termination of the relationship. While there was initial reference to an investigation being undertaken by Mr Pall, matters as to the failure by the applicant to leave the respondent's premises and the failure to return files did not require investigation. It cannot be accepted that the applicant could not have returned the files of the respondent's clients due to a shortness of time allowed by Mr Pall, as the applicant appeared to suggest. Rather, the applicant retained the files of the respondent's clients for his own purposes. The applicant's post-termination correspondence dated 31 August 2020 made this clear, in that the applicant wrote that once Mr Pall had attended to various demands and made a payment of $93,736.58 (including for post-termination invoicing for matters said to include work undertaken as IT services and furniture assembly/removal) "only then" would he "handover the office items ... such as case files ...". Separately, the submissions indicated that, months after 28 August 2020, the applicant had still not returned files of the respondent's clients.

[92 Given my findings concerning the respondent's jurisdictional objection and/or the Code, an order dismissing the applicant's application for an unfair dismissal remedy issues in conjunction with these reasons. The proceedings are concluded."

[11] The Decision subject to appeal was made under Part 3-2- Unfair Dismissal - of the Act. Section 400(1) of the Act provides that permission to appeal must not be granted from a decision made under Part 3-2 unless the Commission considers that it is in the public interest to do so.

[12] Further, s. 400(2) provides that appeals on a question of fact can only be made on the ground that the decision involved a 'significant error of fact'

[13] Section 400 of the Act manifests an intention that the threshold for a grant of permission to appeal is higher in respect of unfair dismissal appeals than the threshold pertaining to appeals generally.

[14] The public interest test in s 400(1) is not satisfied simply by the identification of error or a preference for a different result. In GlaxoSmithKline Australia Pty Ltd v Makin a Full Bench of the Commission identified some of the considerations that may attract the public interest:

"... the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or they result in counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters..."[3]

[15] Other than granting permission to appeal on a public interest basis, the grounds for granting permission to appeal are not specified in the Act. Considerations which have traditionally been treated as justifying the grant of permission to appeal include that the decision is attended with sufficient doubt to warrant its reconsideration and that substantial injustice may result if refused.[4]

[16] It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error.[5] However, the fact that the member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal.[6]

[17] An application for permission to appeal is not a de facto or preliminary hearing of the appeal. In determining whether permission to appeal should be granted, it is unnecessary and inappropriate for the Full Bench to conduct a detailed examination of the grounds of appeal.[7] However, it is necessary to engage with the appeal grounds to consider whether they raise an arguable case of appealable error.

[18] The Appellant's grounds for appeal, as set out in the Form F7 Notice of Appeal, were extensive and intertwined with submissions. We have distilled in summary form the appeal grounds as follows:

Ground 1 - The Commissioner erred in not finding the "Respondent's Agreement for General Use" was not registered as an Enterprise Agreement at Fair Work Commission and that the National Minimum Wage and National Employment Standards formed the Appellant's minimum terms and conditions of employment;

Ground 2 - The Commissioner erred in not finding the Appellant was a Young Lawyer in his first five years of post-admission experience;

Ground 3 - The Commissioner erred in not finding that the Respondent was a 'sham contractor';

Ground 4 - The Commissioner misapplied the relevant principles and tests to the working arrangements that were implemented by the Appellant and Respondent and therefore erred in finding that the Appellant was not an employee of the Respondent;

Ground 5 - The Commissioner erred by applying insufficient weight to the evidence that the Respondent had confirmed to third parties that the Appellant was an employee of the Respondent's legal practice;

Ground 6 - The Commissioner erred by applying insufficient weight to the Respondent's receipt of Jobkeeper Payments in respect to the Appellant;

Ground 7 - The Commissioner erred by applying insufficient weight to the Appellant's evidence in respect to the allegation that the Appellant stole and deleted emails belonging to the Respondent;

Ground 8 - The Commissioner erred in applying insufficient weight to the Appellant's evidence in respect of the yelling allegation.

[19] The Appellant filed a further outline of written submissions in accordance with directions. The Appellant's written submissions were largely confined to matters relevant to Appeal Ground 4 summarised above and argued that the Commissioner made significant errors of fact in relation to the relevant tests to be applied in determining whether or not a worker is an employee or independent contractor.[8]

[20] The Appellant submitted the public interest was enlivened as the Decision was attended with sufficient doubt to warrant its reconsideration, was disharmonious with other decisions and would result in substantial injustice if permission to appeal is refused.[9]

Additional Ground of Appeal - Small Business Fair Dismissal Code

[21] At the commencement of the hearing, we raised with the Appellant that he has not challenged the alternative finding of the Commissioner, which was that if the Appellant was an employee, the termination of the Appellant's employment was consistent with the Code and invited the Appellant to make any oral submissions in relation to Code compliance.

[22] In response, the Appellant made the following submission:

PN53 Sorry, just give me one second for the - in relation to the Small Business Code. In relation to the Small Business Code, the Commissioner did not even reach up to that point, because the Commissioner has dismissed the application before that.

PN54 The Commissioner did not even allow the appellant to file any submissions. The Commissioner just give the decision, like there was no employer and employee relationship. So the first step is to - there should be an employer-employee relationship to go after the - to see up to the relevant - sorry. Unless Commission requires anything further, those are the appellant's submissions.[10]

[23] It is convenient to deal with the Appellant's submission regarding the Code first. We understand the Appellant's only submission on this ground is that he was not afforded an opportunity to be heard and was therefore denied procedural fairness.

[24] We do not accept that submission.

[25] It is clear from a review of the Decision and materials before the Commissioner that:

(i) the Appellant was on notice prior to the hearing of the matter before the Commissioner that the Respondent was relying on the application of the Code if the Appellant was found to be an employee;[11]

(ii) the Respondent addressed the issue of the Code in its Closing Submissions;[12] and

(iii) the Appellant responded, albeit briefly, to the Respondent's submissions on the Code in his closing submissions in reply.[13]

[26] It is apparent from a reading of the Decision and the materials below that the Appellant's primary concern regarding the application of the Code was that the Respondent did not identify the issue in its initial response[14] and therefore, the issue could not be agitated before the Commissioner.

[27] However, as the Commissioner correctly set out in the Decision, whether a dismissal was consistent with the Code is a matter that must be determined prior to a consideration of the merits of an application for an unfair dismissal remedy.[15]

[28] We reject the Appellant's submission that he was denied procedural fairness in relation to the alternative finding of the Commissioner that, if the Appellant was an employee, the dismissal was consistent with the Code.

[29] Other than raising a procedural fairness issue, that we have concluded is not made out, Mr Patial has not questioned the Commissioner's finding that his dismissal was consistent with the Code. As no appeal is brought against this finding, the decision of the Commissioner to dismiss the unfair dismissal application, albeit in the alternative, is sufficient to dispose of this appeal.

[30] The conclusion we have reached in relation to the Code makes it unnecessary to deal with any other ground of appeal raised by Mr Patial.

[31] We do not consider the grant of permission to be in the public interest where as in this instance the jurisdictional obstacle of the dismissal being Code compliant has not been challenged in the appeal filed by Mr Patial, nor do we consider that there is any other basis upon which permission to appeal should be granted.

[32] Permission to appeal is therefore refused.

[33] Finally, we observe that the arrangements between the parties with respect to supervised legal practice as set out in the Commissioner's decision would appear contrary to the requirements of the Legal Profession Uniform Law (NSW). Accordingly, we consider it appropriate to refer this matter to the General Manager of the Fair Work Commission for consideration as to whether it should be referred to the Law Society of New South Wales and/or the Office of the Legal Services Commissioner.

[1] [2021] FWC 4167 (Decision); PR732600 (Order).

[2] Decision at [2], [81]-[82] and [92].

[3] [2010] FWAFB 5343; (2010) 197 IR 266 at [27].

[4] Also see CFMEU v AIRC [1998] FCA 1404; (1998) 89 FCR 200; and Wan v AIRC [2001] FCA 1803; (2001) 116 FCR 481.

[5] Wan v AIRC [2001] FCA 1803; (2001) 116 FCR 481 at [30]

[6] GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343 at [26]- [27], 197 IR 266; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWAFB 10089 at [28], 202 IR 388, affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler [2011] FCAFC 54; (2011) 192 FCR 78; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663 at [28]

[7] Trustee for The MTGI Trust v Johnston [2016] FCAFC 140 at [82]

[8] Appellant's Outline of Submissions filed on 30 September 2021 at [2]-[5].

[10] Transcript 8 October 2021 at PN53-PN54.

[11] Respondent's Outline of Submissions filed on 2 November 2020 at [67]-[79].

[12] Respondent's Closing Submissions filed on 7 June 2020 at [119]-[131].

[13] Appellant's Closing Submissions in Reply filed on 2 July 2021 at [9], [72], and [88].

[14] See Employer's Response Form F3 filed on 23 September 2020.

[15] See s 396(c) of the Act and Decision at [83].

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