Fair Work Act 2009 (Cth)

CASE NO/S: ET-25-01357, ET-25-01355, ET-25-01364, ET-25-00854

JUDGMENT OF: His Honour Deputy President Judge Crawley

Money claims for non-payment of wages - Jurisdictional challenge by the respondent as to whether applicants, employees or independent contractors - Agreements refer to applicants as independent contractors - Applicants allege agreement status a sham - Employment status dealt with as a preliminary question - Held: Agreement descriptor is irrelevant and erroneous - Applicants properly employees - Tribunal has jurisdiction to determine claims

Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16

Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1

ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2

1. In each of these matters, the applicant claims non-payment of wages pursuant to contracts with the respondent, Arcofyre Holdings Pty Ltd (Arcofyre).
2. In its responses, Arcofyre asserts that the arrangement between it and each of the applicants was that of principal and independent contractor, not employer-employee. Accordingly, the respondent challenges the jurisdiction of the Tribunal to entertain the claims brought against it.
3. Because the assertions made in each matter are substantially the same, I directed that the question of jurisdiction be dealt with as a preliminary point; that the matters be heard concurrently; that the evidence in each one would be admissible in the other matters.

1. In each case there is a written contract between the applicant and Arcofyre, being a document prepared by Arcofyre and entitled "Independent Contractor Agreement".
2. In each of the agreements:

a) The applicant in each case is referred to as being an independent contractor; > > b) The applicant must perform services personally: cl 6.2; > > c) The applicant must not perform services for other persons: cl 11(e); > > d) After termination of the agreement, the applicant must not undertake work personally or for another in competition with Arcofyre for 12 months: cl 15; > > e) The applicant is liable to indemnify Arcofyre for any liability: cl 17; > > f) The agreement may not be assigned without consent: cl 18.1; > > g) The written agreement is the entire agreement: cl 18.7.

3. Each applicant was required to obtain an ABN. The work undertaken was at an agreed hourly rate. Payment was to be made on invoices issued by the applicant to Arcofyre.
4. The non-payment of wages claim relates to the non-payment of invoices so issued.
5. In each instance, the applicant asserts that the agreement was a sham and that in reality, the true nature of the relationship between each of them and Arcofyre was that of employer-employee.
6. In their evidence filed with the Tribunal and put before me, it was evident that the applicants had been discussing the matter between themselves. Accordingly, I viewed their evidence as collaborative, rather than corroborative. Nevertheless, there was no substantial disagreement between them and the respondent on their day to day work. To the extent that there was any disagreement, I prefer their evidence to that of the respondent.
7. In support of their cases, the applicants rely on the following:

a) All invoices were prepared on formats created by Arcofyre and utilising its software; > > b) The rostering of shifts was organised by Arcofyre. If an applicant was unable to attend a shift personally, they had limited rights of delegation to only those people nominated by Arcofyre; > > c) In undertaking "client facing" work, they were required to wear Arcofyre labelled jackets provided to them; > > d) If an applicant wished to take time away from work, leave was required; > > e) The applicants were required to work exclusively for Arcofyre; > > f) None of the applicants held an ABN prior to their engagement with Arcofyre, but were required to obtain one by Arcofyre; > > g) On at least one occasion, Arcofyre required absence to be verified by sickness certificate; > > h) The applicants were paid on an hourly rather than piecemeal rate;

1. The applicants were required to provide online timesheets to the Arcofyre software from which the tax invoices were generated;

j) The applicants were subject to performance reviews; > > k) During the course of their engagement, Mr Souster was employed as a Senior Manager and Mr Imllach was promoted to a Senior Grade Associate. These positions were more consistent with employees than contractors.

1. Historically, the analysis that would have been undertaken to determine whether the applicant was employed under a contract of service, was a consideration of the relationship between the business entity and the applicant. This would be used to assess whether the contract existing between the two shared a close enough resemblance to an employer-employee relationship.
2. The decision of Stevens v Brodribb Sawmilling Co Pty Ltd[1] addresses indicia relevant for considering the whole of the working relationship. In this matter, Mason J provided the following comments:

Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee.[2]

1. The recent decisions of the High Court of Australia in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd[3] and ZG Operations Australia Pty Ltd v Jamsek[4] has changed the approach insofar that the indicia test appears to have been superseded with a return to looking at the contract (implied or express) between the two parties as the primary indicator as to whether an individual is a worker.
2. Adopting the above, the starting point is the contract between the parties and what it says about the nature of the work relationship. The respondent contends that there is no contract of employment, which the agreements make clear.
3. In Personnel Contracting, the High Court looked at the rights and obligations the agreement imposed upon the parties. Notwithstanding the parties being labelled as Principal and Contractor, the contractual rights and liabilities of the parties defined the character of the relationship. The court found that to be one of employer-employee.
4. In ZG Operations, the contracts were with the drivers, in partnership with their wives. They provided their own trucks and a driver - not necessarily the contracting party. The contracts were not challenged as being a sham or otherwise legally ineffective.
5. That is not the case here. While I accept the starting point is the terms of the agreements themselves, the mere use of labels is not persuasive, or even relevant.[5] It is the substance of the rights and obligations as expressed in the agreement, and as undertaken in practice, to which I will have regard. Such an approach is consistent with the reasons given in ZG Operations and Personnel Contracting.
6. I find the need to wear uniforms, perform the work personally, not to work elsewhere, the nature of the duties undertaken and the requirement to provide sickness certificates as powerful indicators of an employment relationship. Each applicant's work was dependent upon, and subservient to, Arcofyre's business.[6] I do not believe that labelling the applicants as independent contractors, providing ABN's and being paid by invoice (prepared using Arcofyre software) displaces that evidence.
7. I therefore find that the agreement between the parties was one of employment.

1. Accordingly, I find that each applicant was an employee of Arcofyre and therefore the Tribunal has jurisdiction to determine the applicants' claims for substantive entitlements.
2. I will hear the parties as to the further conduct of these matters.

[1] (1986) 160 CLR 16.

[3] [2022] HCA 1.

[4] [2022] HCA 2.