The Appeal - Employee or Contractor
9 According to the findings of the primary Judge, the respondent had a long history of working in the betting and wagering industry. From 1993 to 2002, she worked for Tabcorp in Victoria carrying out cash control duties. From 2001 to 2003, she worked as a manager of a hotel in Melbourne which had TAB facilities. A requirement of these positions was that she held formal Tabcorp wagering accreditation as a cash controller.
10 In 2004, the respondent was offered a position in Brisbane by the appellant. She accepted that offer, signing an agency agreement with the appellant for its agency at Moorooka. She trained with the appellant for three weeks at another agency before taking up her position at Moorooka. She later applied, unsuccessfully, for an agency in Elizabeth Street, Brisbane. From that application, she was offered a position at the Logan Central agency, which she accepted. She commenced working there in December 2005, and remained there until the termination of her engagement - the event as to which she complained in the Federal Circuit Court - on 10 November, 2011. From time to time, she was offered, and took up, the opportunity to operate other agencies at the same time as she continued to operate the Logan Central agency.
11 There were four consecutive agreements between the appellant and the respondent in respect of the Logan Central agency, the most recent of which - the one which was relevant in the proceeding in the Federal Circuit Court - was made on 9 March 2010. It is referred to hereafter as "the agency agreement".
12 Clause 1 of the agency agreement, headed "Appointment of Agent", provided that the appellant appointed the respondent "for the purpose of operating a UNiTAB Agency" at the Logan Central premises (UNiTAB Ltd being the then name of the appellant). There was a provision for a six-month probationary period, but this applied only "in the first term of appointment" and was, therefore, inapplicable to the circumstances of the respondent. It was provided that the appellant's regional manager would carry out a "written Performance Appraisal" at least once during the term of the agreement (which was until 15 December 2012), and that the rating "earned" during that appraisal would have "a direct bearing on the continuation and/or renewal" of the agency agreement.
13 Clause 2 of the agency agreement provided as follows: "The parties acknowledge that the Agent is an independent contractor".
14 Clause 3 of the agency agreement contained a prohibition upon the respondent transferring or assigning the benefit of the agreement to any person, firm or corporation.
15 Clause 4 of the agency agreement required the respondent to provide to the appellant "a non-interest bearing cash security bond" of $8,500, from which the appellant was entitled to deduct "all and any monies which may be or become owing" to it by her.
16 Clause 5 of the agency agreement was in the following terms:
UNiTAB will provide the following as part of this Agreement:
(a) The data line from the Agency to UNiTAB's central computer;
(b) Terminals, and all office furnishings required by UNiTAB;
(c) A Cash Office Information System and Odds Display Monitors at a rental fee determined by UNiTAB and payable by the Agent (Appendix 1);
(d) A telephone service, rental and call charges to be repaid by the agent to UNiTAB on demand;
(e) A race broadcasting service;
(f) A satellite receiving system and the TV monitor for race telecasts at a rental fee determined by UNiTAB (Appendix 1);
(g) Stationery as approved by UNiTAB;
(h) All tickets stocks with the cost of betting tickets stocks repaid by the Agent to UNiTAB on demand (Appendix 1);
(i) Monies as UNiTAB shall think fit by way of working capital for the proper operation of the Agency. The Agent acknowledges that these monies shall at all times be and remain the property of UNiTAB and shall be repaid to UNiTAB on demand. No such monies shall be removed from the said premises except for immediate deposit into the Bank Account referred to in Clause 10 of this Agreement or as otherwise directed in writing by UNiTAB;
(j) Rent free premises;
(k) Payment of rates, outgoings and garbage collection;
(l) Payment of electricity charges;
(m) Repairs to office and office equipment;
(n) Promotional material for promotions organised by UNiTAB;
(o) An Electronic Results System and Results Display monitors at a rental fee determined by UNiTAB and payable by the Agent (Appendix 1);
(p) A Sportsbet Interactive Unit at a rental fee determined by UNiTAB and payable by the Agent (Appendix 1);
(q) A Keno Information Display System ("KIDS") at a rental fee determined by UNiTAB and payable by the Agent (Appendix 1);
17 Clause 6 of the agency agreement required the respondent to submit an annual "written promotional plan" to the appellant's regional manager. The plan was to detail "the promotional activities and other business initiatives which will be undertaken by [the respondent] over the ensuing twelve months."
18 Clause 7 of the agency agreement required the respondent to keep the agency premises open for business "on such days and during such hours" as were required by the appellant. The requirement at the time of the execution of the agreement was for the agency to be open for 43 hours each week, excluding Sunday.
19 Clause 8 of the agency agreement required the respondent to be "personally … in attendance" at the office of the agency for 32 hours each week.
20 Clause 9 of the agency agreement provided that, if the respondent wished to be absent from her office for a period in excess of one week, she was to submit to the appellant's regional manager, in advance, details of her proposed period of leave, of her proposed "relief agent", of the names of persons acting as bank signatories and of the "casual staff arrangements" which she had made.
21 By cl 10 of the agency agreement, the respondent acknowledged that she would "process transactions relating to the business" of the appellant. She was required to keep the monies received and held by her in the course of conducting the agency separate from all other funds. As required by the appellant, the respondent was to remit to it the monies which she held in the course of conducting the agency.
22 Clauses 11 and 12 of the agency agreement dealt with the subject of statutory compliance, and do not require further comment here.
23 By cl 13 of the agency agreement, the respondent was permitted to use "only … such tickets, betting slips, forms, other stationery, display material, furniture and fittings as [were] provided or authorised" by the appellant.
24 Clauses 14 and 15 of the agency agreement related to the keeping of books and records. The respondent was required to account to the appellant "for all investments received and dividends or refunds paid or unpaid".
25 Clause 16 of the agency agreement required the respondent to "operate the Agency in an orderly and proper manner" and to "maintain and keep the premises and machines clean and in a condition consistent with the standard … laid down by [the appellant] from time to time." The respondent was required to report any damage and necessary repairs. Any non-observance of "the cleaning standards" would result in the engagement of commercial cleaners at the respondent's expense.
26 Clauses 17-20 of the agency agreement dealt with the subject of "Staff Responsibilities", and provided as follows:
17. The Agent shall assume responsibility for the engagement, training, payment, Workers' Compensation, and conduct of any person employed by them for the business of the Agency. Such employees shall be the servant of the Agent and not of UNiTAB.
18. The Agent is required to engage, train and maintain a level of staff to ensure the office has sufficient staff available at all times. Minimum staffing levels are to be consistent with UNiTAB requirements to serve customers, and are to generally meet the labour required to service specified ticket sales volumes.
19. The Agent and its employees are required to observe a minimum business-like standard of dress at all times as follows:
Female Staff:
Smart street attire or tailored slacks (eg. no T-shirts or shorts except as forming part of the corporate wardrobe, no jeans, thongs or joggers).
Male Staff:
Open neck shirts, slacks, shorts and long socks (sock to be fully extended), (eg. no T-shirts except as forming part of the corporate wardrobe, no jeans, thongs or joggers).
20. The Agent will dismiss forthwith, or if not permitted under any industrial relation legislation and/or award, upon giving such notice as is required by such legislation or award, dismiss any employee who fails to meet the standards for business conduct and dress required by UNiTAB.
The Agent will not engage in the Agency any employee who, in the opinion of UNiTAB, fails to respond to counselling from UNiTAB's Regional Manager.
27 Clause 21 of the agency agreement enjoined the respondent not to permit anyone other than herself and her employees to use or to operate the appellant's machines, plant and equipment, and required her, at the termination of the agreement, to deliver up to the appellant all of its property which was entrusted to her or in her possession.
28 Clause 22 of the agency agreement provided that the respondent would be liable to the appellant for the losses which it sustained as the result of the acts, errors or omissions of the respondent or her employees.
29 Clause 23 of the agency agreement was in the following terms:
23. The Agent or any other person under its control shall not engage in any business or occupation of the said premises other than the business of UNiTAB, except such business or businesses as may be approved in writing by UNiTAB.
30 Clause 24 of the agency agreement contained a prohibition upon the respondent divulging, communicating or disclosing any information acquired by her in the conduct of the agency.
31 Clause 25 of the agency agreement was in the following terms:
25. The Agent shall display such regulations or rules of UNiTAB and such other notices as UNiTAB may require. No other notice of any kind may be displayed in or upon the premises without prior consent in writing from UNiTAB.
32 By cl 26 of the agency agreement, the respondent acknowledged that neither she nor any of her employees held a bookmaker's licence or a bookmaker's clerk's licence pursuant to the applicable Queensland legislation. The respondent was, and her employees were, prohibited from acting as a bookmaker, a bookmaker's clerk, a bookmaker's agent or a bookmaker's remote clerk during the term of the agreement.
33 Clause 27 of the agency agreement dealt with the subject of "remuneration", and was as follows:
27. UNiTAB shall pay to the Agent for acting as its Agent in the terms required by this Agreement a consideration calculated in accordance with a scale of fees determined by UNiTAB from time to time. The parties acknowledge that the scale of fees applicable at the date of this Agreement is attached hereto as Appendix 3.
Appendix 3 provided for the respondent to be paid a commission calculated as a percentage of the weekly turnover of the agency. For a turnover of up to $40,000, the figure was 2.45%. This decreased stepwise to a turnover of $80,000, at which the figure was 1.25%. These levels of turnover would have yielded commission payments of $980 and $1,000 respectively. There was, however, a "minimum commission payment" of $900 per week, applicable only when the agency was "trading normally", or when it was closed for more than 10 days for "resite or refurbishment". Appendix 3 provided also for the respondent to be paid in respect of other specified transactions or operations, such as by way of "ticket handling fees", "FootyTAB Commission" and "Sportsbet Commission".
34 Clause 27A of the agency agreement dealt with the subject of goods and services tax ("GST"). In part, the clause read as follows:
27A.1 UNiTAB to Pay GST on Supplies by Agent
If GST is imposed on or in connection with any supply of goods, services and/or other things by the Agent under this Agreement, the following provisions will apply:
(a) Unless the prices specified in this Agreement are expressly stated to be inclusive of GST, they shall be deemed to be wholly exclusive of any GST, and the Agent may charge and recover from UNiTAB the amount of any GST imposed in addition to (and, subject to the provisions of this clause 27A.1, at the same time and in the same manner as) the amounts payable to the Agent under the other provisions of this Agreement;
(b) UNiTAB may issue Recipient Created Tax Invoices in respect of such supplies;
(c) The Agent shall not issue Tax Invoices in respect of such supplies;
(d) The Agent hereby acknowledges that it is registered for GST as at the date of signing this document and has supplied its Australian Business Number;
(e) The Agent shall immediately notify UNiTAB in writing if it ceases to be registered for GST;
(f) UNiTAB hereby acknowledges that it is registered for GST and;
(g) UNiTAB shall immediately notify the Agent in writing if it ceases to be registered for GST.
27A.2 Agent to Pay GST on Supplies by UNiTAB
If GST is imposed on or in connection with any supply of goods, services and/or other things by UNiTAB under this Agreement, then unless the prices specified in this Agreement are expressly stated to be inclusive of GST, they shall be deemed to be wholly exclusive of any GST, and UNiTAB may charge and recover from the Agent the amount of any GST imposed in addition to (and, subject to the provisions of this clause, at the same time and in the same manner as) the amounts payable to UNiTAB under the other provisions of this Agreement.
35 Other provisions of cl 27A required each of the appellant and the respondent to "review" the price of supplies made by her or it to the other if there should be a reduction in the costs of making the supplies concerned.
36 Clause 28 of the agency agreement dealt with the termination of the agreement. The appellant was entitled to terminate the appointment of the respondent "at any time … without prior notice and without assigning any reason for such termination". The respondent could terminate her own appointment upon the giving of three calendar months' notice in writing to the appellant.
37 The remaining provisions of the agency agreement, cll 30 and 31, do not require comment in the present context.
38 As was pointed out by the primary Judge, beyond stating that she would "process transactions relating to the business of [the appellant]", the agency agreement did not specify the duties that the respondent would undertake in the operation of the agency. His Honour held it to be uncontroversial, however, that the respondent was to conduct a "shopfront" for the appellant, selling its betting and wagering products to the public. In doing so, his Honour held, the respondent was not merely performing "a clerical role selling bets and wagering contracts for [the appellant]". Her role extended "to ensuring the smooth operation of the agency and making sure that it was open at relevant times and was adequately staffed." Beyond that, more controversially in the submission of the appellant, the primary Judge did not accept that the running of the agency required "business acumen" on the respondent's part. His Honour found that "a certain level of managerial expertise was required", but that the work was not "particularly complex", nor was there "an extensive number of persons to be managed by [the respondent]". His Honour accepted the appellant's case that the respondent was "engaged to manage and operate a business", but posed for himself "the real question", namely, "whose business was she operating?"
39 The primary Judge accepted the respondent's evidence that the appellant selected the premises of the agency and conducted dealings with the landlord, that it paid the rent, that it supplied the necessary computer equipment, that it supplied and paid for data connections, that it supplied the telephones (while passing on the charges to the agency operator), that it provided all television screens, race broadcasting equipment, furniture and fittings for the agency, that it either supplied or approved the signage for the agency and that it determined the minimum hours the agency operated. This last aspect was, of course, covered by cl 7 of the agency agreement.
40 On the other hand, his Honour's observation that the agency agreement "reposed in [the appellant] the ability to determine the number of hours per week that [the respondent] had to attend the agency" was not, with respect, correct. The agreement itself required the respondent to be in attendance for at least 32 hours each week, but cl 9 permitted her to absent herself for a period in excess of one week if she first gave the required details to the appellant in writing. Although there was a certain tension between cll 8 and 9 in these respects, ultimately counsel for the respondent accepted that cl 8 was subject to cl 9, and that the respondent could be absent, even without the leave of the appellant, if she had provided the details referred to. Her absence, of course, had no impact on the hours during which she was required to keep the agency open for business.
41 His Honour held, and it could scarcely be doubted, that the respondent's place of work was determined by the appellant. That was, of course, inherent in the nature of the relationship itself: the respondent's appointment was to operate the Logan Central agency. But his Honour's observation was also valid in the sense that, necessarily, most of the the work which the respondent did for the appellant could only be done on the appellant's premises, using the appellant's furniture, equipment and systems. Save for what his Honour described as "some administrative tasks in the nature of accounting", the respondent's work could only be performed at that workplace. In this sense, the respondent "was not free to operate from whatever premises she chose". Neither was it suggested that she "could simply make her services available to other betting shops as part of her business".
42 The respondent gave evidence, and the primary Judge accepted, that her duties included unlocking the premises at the start of each day, turning on "the systems", selling the bet types for which the system provided, and banking the takings. His Honour accepted evidence given on behalf of the appellant that the respondent was also responsible for creating a marketing plan, running local promotions, engaging with customers, handling customer complaints, monitoring customer behaviour, ensuring responsible service of gaming/wagering and complying with the Anti-Money Laundering and Counter Terrorism Financing Act 2006 (Cth).
43 The primary Judge found that the respondent had little flexibility in the way she operated the agency. Indeed, the appellant employed regional managers to "assist", and to "advise", those like the respondent in the running of their agencies. His Honour took the view that, in truth, "the regional manager's role was to ensure that the agencies were conducted in a way that was acceptable to [the appellant]." By way of example of the appellant's control over the way that the respondent operated the agency, his Honour referred to an occasion when the respondent had expanded her operation to include the sale of food. That was unacceptable to the appellant, and the respondent was required to desist from the practice, for the reason that it did not fit with the image which the appellant wished to cultivate and to project to the public.
44 Clause 5 of the agency agreement appeared to make it the appellant's responsibility to provide the items and systems there referred to. There was, however, evidence that the appellant levied a charge on the respondent, based on the turnover of the agency, for the use of them, or of many of them (there being some uncertainty in the evidence as to the range of items that were covered by this charge). For example, in the financial year to 30 June 2011, the respondent was charged $4,510 for Sky Channel, $177 for Foxtel and $6,590 for the use of unspecified equipment, plus GST in each case. Additionally to the items mentioned in cl 5, the respondent, at her own initiative and, it seems, at her own expense, supplied facilities for the comfort of those working on the premises, such as a refrigerator and tea and coffee-making facilities.
45 In the submission of the appellant on appeal, a significant feature of the respondent's situation was that she was responsible for the staffing of the agency. For most of the week, she would operate the agency by herself. On Saturdays, she would usually roster two additional members of staff, and on Thursdays, Sundays and some Friday nights, she would roster one additional member of staff. She did not work on Mondays and Tuesdays (taking them as what she described as "a delayed weekend"), and would roster a member of staff to replace her on those days. These staff members were employees of the respondent. In engaging them, she did not act merely on behalf of the appellant. Their terms of engagement were, subject to their agreement and compliance with the law, determined by the respondent, such as whether they were casual or part-time (as it happened, they were casual), how much they were paid and their hours of work. The respondent undertook the conventional responsibilities of an employer in this situation, including the withholding of "pay-as-you-go" ("PAYG") tax instalments and the forwarding of them to the Australian Taxation Office ("the ATO").
46 The position with respect to payroll tax was complicated by a change in the practice of the Queensland Office of State Revenue in 2008. Before the change, the respondent was grouped with other agents, with the result that they were all required to pay payroll tax, whereas the payroll of any one of them considered individually, and certainly of the respondent herself, would have fallen below the threshold at which payroll tax became payable under the Payroll Tax Act 1971 (Qld). At that time, the respondent paid payroll tax on the wages paid to her employees, and was reimbursed by the appellant. In 2008, the Office of State Revenue discontinued the grouping practice, with the result that the respondent was no longer required to pay payroll tax.
47 The respondent was an "active" member of the Queensland UNiTAB Agents Association ("the association") from November 2008, and became the Vice-President of the association from November 2010. The primary Judge found that the association caused an enterprise agreement, the UNiTAB Agents Association (Sharon Morrow) Enterprise Bargaining - Certified Agreement 2008, to be reached with the relevant employees' association and registered in the Queensland Industrial Relations Commission. Although not specifically mentioned by his Honour, this was, presumably an agreement between the respondent as employer and those who were employed by her at the time: see Industrial Relations Act 1999 (Qld), s 142. Although this agreement was made before the term of the agency agreement, it was implicit in his Honour's observation that it continued to apply to the respondent's employees during that term.
48 As mentioned above, the respondent was registered for GST purposes. Each quarter, she lodged a Business Activity Statement ("BAS") which set out, amongst other things, her "total sales" for the quarter, her capital and non-capital purchases, and the amount of PAYG instalments which she had deducted from payments made to her employees. In evidence before the primary Judge were the respondent's BAS returns from the quarter ended 30 September 2004 to the quarter ended 30 September 2011. Over the four quarters to, and including, that ended 30 September 2011, the respondent returned a total of $236,255 in sales, $54,312 in capital purchases, $17,996 in non-capital purchases and $7,522 in PAYG instalments. She remitted $21,491 in respect of the GST which she had collected, against which she claimed $6,410 by way of input tax credits. The time taken to complete these four BAS returns, including the time taken to collect any information, was estimated by the respondent at 30, 18, 22 and 20 hours respectively.
49 The respondent's tax returns for the six years 2005-2010 were in evidence. In the return for the year ended 30 June 2010, the respondent completed the section headed "Business and Professional Items". As her "main business or professional activity", the respondent gave "TAB Agency Operation". She declared a "total business income" of $232,934 and claimed total expenses of $159,114. Her "net income … from business" was $73,820.
50 The respondent's position may be compared to that of agency managers who were expressly engaged by the appellant as employees. They were paid about $47,000 pa, in addition to which, presumably, they received paid leave and the other conventional entitlements of employees. By contrast, as noted above, the respondent's net income was $73,820 in the year to 30 June 2010. Because her income was related to the takings of the agency rather than to her own hours of work, any leave taken by the respondent would not, presumably, have affected her gross remuneration. But she would, again presumably, have had to fund the cost of a replacement to operate the agency during the period of her absence. On the other hand, as the primary Judge pointed out, the agency agreement did make provision for the respondent to receive certain minimum payments if the agency were closed for resite or refurbishment.
51 No PAYG instalments were deducted by the appellant from the commission payments which it made to the respondent.
52 As the primary Judge pointed out, the respondent's operation of the agency did not result in her having any goodwill in the relevant business. She had no asset that she might sell if she chose to leave the agency. She could do so, of course, only by giving three months' notice. By contrast, the appellant might have terminated her appointment at any time, and for any reason, without notice. In these respects, his Honour was correct to observe that the respondent's position was "entirely akin to that of an employee who has no right to sell the job to the next incumbent".
53 Towards the start of the primary Judge's reasons, his Honour identified the law to be applied to the determination of the question whether a particular person was an employee or an independent contractor as follows:
The most recent authorities, Stevens v Brodribb Sawmilling Co Pty Ltd … (1985) 160 CLR 16, Hollis v Vabu Pty Ltd (2001) [207 CLR 21] and ACE Insurance Ltd v Trifunovski (2013) … 209 FCR 146, make the following propositions clear:
a. the characterisation of the relationship by the parties, whilst of some weight, is not determinative of the proper characterisation of that relationship;
b. no one matter is likely to be determinative of whether a particular relationship between two people is that of employer and employee. Some matters will attract more weight in a particular case than those same factors will attract in another case; and
c. the "test", if there is one, is said to be multi-factorial. All of the relevant circumstances need to be weighed and the totality of the relationship identified.
54 At the point where his Honour came to apply the law to the facts and circumstances before him, however, he extracted the following "tests" from the judgment of Bromberg J in On Call Interpreters and Translators Agency Pty Ltd v Federal Commissioner of Taxation (No 3) (2011) 214 FCR 82, 123 [208]:
Simply expressed, the question of whether a person is an independent contractor in relation to the performance of particular work, may be posed and answered as follows:
Viewed as a "practical matter":
(i) is the person performing the work [of] an entrepreneur who owns and operates a business; and
(ii) in performing the work, is that person working in and for that person's business as a representative of that business and not of the business receiving the work?
If the answer to that question is yes, in the performance of that particular work, the person is likely to be an independent contractor. If no, then the person is likely to be an employee.
55 The primary Judge opined that a "genuine" independent contractor providing personal services would typically be "autonomous rather than subservient in its decision-making". It would be "financially self-reliant rather than economically dependent upon the business of another". It would be "chasing profit (that is a return on risk) rather than simply a payment for the time, skill and effort provided".
56 In what was "a finely balanced case", his Honour identified the indicators pointing in the direction of the respondent having been an independent contractor as the characterisation of the relationship by the agency agreement itself, something which was clearly understood by the respondent; the respondent's accounting to the ATO; the respondent's employment of others; the respondent's membership of, and active participation in, an employers' association; the respondent's remuneration by way of recipient-created tax invoices; the respondent's Australian Business Number; the respondent's lodgement of quarterly BASs; and the respondent's payment of GST on supplies made to the appellant by her.
57 The primary Judge also identified various "strong indicators pointing towards an employee-employer relationship", namely, the tight control which the appellant exercised over the conduct of the agency; the provision of premises by the appellant; the provision of plant, equipment and other consumables (except for staff amenities) by the appellant; the prohibition on the respondent engaging in the provision of services to other like businesses such as bookmakers; the tight control which the appellant exercised over "the identity of the persons that [the respondent] could employ as staff"; the appellant's reservation to itself of the right to approve any proposed leave of absence; the requirement for the respondent to purchase "the relevant supplies" from the appellant; the reimbursement, at least for some period, of the respondent by the appellant for the payment of payroll tax; the inability of the respondent to make autonomous decisions about the conduct of betting services provided through the agency, and to make autonomous decisions about the conduct of the agency business generally; and the requirement for promotional activities undertaken by the respondent to be approved by the appellant.
58 Overall, his Honour was left with the impression that the respondent was "clearly working in the [appellant's] business rather than in a business of her own". His Honour noted that, whilst success in the agency meant an increase in the respondent's net income, "that was only ever a sharing of the profits of the agency". His Honour concluded:
The income of the agency belonged to the [appellant], subject to its obligation to pay commission to [the respondent] according to the scales set out in the agency agreement. Remunerating employees by way of commission is not uncommon.
I appreciate the [appellant's] argument that [the respondent] was operating a business in her own right as a TAB Agent, and that business of providing skill and labour in operating the agency was fundamentally different to the business of the [appellant], a business of betting and wagering. Nonetheless, the measure of control provided for in the contract between the parties, together with the evidence of the way in which that control was exercised, as I have set out above, leads me to conclude that [the respondent] was in fact an employee of the [appellant]. That is so even though [the respondent] was herself an employer of others in the agency.
59 In its Notice of Appeal dated 24 July 2014, the appellant's first ground was that the primary Judge was in error to have found that the respondent was its employee. The appellant's second ground amounted to a ten-item litany of factual errors said to have been made by his Honour, but the appeal was not conducted by reference to those complaints. As conducted, the appeal was confined to the first ground, in support of which the appellant submitted that his Honour had applied the wrong test, particularly to the extent to which he relied upon the judgment of Bromberg J in On Call.
60 As mentioned above, one of the authorities to which his Honour referred was ACE Insurance Ltd v Trifunovski (2011) 200 FCR 532. That was the judgment at first instance in that case. About three months after the primary Judge in the present case reserved his judgment, but still more than 17 months before his Honour handed down that judgment, the decision of the Full Court in ACE Insurance was published: ACE Insurance Ltd v Trifunovski (2013) 209 FCR 146. In the reasons of the Full Court, Buchanan J, with whom Lander and Robertson JJ agreed, undertook a comprehensive review of the authorities in the relevant area of the law. On the present appeal, it was not suggested that that review, or the authorities considered in it, cast any doubt upon the high-level articulation of the correct approach offered by the primary Judge, referred to in para 53 above. For that reason at least, the present is no occasion to traverse again the ground covered by Buchanan J in ACE Insurance. But there is one dimension of the problem which has become controversial here, it being submitted on behalf of the appellant that, although the primary Judge identified the correct approach, at the point when he came to decide the case before him he departed from it.
61 The area of the primary Judge's reasons which is said to be problematic is that set out in para 54 above. As will be seen, his Honour ultimately saw the question as one which involved, in effect, a dichotomy between a situation in which the putative employee works in the business of another and a situation in which he or she conducts his or her own business as an "entrepreneur". To view the matter through a prism of this kind is, however, to deflect attention from the central question, whether the person concerned is an employee or not; or, perhaps, as Mason J put it in Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16, 28, to "shift the focus of attention" to a no less problematic question. As Buchanan J put it in ACE Insurance, "[w]orking in the business of another is not inconsistent with working in a business of one's own" (209 FCR 146, 182 [128]). On the other hand, if the putative employee's circumstances exhibit the characteristics of a business, that will undoubtedly be a matter proper to be taken into account in determining the question at hand, so long as sight is not lost of the question itself. The question is not whether the person is an entrepreneur: it is whether he or she is an employee.
62 After we had reserved on this appeal, the Full Court handed down judgment in Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] FCAFC 37, in which the question arose whether two serviced apartment housekeepers, who had traditionally been employed by the respondent in that case, were no longer so employed after arrangements were put in place for their services to be supplied by way of an intermediary. The cause of action arose under s 357 of the FW Act, in which respect it was held that the Ombudsman's case failed because the actual representation which was made in the facts of the case did not satisfy the terms of the section. But North and Bromberg JJ (with the agreement of Barker J) gave detailed attention to the question whether the cleaners were employees or independent contractors, in the course of which their Honours held that the answer to any such question would be yielded by first answering the question whether the workers in question were engaged in the conduct of their own businesses. While I would pay the greatest respect to this recent, considered, judgment of the Full Court, the fact is that their Honours' observations were, relevantly, by way of obiter. Furthermore, the present case is, on the facts, very different from Quest.
63 In the present case, the respondent was, on any view, working in the business of the appellant. Operating in the appellant's specialised premises, and using the appellant's equipment, methods and systems as she was, the respondent had little scope to vary the way she worked. Insofar as her actual work was concerned, there would have been little to distinguish her position from that of an employee, such as the employed managers who, it seems, worked for the appellant in some agencies. The primary Judge was justified in pointing to a number of indicia which suggested that the relationship in question was that of employer and employee.
64 Notwithstanding that, the situation before his Honour involved a number of features that, in combination, compel the conclusion that the respondent was not the employee of the appellant.
65 First (and this may be little more than laying the groundwork for the other features mentioned below), in the agency agreement itself it was provided that the respondent was an independent contractor. This was said to be an "acknowledge[ment]", rather than a provision of contractual force in its own right, reflecting, no doubt, the parties' appreciation that the reality of the relationship established by the agreement would determine whether the respondent was in truth an independent contractor, and that any attempt by them to place a "label" on the relationship would be of little importance. But their understanding of the position may, and in the present case would, be significant to the extent that it reflected what was the reality of the relationship: see Australian Mutual Provident Society v Chaplin (1978) 18 ALR 385, 389-390.
66 It is important to distinguish this case from one in which an acknowledgement of the kind contained in cl 2 of the agency agreement does not reflect the real intentions of the putative employee. In this case, the agency agreement was the fourth in a line of similarly-worded agreements. There can be no suggestion that the respondent did not clearly appreciate the distinction between being an employee and being an independent contractor. As noted below, she structured her own arrangements conformably with the circumstances of a business operator. By the time she executed the agency agreement, she knew exactly what was proposed, and intended that her relationship with the appellant should be as acknowledged in cl 2.
67 Secondly, although the respondent might, in her own work in the premises of the agency, have been acting just as an employee would act in like circumstances, the truth of the matter is that she was not engaged, or paid, for her own work alone. She was engaged to operate the agency, and was paid by reference to the value of the business transacted there. She was not required to perform all the work herself, but was free to employ others to assist her or, on occasion, to work in place of her. The respondent's active membership of the employers' association, and her execution of an enterprise agreement with the relevant trade union covering her employees, are factors which stand outside the terms of the agency agreement itself, of course, but they are strongly consistent with the position for which the appellant contended, namely, that the respondent was engaged to operate the agency with the assistance of such employees as may have been necessary.
68 Thirdly, and relatedly, in the employment of staff the respondent was no mere agent for the appellant, or conduit for the transmission of benefits and obligations as between the appellant and the staff whom the respondent employed. The respondent employed the staff, and undertook, as principal, the conventional obligations of the employer. For example, the respondent paid the required workers' compensation premiums. The only exception to what appears to have been a consistent pattern in this regard was the situation in respect of payroll tax obligations, where the respondent was, during the period when she was grouped with other agents, reimbursed by the appellant. That situation came about by reason of an administrative practice of the Office of State Revenue, and did not reflect on the reality of the relationship between the appellant and the respondent.
69 Fourthly, the respondent's net personal income was only about a third of the gross remuneration which she received for operating the agency (to take the 2010 figures referred to at para 49 above). It is sometimes said that the essence of an employment relationship is the work and skill of the person concerned. The greater the divergence between the overall remuneration of the person and his or her personal net income from the arrangement, the harder it will usually be to conclude that the essence of what was being paid for was the work and skill of that person. The respondent's main outlay, of course, was by way of wages for her employees, and to that extent this consideration merges with the second one referred to above, but the degree of the divergence apparent on the facts of the present case is nonetheless a striking feature of the respondent's circumstances.
70 Fifthly, in contemporary Australia, it is impossible to ignore, and difficult to depreciate, 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. These observations are made, of course, in the context of the present case, where there is no suggestion that the respondent's participation in the GST system did not reflect her own conscious, well-informed, intentions.
71 There was nothing tokenistic about the respondent's participation in the GST system. Not only did she collect, and forward to the ATO, GST in the amounts referred to in para 48 above, but, over the course of a year, she invested about 90 hours of her own, or of her accountant's, time in the preparation of the relevant BAS returns and the collection of the necessary information: the equivalent of more than two weeks' work for a normal wage-earner. There would be something conspicuously at odds with the reality of the respondent's own actions, and the assumptions which those actions implied, were it now to be held that the respondent's participation in the GST system was undertaken because of her own mistaken characterisation of her relationship with the appellant.
72 For the reasons stated above, I take the view that the primary Judge's conclusion that the agency agreement established a relationship of employer and employee cannot be sustained. The appeal must be upheld, and the primary Judge's order under s 117 of the FW Act set aside.