[2012] FWA 2943 |
|
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Peter Stanley
v
Jiarong Lin (Kim) T/A IGA Liquor Plus (SPQR Gourmet Groceries)
(U2011/14116)
Kathy Carty
v
Jiarong Lin (Kim) T/A IGA Xpress (SPQR Gourmet Groceries)
(U2011/14120)
COMMISSIONER RYAN |
MELBOURNE, 4 APRIL 2012 |
Termination of employment - jurisdiction - not employees.
[1] Applications were made pursuant to s.394 of the Fair Work Act 2009 (the Act) on 30 November 2011 by both Peter Stanley and Kathy Carty for an unfair dismissal remedy in relation to their dismissal by SPQR Gourmet Groceries P/L T/A IGA Liquor Plus (the Respondent).
[2] The applications were listed for hearing on 17 February 2012 for a Jurisdiction Hearing in relation to a jurisdictional challenge to the applications raised by the Respondent on the basis that the two Applicants were independent contractors and not employees.
Respondent’s evidence
[3] Evidence in the matter was given by both Applicants and by Mr Jiarong Lin aka Kim Lin, a Director of the Respondent.
[4] The evidence of Mr Lin was that he employed both Mr Stanley and Ms Carty as shop managers in his 2 supermarkets at Portarlington on the Bellarine Peninsula.
[5] Mr Lin stated that in September 2011 Mr Stanley approached him and proposed that Mr Lin engage him as an independent contractor. 1 On 18 October 2011 Mr Stanley tendered his resignation to Mr Lin with effect from 26 October 2011. Subsequent to resigning Mr Stanley offered to continue to work for Mr Lin but on the basis of being an independent contractor. While Mr Lin was unhappy with this course of action he reluctantly agreed to engage Mr Stanley as an independent contractor as from 27 October 2011.2 Mr Stanley worked for Mr Lin managing one of the supermarkets until the 23 November 2011 when the relationship ended after an argument between Mr Lin and Mr Stanley.
Mr Lin also stated that in early November 2011 Ms Carty rang Mr Lin and told him that she wished to resign and enter into a similar arrangement as applied to Mr Stanley. Ms Carty resigned her employment effective on 16 November 2011 and was engaged as an independent contractor as from 17 November 2011 managing one of the supermarkets. Ms Carty was advised in writing on 25 November 2011 that her service as an independent contractor was no longer necessary.
Applicants’ evidence
[6] The evidence of Mr Stanley was that he was approached on several occasions by Mr Lin with a request that both he and Ms Carty become independent contractors. Due to Mr Lin’s insistence on moving to independent contractor status Mr Stanley and Ms Carty went to the Australian Taxation Office (ATO) in Geelong to seek information in relation to Mr Lin’s requests. Mr Stanley agreed to change to an independent contractor on 14 October 2011 and on 18 October 2011 provided a written resignation at the request of Mr Lin. Mr Stanley continued to work as the shop manager for one of the Respondent’s supermarkets.
[7] On 17 November 2011 Mr Stanley had a heated argument with Mr Lin after Mr Lin informed him that Mr Lin was transferring a female staff member from the supermarket to his house where Mr Lin was relocating his office. Mr Stanley expressed his strong concern over this move as he was concerned for the female employees welfare. The argument ended when both Mr Stanley and Mr Lin settled down and regretted some things said in the heat of the argument. The pair parted after shaking hands. On 21 November 2011 Mrs Lin fired Mr Stanley.
[8] The evidence of Ms Carty was that in August/September 2011 Mr Lin became insistent that both she and Mr Stanley become independent contractors. Due to Mr Lin’s insistence on moving to independent contractor status Mr Stanley and Ms Carty went to the ATO in Geelong to seek information in relation to Mr Lin’s requests. At a meeting between Mr and Mrs Lin, Mr Stanley and Ms Carty both Mr Stanley and Ms Carty agreed to become independent contractors. Mr Stanley already had an ABN and could start immediately but Ms Carty did not have an ABN. Although Mr Lin offered to pay for Ms Carty to go to Mr Lin’s accountant to apply for an ABN Ms Carty went to her own accountant and applied for an ABN which she received on 1 November 2011. On 9 November 2011 Mr Lin asked Ms Carty to write a letter of resignation which was effective as from 16 November 2011 and Ms Carty continued to work as a Store manager at one of the supermarkets. On 25 November 2011 Mrs Lin attended the supermarket and gave a written notice of termination to Ms Carty effective immediately.
Move from employee status to independent contractors
[9] The evidence of all three witnesses was that during the period Mr Stanley and Ms Carty were independent contractors they were remunerated at a higher hourly rate than they had been as employees and that each of Mr Stanley and Ms Carty submitted invoices to the Respondent for their hours of work.
[10] The Respondent paid Mr Stanley and Ms Carty gross amounts for work as independent contractors without any tax being deducted.
[11] The evidence of both Mr Stanley and Ms Carty was that nothing changed in relation to the work they performed when converted from employees to independent contractors.
[12] Mr Lin provided no evidence that there was any change in the way either Mr Stanley or Ms Carty worked on becoming independent contractors. Rather Mr Lin described Mr Stanley’s role after becoming an independent contractor as: “He will be independently running my business and fully, basically, represent me as - you know, as a whole manager.” No evidence was given by Mr Lin as to what changed when Mr Stanley became an independent contractor. Mr Lin gave no evidence at all in relation to Ms Carty’s role as an independent contractor. Yet when Mr Lin gave evidence about Ms Carty as an employee shop manager in April 2011 he described her as follows:
“On Saturday, April 9, 2011, you approached me and said that the workload at the new store, Newcombe Street, was far too great for Kathy as there was a lot of work to do, and that you wanted me to go there as from Monday, April 11, I was going to go there as manager of that store and Kathy would return to the Express Store to re-assume her position as manager there. How do you respond to that?
---When we purchased the second store, at the time I reschedule the people work for me, and at the beginning Kathy did work with me longer than Peter and then I send Kathy to the new store and - to run the new business. But I find that Kathy is a very, very careful handling - like ordering, things like that. It's not about how heavy the work, because we don't need the work, we need someone smart. I can't smart - I just say someone when they do ordering they can understand the movement of the stock, and you can - not too scared to order things. Kathy very careful with ordering and we often - the shelving is empty, there is not enough stock. Due to this reason I say, "Let's try Peter, see how he go." That's - then we took another store. That's the answer, Peter.” 3
[13] Mr Lin considered the move of both Mr Stanley and Ms Carty from employees to independent contractors as a matter in which his hand was forced by the conduct of Mr Stanley and Ms Carty and as an outcome which he did not genuinely seek or pursue. Rather as Mr Lin would have it, he reluctantly accepted what he was forced into. 4
[14] Both Mr Stanley and Ms Carty considered that they were effectively pressured into accepting becoming independent contractors against their preference to remain employees and against the advice they had received from the ATO. 5
[15] Whilst each side in this matter blames the other for forcing the change to independent contractor status it is abundantly clear that neither side wanted Mr Stanley or Ms Carty to be engaged in a genuine relationship of client (the Respondent) and independent contractor (the Applicants).
[16] I do not need to decide who initiated the move from employee status to independent contractor status. It is clear from the evidence that both the Respondent and the Applicants had the potential to gain from the outcome. For the Respondent, it was relieved of two employees with all the consequences that flow from that and for the Applicants their hourly rate of remuneration increased.
[17] The test for determining whether a relationship is one of employer/employee or independent contractor/client is well expressed in Jiang Shen Cai trading as French Accent v Michael Anthony Do Rozario 6 (French Accent), which refined the test set out in Abdalla v Viewdaze Pty Ltd.7
[18] The test was expressed in French Accent as follows:
“[30] The general law approach to distinguishing between employees and independent contractors may be summarised as follows:
(1) In determining whether a worker is an employee or an independent contractor the ultimate question is whether the worker is the servant of another in that other’s business, or whether the worker carries on a trade or business of his or her own behalf: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own of which the work in question forms part? This question is concerned with the objective character of the relationship. It is answered by considering the terms of the contract and the totality of the relationship.
(2) The nature of the work performed and the manner in which it is performed must always be considered. This will always be relevant to the identification of relevant indicia and the relative weight to be assigned to various indicia and may often be relevant to the construction of ambiguous terms in the contract.
(3) The terms and terminology of the contract are always important. However, the parties cannot alter the true nature of their relationship by putting a different label on it. In particular, an express term that the worker is an independent contractor cannot take effect according to its terms if it contradicts the effect of the terms of the contract as a whole: the parties cannot deem the relationship between themselves to be something it is not. Similarly, subsequent conduct of the parties may demonstrate that relationship has a character contrary to the terms of the contract.
(4) Consideration should then be given to the various indicia identified in Stevens v Brodribb Sawmilling Co Pty Ltd and the other authorities as are relevant in the particular context. For ease of reference the following is a list of indicia identified in the authorities:
Control of this sort is indicative of a relationship of employment. The absence of such control or the right to exercise control is indicative of an independent contract. While control of this sort is a significant factor it is not by itself determinative. In particular, the absence of control over the way in which work is performed is not a strong indicator that a worker is an independent contractor where the work involves a high degree of skill and expertise. On the other hand, where there is a high level of control over the way in which work is performed and the worker is presented to the world at large as a representative of the business then this weighs significantly in favour of the worker being an employee.
“The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter’s order and directions.” “[B]ut in some circumstances it may even be a mistake to treat as decisive a reservation of control over the manner in which work is performed for another. That was made clear in Queensland Stations Pty. Ltd v Federal Commissioner of Taxation, a case involving a droving contract in which Dixon J observed that the reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract.”
(5) It should be borne in mind that no list of indicia is to be regarded as comprehensive or exhaustive and the weight to be given to particular indicia will vary according to the circumstances. Features of the relationship in a particular case which do not appear in this list may nevertheless be relevant to a determination of the ultimate question.”
[endnotes omitted]
[19] In the present matter the Tribunal need not consider the various indicia referred to in paragraph (4) of the above test. This is so because there is a fundamental point which goes directly to the first three paragraphs of the test.
[20] In this matter each of the Respondent and the Applicants disavowed an intention to freely and genuinely enter a relationship of client/independent contractor. There was no written contract in existence. Each of the Respondent and the Applicants assert that they entered into a contractual relationship without knowing the details of the contract. Each of the Respondent and the Applicants asserted that the contract that they entered into was not the relationship they wanted. Each of the Respondent and the Applicant asserted that the contract was not what it appeared to be.
[21] It is irrelevant as to who initiated the move from employee to independent contractor. What is so obvious is that it would be difficult to find a clearer case of a sham arrangement than the present matter.
[22] I find that the Applicants were at the time of the termination of their relationship with the Respondent employees of the Respondent.
[23] The application for an unfair dismissal remedy will be referred back to Commissioner Jones as Panel Head for the Unfair Dismissal Panel for allocation in relation to the issue of merit.
COMMISSIONER
Appearances:
P. Stanley on his own behalf
K. Carty on her own behalf
I. Gude for the Respondent
Hearing details:
2012:
Melbourne
17 February
Final written submissions:
Respondent by 9 March 2012
Applicants by 23 March 2012
1 Transcript at PN40, 43, 45
2 Transcript at PN59-60
3 Transcript at PN291
4 Transcript at PN40-59
5 Exhibit A2 at paragraphs 6 & 7
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