Recent case highlights what really matters in contractor vs employee disputes
The Fair Work Commission (FWC) recently dealt with a case concerning whether a worker was an employee or an independent contractor. The worker had filed an unfair dismissal application after her services were terminated, claiming she was actually an employee despite being classified as a contractor.
The worker argued several points to support her employee status claim. She stated she had no control over her shifts, received regular weekly payments, had minimal financial risk, and didn't provide her own tools or equipment. She also noted that she obtained an Australian Business Number (ABN) specifically for this role, having never held one previously.
The employer firmly disputed these claims, presenting evidence that the worker maintained her own insurance, had schedule flexibility, and was responsible for her own tax affairs. The case turned on determining the "real substance, practical reality and true nature" of their working relationship.
The case involved a support worker providing services to a National Disability Insurance Scheme (NDIS) participant. The participant had previously received support through a Supported Independent Living (SIL) arrangement that ended in September 2023, requiring a new support model.
The legal guardian of the NDIS participant approached the worker months before the previous arrangement ended. Although showing initial interest, the worker didn't start until November 2023, after a meeting established the working arrangements.
The worker continued until December 2024, when her services were terminated following concerns about her performance. Before termination, she received an email outlining workplace concerns and requesting a discussion, which stated:
"To discuss these matters further, we would like to arrange a phone conversation with you at the earliest opportunity... Please let us know a suitable time for this discussion by 5pm Wednesday [18 December 2024]. If we do not hear from you by then, we will proceed with making decisions regarding the next steps."
The worker contended that despite her contractor classification, the real nature of her working relationship made her an employee. She based this on several factors including payment arrangements and control over her work.
While acknowledging she had an ABN, she noted it was obtained specifically for this role, stating: "Prior to the 23 November 2023, she had never held an ABN. Her evidence was that it was sourced solely for the NDIS Participant's support."
The worker claimed she had no control over her shifts, saying they "were dictated from the beginning, and she was just informed of the times."
She added that when shift lengths changed, she "was merely informed of the reduction in hours" and that these shifts "were fixed and worked on a two-week rotation."
The disability support coordination company presented evidence through several witnesses, including its director, bookkeeper, and the NDIS participant's legal guardian and other support workers.
The company's bookkeeper stated it "does not have any employees on payroll" and "exclusively engages independent contractors to supply services." The worker "received gross payments without PAYG tax deductions," confirming she was "responsible for her own taxation obligations."
The director claimed the company's role was "solely to process payments on a predictable schedule," but "did not dictate their work arrangements." This arrangement was reportedly established after a meeting where the terms of independent contracting were "discussed in detail and all the options available."
The Commission examined the relationship between the parties under section 15AA of the Fair Work Act which requires looking at "the real substance, practical reality and true nature of the relationship."
The Commissioner found that the company "did not have the level of control that is consistent with being an employer" but rather played "a coordination role, including of ensuring the payment of invoices."
A critical finding was that "[the employer] became a SIL provider because of its arrangement with the NDIS Participant, but [the employer] did not become an employer of the persons providing support to the NDIS Participant."
The Commissioner noted: "I am satisfied that [the employer] never offered employment to [the worker] and [the worker] never accepted an offer of employment from [the employer]. [The employer] was facilitating the wishes of the legal guardian, [the guardian], on behalf of the NDIS Participant."
The case highlights the importance of understanding the distinction between employees and contractors, particularly in a sector where various funding and support models exist.
The Commissioner explained that even though there was some coordination of the worker's activities, "the primary authority rested with [the legal guardian] as the legal guardian. However, it seems that the matters such as which Support Worker would work at which times were resolved as a matter between the Support Workers themselves."
The FWC examined who has real control over how work is performed, payment arrangements, tools and equipment provision, and other factors beyond just having an ABN and submitting invoices.
The Commissioner concluded: "I have determined that [the worker] was not an employee of [the employer] and was instead an independent contractor. On that basis this application is not within the jurisdiction of the Commission and must be dismissed."
