Are they an independent contractor or employee?

Recent case involving church worker looks at multi-factorial test

Are they an independent contractor or employee?

The Fair Work Commission (FWC) dealt with the case of an unfair dismissal claim filed by a worker who said she was fired for getting the COVID-19 vaccination, an act that goes against her employer’s beliefs.

After submitting that there was no written employment contract between them, the employer, in this case, argued that she was an independent contractor and said there was no unfair dismissal. How can HR know if a worker is an employee or an independent contractor?

Background of the case

The worker filed for unfair dismissal after claiming that the w employed her. The employer raised a jurisdictional objection, arguing that the worker was an independent contractor engaged by Ubuntu Wellness Clinic, a separate entity.

The Vice President of the church is registered as an individual or sole trader and holds several business names, including Ubuntu Wellness Clinic. The VP is also the owner or operator of the clinic.

The employer believes that “receiving a COVID-19 ‘inoculation’ is contrary to God’s teachings and respondent will not hire anyone as contractor or volunteer who has received an inoculation.” The parties agreed that the contract was terminated because the worker received a COVID-19 vaccination.

What is the test to determine if an employee is an ‘independent contractor’?

In a recent High Court decision, it was held that a “multi-factorial test” is necessary to determine whether a party is an independent contractor or not.

“Where parties have comprehensively committed the terms of their relationship to a written contract and validity of the contract is not in dispute, their relationship is characterised by reference to the contract, rather than by reviewing the history of their dealings,” the High Court said.

“But where there is no comprehensive written contract or the validity of the contract is challenged, the multi-factorial test is relevant,” the court added.

The FWC found out that there was no written contract between the worker and the church or the clinic, alleging that their agreement was verbal. The FWC considered the factors that may be applied in a multi-factorial test.

The Commission discovered that the worker had no control over how her work was performed; did not pursue or generate her own client base; and she did not work independently.

According to records, there was also a purported requirement that the worker become a church member and comply with its belief systems. The FWC found this as “further evidence of control.”

Adding to the findings, the FWC said that there was no evidence that the worker had a separate place of work or advertised her services to the world at large; provided any tools or equipment necessary to perform the work; or had the right to delegate or subcontract her work to others.

Income tax and paid holidays as indicators

However, the FWC also noted that no income tax was deducted from the worker’s wages and found that she was responsible for conducting her own taxation affairs.

“[This] indicated an intention by the church/clinic to engage her as a contractor, but did not establish that she actually was a contractor,” the FWC said.

Moreover, the worker did not receive paid holidays or sick leave other than an ex gratia payment when she was absent from work due to a medical procedure. “While this is an indication of the [worker] being an independent contractor, it is equally an indication of casual employment. Alternatively, it may be that the church/clinic did not provide [her] with NES (National Employment Standards) entitlements,” the FWC said.

What made her an ‘employee’?

The FWC noted that the worker did not provide invoices after the completion of tasks. She created no goodwill or saleable assets for her own business, and there was no evidence that she spent any of her remunerations on business expenses associated with any business she was running.

The FWC found that the evidence “weighed overwhelmingly” in favour of a finding that she was an employee of the church or clinic. It concluded that the clinic “was part of, and controlled by the church, and it followed the [worker] was employed by it.”

Regarding unfair dismissal, the FWC directed that it would now proceed to a hearing on the merits to determine whether there was a valid reason for the worker’s dismissal and whether it was procedurally fair.

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