Marketing consultant said she was presented to the public, staff and clients as the employer's CEO, which proves an employment relationship
A marketing consultant challenged the employer's argument that she was an independent contractor, not an employee, contending that the manner of her suspension, investigation, and termination indicated an employment relationship.
The worker claimed that she was presented as the CEO to staff and clients, took over day-to-day operations with all staff reporting to her, and was subsequently suspended and then investigated before being terminated.
The employer maintained that the worker was engaged through her company to provide consultancy services, issued tax invoices for these services, and the parties never discussed or agreed that the worker would be an employee.
Engagement and the CEO role
The employer was a small business creating custom lighting arrangements for various projects. The worker was the sole director and shareholder of a management consultancy company.
The company did not employ any employees, apart from the worker. In 2023, the employer sought to engage an external consultancy to assist with its expansion and growth, primarily in the marketing space.
The worker's company was one of three businesses interviewed for the provision of such consultancy services in October 2023, whereby the company pitched itself to provide and deliver strategic marketing outcomes for the employer. Out of the three businesses interviewed, the worker's company was successful.
The parties accepted that the employer engaged the worker's company to provide its marketing consultancy services from 2 February 2024 to 30 April 2024.
There was no formal written agreement between the parties regarding this engagement; however, the presentation provided by the worker on behalf of her company to the employer outlined the nature and scope of the services to be provided.
Both the employer's director and the worker confirmed that this initial engagement ended on 30 April 2024. Regarding this engagement, the worker's company issued a tax invoice to the employer each month.
On 1 March 2024, during the term of the initial marketing engagement, the worker and the employer's two directors had a lunch meeting. At this meeting, a discussion was held on expanding the employer's business in a more holistic manner beyond the marketing services already being provided. These discussions progressed, whereby the worker's company put forward two different options to the employer.
Firstly, for the company to continue providing its marketing services to the employer and bring in other specialist contractors to provide additional and complementary growth services, to be project-managed by the company. Secondly, and alternatively, the external recruitment and subsequent appointment of a general manager to lead and manage the employer's business for an interim period.
Payment via tax invoices
Ultimately, it was agreed that the worker would be appointed as the general manager or fractional/interim CEO of the employer's business from 1 May 2024, for a period of six months, at which time a re-evaluation and reassessment were to occur, potentially extending the arrangement for a period of up to 12 months.
There was no written agreement between the parties regarding the CEO engagement, beyond an email dated April 9, 2024. In terms of payment for the CEO engagement, it was agreed between the employer and the worker's company that the employer would pay the company $17,000 per month plus GST, for the worker to be engaged through the company as the CEO of the employer's business.
Regarding the CEO engagement, the worker's company issued a tax invoice each month from May to November 2024 to the employer, in the amount of $18,700, which was $17,000 plus GST of $1,700 per month.
This payment encompassed any work that the worker undertook as part of the CEO engagement, and any hours that the worker undertook, be they ordinary or normal working hours, or any additional hours. It was up to the worker to do the hours she determined appropriate or necessary to fulfil the CEO engagement.
In addition to the CEO engagement, the worker's company also provided additional marketing services to the employer during the period of the CEO engagement, in June and November 2024. The company issued tax invoices for the months of June and November 2024 in respect of these additional services.
There was no discussion or agreement between the employer and the worker's company as to the worker being engaged as, or otherwise being, an employee of the employer, during the period of the CEO engagement or otherwise. The employer did not pay the worker superannuation or withhold taxation from any of the payments it made to the company.
The worker received superannuation payments from her company. The worker was not provided with sick leave or annual leave, however, there was no suggestion that the worker was not paid for any time she took off to attend to personal issues or other appointments. Nor did the worker make any request for leave.
Presented as CEO to staff and clients
Upon her engagement as CEO, the worker was able to work her own hours, subject to touching base with either director as to time off to attend personal issues or appointments, was reimbursed for expenses incurred, was presented to the public, staff and clients as the employer's CEO, and was provided with an email address for use in her communications with staff and clients.
The worker also took over the running of the day-to-day operations of the employer's business, with all staff reporting to her. She would consult with the directors as to their or her recommendations in respect of business decisions, and the implementation of the same, including the hiring of new staff, dealing with employee grievances and absences, making employees redundant, and finalising hybrid arrangements for staff. There was no job description for the CEO engagement.
There was no suggestion on the evidence that the worker was prohibited from running her company as a business during the period of the CEO engagement. Whilst the worker's time may have been consumed by the CEO engagement and the additional marketing engagement, this was not the same as her being required by the employer to abandon her work with her company during these engagements.
In other words, it was up to the worker to prioritise the work and the workload that she had agreed to take on, on behalf of her company, with the employer. There was no suggestion that any of the engagements between the worker and the employer, if she was found to be an employee, gave rise to any award coverage.
Suspension and investigation
On 22 November 2024, the worker was issued with a "Confirmation of Suspension" letter, which stated: "The purpose of this letter is to formally advise you that a number of complaints of serious misconduct have recently been brought to our attention. Due to the serious nature of these complaints, we confirm that you will be stood down and suspended from your normal duties pending the resolution of this matter. This period of suspension should not be viewed as a disciplinary sanction in and of itself and you will of course continue to receive full pay and benefits during this period of suspension. Whilst you are suspended you must not attend the office, or contact any client or fellow employee, without my prior express consent."
On 25 November 2024, the worker was issued with an "Invitation to Investigation Meeting" letter, which stated: "The purpose of this letter is to formally advise you that we are investigating a grievance raised by Alex Kauler in relation to your employment with the Employer."
The letter set out the specifics of the grievance raised against the worker, including allegations that on an ongoing basis the worker had told employees they had ADHD and needed medication, the worker belittled an employee to the point she was reduced to tears, and the worker made inappropriate comments during a meeting.
The letter stated: "We remind you that if any of the above issues are proven this behaviour may constitute bullying and could result in disciplinary action up to and including termination of your employment."
The worker advised that she would be responding to the allegations raised against her in writing, and provided that response through her lawyers on 13 December 2024. In short, the worker denied any wrongdoing on her part.
On 24 December 2024, the worker was issued with a "Termination of Verbal Independent Contractor Agreement" letter, which stated: "We refer to your verbal independent contractor agreement. The Company would like to inform you that it will be terminating the Agreement due to operational reasons following the recent investigation. By way of clarification, the Agreement will cease to be effective as of Tuesday 24th December 2024. Please note that you will be paid for any services provided up to and including the date of termination. You will not be entitled to any other compensation."
Neither the worker's company nor the worker performed any work for the employer after 24 December 2024.
Employment relationship found
The Commissioner noted that in determining whether or not the worker was an employee of the employer, the Commissioner needed to assess the true substance, practical reality and true nature of the relationship between the worker and the employer, having regard to the totality of the relationship between them, the terms of any contract between them, and how that contract was performed in practice.
The Commissioner found there were clear differences between the initial marketing engagement and the CEO engagement. The title of CEO, the presentation of the worker as an employee of the employer to staff, clients, and the public, and the nature of the work performed by the worker in the employer's business, were all indicative of an employment relationship.
The Commissioner accepted that the employer had the right to direct the worker in the performance of her work as CEO. However, the evidence did not establish that such right to direct extended to a right to require "how" such work was performed. The Commissioner found the manner in which the worker was remunerated for the CEO role was via the payment of tax invoices issued by the worker's company to the employer.
The worker never sought to be remunerated in any other manner. Indeed, the method of remuneration was based upon how the worker had chosen to structure her affairs, through her company, including upon the provision of professional advice as to her taxation and financial matters.
The Commissioner noted the evidence disclosed that the parties reached an agreement for the worker, through her company, to perform the CEO role on an interim basis, for the amount of $17,000 plus GST per month. What was not clear on the evidence was whether, if the parties had turned their mind to the worker being an employee, the same remuneration would have been agreed. In other words, it simply could not be the case that the amount of $17,000 plus GST per month would have been agreed by the employer as a wage, or was to be converted to a wage, such that notice of termination, leave or other entitlements were to be applied at this figure.
The Commissioner found that the suspension of the worker, the subsequent investigative process, and the manner in which the relationship between the parties was brought to an end all pointed to the worker being employed by the employer. These matters were unexplained by the employer on the evidence.
The Commissioner found in this case that the criteria were very much finely balanced. That said, the manner in which the relationship was dealt with in December 2024, and brought to an end that month, pointed strongly in favour of the worker being an employee of the employer. The Commissioner was only required to determine whether the worker was an employee of the employer as at the date of her purported dismissal, being 24 December 2024.
The Commissioner's overall impression of the true substance, practical reality and true nature of the relationship between the worker and the employer as at 24 December 2024 was that it was a relationship of employment. It followed that the Commissioner also found that the worker was "dismissed" on 24 December 2024.
