FWC determines if independent contractor arrangement involved
The Fair Work Commission (FWC) recently dealt with a case involving a worker who applied for an unfair dismissal remedy against his former employer, a barter trading exchange that uses cryptocurrency as its digital currency.
The employer objected to the application, asserting that no employment relationship existed between the worker and the employer, and that the worker was a director of a company who entered into a commercial agreement with the employer.
The case revolved around the nature of the relationship between the worker and the employer, with the central issue being whether an employment relationship existed at the time of the alleged dismissal.
Background of unfair dismissal case
The worker made an application to the FWC on December 30, 2023, seeking an unfair dismissal remedy. He said that he was unfairly dismissed by the employer on December 11, 2023.
The employer objected to the application, claiming that it did not employ the worker and that no employment relationship had ever existed between them. Instead, the employer contended that the worker was a director of a company that had entered into an agreement with the employer on August 3, 2022.
Prior to the August 2022 agreement, the worker and another director of the company had entered into a similar agreement with the employer in December 2021.
The employer claimed that it terminated the commercial contract with the worker on December 11, 2023, due to ongoing performance issues and allegations of conflicts of interest. The worker, on the other hand, strongly disputed the authenticity of the August 2022 agreement, alleging that it was “a sham contract” and that he was an employee of the employer.
Alleged employment relationship
The worker said that he worked for the employer from December 17, 2021, to December 11, 2023, and that he was instructed on what to do. He claimed that he was provided with a computer, work uniform, promotional material, and business cards paid for by the employer to carry out his work duties.
"The worker strongly asserts that he is an employee of the employer on the basis that he was directed on how, where and when to conduct his work," the decision said.
The worker also claimed that he was paid on a fortnightly basis by issuing invoices to the employer, and that the employer would deposit the money into the company’s account, from which the worker would disburse the money to himself.
The worker alleged that his dismissal was unfair because he was not informed of the outcome of an investigation into allegations of collusion with competitors and running another business during work hours.
Employer’s position on independent contractor
According to records, the employer maintained that the worker was not an employee but an independent contractor.
The employer relied on the terms of their agreement, which expressly characterized the engagement as an independent contractor relationship.
The agreement stated that "Your engagement under this Agreement is as an independent Contractor and you work according to your own schedule and roster provided that you meet your obligations herein and your agreed Business Plan.”
The agreement also outlined the basis upon which the employer could terminate the agreement and services, including for serious misconduct, material breach of the agreement, and collusion or working with a competitor.
FWC's consideration of contractual terms
The FWC applied the principles set out in recent High Court decisions, which emphasized that contractual terms, and not performance, would determine the true nature of the relationship where the contract was not a sham.
The FWC rejected the worker's claim that the agreements were sham contracts, noting that the worker had held the role of director since December 2021 and had fulfilled his obligations under the Corporations Act during that time.
The FWC found that the various terms of the agreements between the employer and the company of which the worker was a director demonstrated a business-to-business relationship.
The FWC stated that "The worker has for example fulfilled entirely different taxation obligations over the previous 3 years as he would have if he was an employee. The arrangements in place have not been challenged by the worker until the cessation of the arrangement."
Ultimately, the FWC was satisfied that there was no employment relationship between the worker and the employer. As a result, it was unnecessary for the FWC to determine whether the worker's employment was terminated at the initiative of the employer. The worker's application for unfair dismissal was dismissed.
