He ran the company as CEO and even negotiated his own leave credit - so why wasn't he staff
A man who ran an AI healthcare startup as CEO has lost a dismissal claim - a tribunal found he was not an employee.
On July 22, 2026, the Fair Work Commission dismissed a general protections claim, finding it had no jurisdiction to hear it. The applicant, who had served as chief executive of an AI healthcare startup, was an independent contractor rather than an employee. Under the Fair Work Act, only an employee who has been dismissed can bring a claim of this kind, so the classification question determined the outcome.
The worker ran the startup as CEO but supplied his services through his own company under an independent contractor agreement. When the arrangement ended in March 2025, he argued that the contractor structure had been a "sham to avoid obligations" and that he had in fact been an employee who was constructively dismissed - pushed out by the employer's conduct rather than leaving voluntarily. The company objected that he had signed a contractor agreement through his own corporate entity and could not use the dismissal jurisdiction.
To decide the point, the Commission applied section 15AA of the Fair Work Act. Introduced after two 2022 High Court decisions, the provision directs decision-makers to look beyond the words of the contract to the "real substance, practical reality and true nature" of the relationship. In practice, that means weighing a range of factors: who controlled the work, whether the person could work for others or delegate, how they were paid and taxed, whether they received leave, and how they presented to the outside world.
Some factors pointed toward employment. The company's acting chief executive controlled its finances and directed which opportunities the CEO pursued and how. The CEO worked full time, had limited practical ability to take on other clients, was paid for his time rather than for completed tasks, and presented himself publicly as part of the business, including by wearing company-branded clothing at an industry conference.
Other factors pointed toward an independent contract, and the Commission gave them significant weight. The CEO was an experienced businessman with an MBA who negotiated the agreement at arm's length. He chose to contract through his own company partly because it held tax losses. He asked for the leave credit and the limited warranties that he later cited as indicators of employment. He invoiced monthly, no income tax was withheld, and the contract allowed him to delegate the work. When payments stopped, he issued a formal default notice and then a termination notice under the contract before arguing to the Commission that the same contract was a sham.
The Commission found he could not rely on the contract's terms to end the relationship and, at the same time, argue that those terms did not reflect the true position. Considering the relationship as a whole, it held that he was not an employee and dismissed the application.
The Commission's ruling was confined to jurisdiction. Having found the worker was not an employee, it did not decide the merits of his underlying claims, including his allegation of adverse action. The decision was a first-instance ruling of the Commission.
For HR teams, the case is a practical illustration of how worker status is assessed under section 15AA. In this instance, a CEO title, a leave entitlement and an employee share option plan did not, on their own, make the worker an employee. How a senior engagement is structured - and how the contract is relied on when the relationship ends - can carry as much weight as the day-to-day work.
