Independent contractor or not: Worker asserts oral contract

Employer argues individual had her own business

Independent contractor or not: Worker asserts oral contract

In a recent case, a worker who had been engaged by a circus company found herself without a job after her working arrangement was terminated by the company's director.

The worker, who had initially been hired as part of the tent crew and later took on additional responsibilities such as driving vehicles and working in the canteen, believed that she had been unfairly dismissed and sought a remedy through the Fair Work Commission (FWC).

The circus company, however, argued that the worker was not entitled to the protections afforded to employees under the Fair Work Act 2009 (Cth) (the Act) because she was an independent contractor, not an employee. This distinction is crucial, as independent contractors are not covered by the unfair dismissal provisions of the Act.

Background of the case

The central question was whether the worker was truly an independent contractor running her own business or whether she was, in fact, an employee of the circus company.

To answer this question, the FWC had to consider a range of factors, including the level of control the circus company had over the worker's day-to-day activities, how she was paid, and the extent to which she was integrated into the circus company's business.

The case also involved a third party, a company that initially engaged the worker and paid her wages before she began receiving payments directly from the circus company. This added an extra layer of complexity to the case, as the FWC had to consider whether there had been a transfer of employment from the third party to the circus company at some point during the worker's engagement.

The worker was engaged by the employer from 28 August 2023 until 29 January 2024. She initially worked in the tent crew and was paid a weekly sum by a third party, MR Home Services & Maintenance (MR Home Services), without any tax deductions or superannuation contributions.

Later, her role expanded to include driving vehicles and working in the canteen, and she received payments directly from the employer.

The employer submitted that the worker was operating her own independent business, as she agreed not to be an employee, was responsible for her own tax and superannuation, and provided invoices under her Australian Business Number (ABN).

However, the worker denied any agreement about working under "non-employment" conditions and claimed she had no choice but to invoice the employer to receive payment.

Legal framework

The FWC referred to the legal principles set out by the High Court of Australia in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (Personnel Contracting) and ZG Operations Australia Pty Ltd v Jamsek.

These principles emphasise the importance of examining the contractual rights and obligations of the parties to determine the nature of their relationship.

The decision noted that the characterisation of a relationship often hinges on two key considerations: the extent of the employer's right to control how, where, and when the worker performs the work, and the extent to which the worker can be seen to work in their own business, as opposed to the employer's business.

As the Federal Court also stated in Secretary, Attorney General's Department v O'Dwyer, these principles apply equally to situations where there is no wholly written contract between the parties, but instead an oral contract or one that is partly written and partly oral.

Analysis of the case

In this case, there was no written contract between the parties. The FWC examined the evidence of the contractual arrangements governing the worker's engagement with the employer. It was found that:

"It is difficult to arrive at any conclusion other than that the relationship between [the worker] and [the employer] was one of employment. She was a labourer, working in the Circus' tent crew. Her job description and daily tasks were set by [the employer] and MR Home Services. These evolved over time to include driving and canteen work. [The worker] had no control over her work activities independently of [the employer] and/or MR Home Services," the decision said.

The FWC determined that the worker's engagement was governed by an oral contract of employment, either initially with MR Home Services and later transferred to the employer, or always with the employer.

"What is clear is that at the time of her dismissal, [the worker] was employed by [the employer]. She was not conducting her own business and was clearly serving in the business of [the employer]," the FWC added.

The FWC dismissed the employer's jurisdictional objection, finding that: "[The worker] was employed by [the employer] at the time she was dismissed." The decision emphasised that the worker was not operating her own business but was serving the employer's business. The FWC then referred the case to further hearing.

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