Contractor v Employee Debate continues7 October 2021
By Sagorika Platel (Associate)
We are at an exciting juncture in the contractor/employee debate with two significant decisions on cusp of being heard in the High Court. However, and until that time, the test enunciated in Stevens v Brodribb Sawmilling Co Pty Ltd and Hollis v Vabu is still good law and robustly reinforced in the Fair Work Commission decision of Erin Shay v Christopher Shannon  FWC 2815.
Erin Shay v Christopher Shannon  FWC 2815 (Shay)
The Fair Work Commission’s decision in Shay involved the classic jurisdictional objection of ‘the Applicant could not possibly have been dismissed, they were an independent contractor!’.
In his determination, Deputy President Gostencnik takes us through a line of authorities exploring the employee/contractor dichotomy and current tests.
On 30 July 2018, the Applicant, Ms Shay, started working for the Respondent, Mr Shannon. The Respondent was in the business of hosting games in venues across Victoria. The business was called “Shannon Entertainment”.
There were no written contracts between the parties, but the understanding was that the Applicant would undertake ‘hosting work’ by attending a venue and setting up and hosting games.
The Respondent stipulated that the Applicant would earn $60 per hour and that she would be required to render invoices under her own ABN to the Respondent in order to receive payment for work completed.
The Applicant was given instructions on how to operate the game, including how to set up the game, how to circulate tickets to patrons, when to draw tickets and when to make announcements. The Applicant was told to follow these instructions.
When hosting the games, the Applicant was directed to complete a running sheet, recording the names of each person whose raffle ticket was drawn, and what prize they won. The Applicant was then required to take a photo of the running sheet and forward it to the Respondent.
The Applicant was provided with a shirt with a Shannon Entertainment logo, and she was instructed to wear this with black pants and shoes while she hosted the games.
The Respondent also provided the Applicant with the equipment to operate the game including a contraption with coloured balls, a pull up banner, Shannon Entertainment branded raffle tickets and the running sheet.
The location of the venue and the time which the Applicant was required to host the games were dictated by the Respondent.
The Applicant had to use her own vehicle to travel to each venue, however, she was able to charge higher fees for travel to regional venues.
On 23 November 2020 the Respondent terminated the relationship with the Applicant via text message.
Following the termination of what the Applicant claims was an employment relationship, she commenced general protections proceedings against the Respondent alleging dismissal in contravention of s340 of the Fair Work Act 2009 (Cth) (FW Act).
In reply, the Respondent raised a jurisdictional objection, contending that the Applicant could not have been dismissed as she had been engaged as an independent contractor.
Unfortunately the Respondent did not attend the jurisdictional objection hearing, thereby leaving the Deputy President to carefully consider all the evidence before him, mostly provided by the Applicant, in order to decide the true character of the relationship between the parties.
Drawing on the decision of Stevens v Brodribb Sawmilling Co Pty Ltd as summarised in Jiang Shen Cai trading as French Accent v Do Rozario  FWAFB 8307, Deputy President Gostencnik utilised the following indicia to determine the nature of the relationship between Ms Shay and Mr Shannon:
- Control – the Applicant was found not to have control over her conduct of the work as she was told “where”, “when” and “how” to undertake work for the Respondent. As a result, this factor weighed in favour of an employment relationship.
- Entitlement to work for others – There were no impediment to the Applicant working for others, however, this factor was compatible with casual employment.
- Provision of tools and equipment – The evidence suggested that other than using her vehicle to travel to venues, the Applicant provided no tools or equipment for the performance of her duties. Travel to venues in this instance was deemed no different to an employee using their vehicle to travel to their place of work and therefore compatible with an employment relationship.
- Entitlement to delegate or sub-contract work – The Applicant gave evidence that she was not able to delegate or subcontract work. This weighed in favour of an employee arrangement.
- Uniform branding and integration – Because the Applicant was required to wear a uniform branded with the Respondent’s logo, this evinced integration with the Respondent’s business and illustrate to the world that Ms Shay was connected or associate with the Respondent; much as an employee would be.
- Goods and Services Tax (GST) – As the Applicant was required to ‘deal with her own’ tax affairs, this factor weighed in favour of a contract for services.
- Provision of invoices and periodic payment – Although the Applicant invoiced the Respondent for work completed, Deputy President Gostencnik ascribed little weight to this factor on the basis that he accepted the Applicant’s evidence that her ABN was primarily used for her music business and that she did no regard her work for the Respondent as part of her music business. Further, the fact that the Applicant was paid an hourly rate was indicative of an employment relationship.
- Paid leave – the absence of paid leave was found to be compatible with a casual employment relationship.
- Nature of the work – the nature of the work did not require specialist professional skill or trade. It was found to be simple tasks to be performed in accordance with the Respondent’s instructions, therefore favouring a contract of services arrangement.
- Proportion of remuneration spent on business expenses and exposure to losses – The Deputy President accepted the Applicant’s evidence that she was not required to use a portion of her pay on business expenses, nor did she assume any business risks. This was in line with an employment relationship.
In conclusion, Deputy President Gostencnik found that the ‘overwhelming weight of the relevant indicia pointed towards an employment relationship’ notwithstanding the invoicing arrangement between the Applicant and Respondent.
Lessons for Employers
An invoicing arrangement, may not, by itself, be enough to demonstrate that the person engaged is truly an independent contractor.
When engaging an individual, an employer must carefully consider all the factors listed above to determine whether the relationship is truly an independent one, or whether, as happened in Shay, the relationship is one of casual employment.
At Hentys Lawyers, we welcome the opportunity to review your business arrangements with individuals and employees alike, and provide you with essential advice on the most appropriate structure to benefit your business activities.