Worker argues she lacked control over when, where, or how services were done
The Fair Work Commission (FWC) recently dealt with a case involving a worker who claimed she was unfairly dismissed from her role at a premium rehabilitation facility.
The worker argued that she was an employee and entitled to protection from unfair dismissal, while the employer maintained that she was an independent contractor and therefore not covered by unfair dismissal laws.
The employer operates a premium residential rehabilitation facility where a maximum of four clients with substance abuse issues, addiction, depression, anxiety, and/or post-traumatic stress disorder stay onsite at any one time for a minimum of four weeks.
Clients are promised discrete, one-on-one care, rigorous case management, a team of expert medical and health professionals, and tailored solutions to identify and successfully treat the underlying cause of their condition(s).
Background of the case
The worker, a psychologist, had been providing creative arts therapy and somatic experiencing services to the employer's clients since January 2014.
She performed work on the residential programs onsite where those programs were conducted and the patients were staying.
She also performed work called 'after-care' for ongoing support and maintenance, usually by phone, zoom, or at her private business premises.
In November 2017, the parties entered into a written services agreement which set out the terms and conditions of their arrangement.
On 4 January 2024, the employer notified the worker in writing that the relationship would be ending. The employer later issued a letter informing the worker that the agreement was being terminated with 14 days' notice, as per clause 16.1 of the services agreement.
The worker's arguments
The worker submitted that the relationship between her and the employer was one of an employee/employer relationship. She argued that the services agreement was “a sham contract” and that she was contracted for her labour rather than her services.
The worker stated that she undertook two different types of work for the employer: in-residence, initial psychotherapy direct client services (residential care), and sessions conducted after the client was discharged (after care).
She considered the residential care aspect to be the basis of the employment relationship, whereas the after care work was a distinct offering separate from the employer's residential care program.
"The [worker] stated that she was certain that as far back as March 2014, that if she had ever made a request or placed a requirement on the [employer] to be an employee for the purposes of performing residential psychotherapy, that it would have been declined and her work with the [employer] would have ceased. She stated that for this reason, she felt pressured and intimidated and 'went along with' the independent contractor requirement for so long and that she genuinely knew there was no other option."
The worker also said that she did not have control over when, where, or how she provided the services under the service contract, and that she was required to complete a report form in each session as a summary and record of every session. She had signed an agreement stipulating that if she did not complete these forms, she would not be paid at all.
The employer’s arguments
The employer submitted that the services agreement comprehensively set out the rights and duties of the parties and was demonstrative of an independent contractor relationship.
They argued that the worker was entitled to control how, where, and when she delivered the services, and was not paid a wage or salary but rather at an hourly rate upon presentation of a valid tax invoice.
"The [employer] submitted that the [worker] was an independent contractor by reason of the following: (a) The rights and duties of the parties are comprehensively committed to writing in the services agreement. There is no indication that the parties conducted themselves other than in accordance with the terms of the contract. In circumstances where that contract is not a sham, it is decisive of the character of the parties' relationship."
The employer also pointed out that the worker had her own business with separate private clients, provided her own equipment, was responsible for her own tax and superannuation affairs, and was required to hold her own professional indemnity insurance.
They noted that the worker was not prohibited from delegating or subcontracting her work to other people, and that she wore clothing of her choice and was not supplied business cards by the employer.
The FWC's consideration
In considering whether the worker was an employee or an independent contractor, the FWC applied the principles set out by the High Court in recent decisions.
These principles emphasise that where the rights and duties of the parties are comprehensively set out in a written contract, the legal rights and obligations established by the contract are decisive of the character of the relationship.
"First, where the rights and duties of the parties are comprehensively committed to a written contract, the legal rights and obligations established by the contract are decisive of the character of the relationship provided that the validity of the contract has not been challenged as a sham, or that the terms of the contract have not been varied, waived or are subject to an estoppel."
The FWC noted that the services agreement contained numerous provisions that were indicative of an independent contractor relationship, such as the worker's entitlement to delegate or subcontract the work, her responsibility for her own tax and superannuation affairs, and the fact that she was not prohibited from working for other clients.
"The contractual provisions that may be relevant in determining the nature of the relationship include, but are not limited to, those that deal with the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work, the provision for holidays, the deduction of income tax, the delegation of work and the right to exercise direction and control."
Ultimately, the FWC found that the terms of the services agreement were decisive of the character of the relationship and that the worker was an independent contractor, not an employee. As a result, the worker was not protected from unfair dismissal under the Fair Work Act.
