Worker rejects independent contractor role but evidence says otherwise
The Fair Work Commission (FWC) recently dealt with a case involving a worker who claimed that he was unfairly dismissed from their employment.
The employer objected to the application, arguing that the worker was not an employee but an independent contractor.
In this case, the worker and the employer had a complex relationship that spanned several years, beginning in February 2021.
According to records, the worker argued that he had entered into an employment agreement with the employer on 19 April 2021, which was supported by a signed employment contract.
However, the employer countered this claim, stating that the contract was only signed to assist the worker in obtaining a rental property and did not actually operate as a contract of employment. The employer pointed to the method of payment, which remained a sum of money paid to the worker with GST, as evidence that the worker was a contractor.
"The [employer] contended the amount being paid to the [worker] did not reflect the amount identified in the April 2021 contract and additionally, that there was no net amount with PAYG tax deducted like the [employer] does for its employees or superannuation contributions paid,” said the FWC.
In December 2021, the employer prepared a new agreement for the worker, which the worker claims he declined.
The worker ceased working for the employer in January 2022 but recommenced in March 2022, acknowledging that this was as an independent contractor. The employer denied that the December 2021 agreement ever ended.
The worker said that in August 2022, the employer's CEO informed him that he could no longer contract at their consultant rate and would need to become a full-time employee to continue working with the company.
The worker said he accepted a 40% reduction in pay upon commencing as a full-time employee. However, the employer denied that such a discussion took place.
A pivotal piece of evidence presented during the hearing was a series of WhatsApp messages exchanged between the worker and the employer's CEO in July 2023.
These messages indicated that a new contractor agreement had been discussed, populated by the worker, and signed by both parties. Although the worker initially could not recall signing the agreement, he later conceded that he might have done so out of desperation.
"On the morning of the hearing, [the CEO] sent to chambers further WhatsApp messages exchanged between himself and [the worker] on 20 July 2023 which appeared to indicate a contractor agreement and been signed and executed by both [of them]."
The employer argued that these WhatsApp messages clearly demonstrated that a new contracting agreement was entered into in July 2023, with payment terms matching the amounts paid to the worker until the end of their engagement.
The FWC highlighted the importance of clearly defining the nature of working relationships and maintaining proper documentation to avoid disputes.
After carefully considering the evidence presented by both parties, the FWC concluded that the engagement between the worker and the employer was that of contracting. The decision highlighted several key points that led to this conclusion:
1. The arrangement began as a contracting relationship, and there was no clear evidence of a transition to employment.
"Having considered the evidence it is sufficiently clear to me that the engagement between the Applicant and the Respondent was that of contracting. There was no dispute that the arrangement started as contracting," the FWC said.
2. The payment arrangement in August 2022 was consistent with a contracting relationship, with the worker being paid a daily rate plus GST.
"The payment arrangement made was $660 per day equally $3300 weekly which [the CEO] said was $3000 plus GST. [The employer said that they have] never been asked for any information by [the worker] that would allow him to submit tax as an employee," the FWC said.
3. The WhatsApp messages and oral evidence regarding the July 2023 contracting document were sufficient to establish that a contracting agreement was signed by both parties.
"The WhatsApp messages exchanged and the oral evidence concerning a contracting document that I am satisfied was signed by both parties are sufficient for me to be satisfied that whatever may have happened prior to that time, the parties entered a contracting agreement in July 2023,” the FWC added.
Based on these findings, the FWC determined that the worker was not an employee at the time of termination in December 2023. As a result, the FWC lacked jurisdiction to hear the unfair dismissal application, and the case was dismissed.
