Does working under an ABN negate an employment relationship?

The Fair Work Commission (FWC) recently dealt with the case of a worker who said he was employed at a business that required him to work “under his ABN.”

The Commission had to determine if there was an employment relationship and if he had legal standing to file the claim.

The worker, Daniel Kane, filed an application to the FWC for a remedy, alleging that he had been unfairly dismissed by Raiwaqa Pty Ltd t/as Jetts Sevens Hills.

The employer operates a gym under some sort of franchise-type arrangement, and Kane worked there as an instructor. It maintained that Kane was not employed but instead worked as an independent contractor, so he was not an employee who was dismissed from employment.

Before working at the gym, Kane signed an “employment contract” that described him as a casual employee.

According to records, the contract “bore the hallmarks of a comprehensive template document provided by a franchisor to cover the full range of employment terms a franchisee employer might find useful.”

For example, the contract included terms relating to confidential information, intellectual property rights and moral rights, limitations on damages, and the like. It also required Raiwaqa to pay remuneration of $25 per hour plus superannuation.

‘Will worker under his ABN’

Raiwaqa said that before the first payment was made to Kane, “a verbal agreement was made that he will work under his ABN.”

The worker’s history was examined, and before working for Raiwaqa, Kane had worked as an employee (where he received wages less tax and was provided with a payslip), and he had also worked on other occasions as an independent contractor (where he provided invoices and was paid in full without any deduction for tax).

Throughout his engagement with Raiwaqa, Kane provided invoices for his work. The invoices were addressed to a different company, ME5 Pty Ltd.

The latter supplies labour to a concreting business operated separately by the director of Raiwaqa. Kane’s invoices charged $25 per hour for his time spent at work. The invoices did not include a component for GST.

Raiwaqa also did not appear to have made superannuation contributions on Kane’s behalf. After a few months, Kane complained to Raiwaqa that he thought he was being underpaid. As a result, his hourly rate was increased from $25 per hour to $30.90 per hour.

Kane said that he wore a uniform, worked rostered hours as directed by Raiwaqa, and was employed to provide specific work as directed.

He said he was required to follow Raiwaqa’s standard operating procedures, and he said he “presented himself as an employee.” Kane said that at the time of his dismissal, he had “about two months’ worth of shifts planned and booked in,” suggesting that there was predictability to the work.

Employee or independent contractor?

The FWC found that the “arrangements between the parties were consistent with the terms of the employment contract and consistent with casual employment.”

“Kane was only paid for the hours he worked, he was paid for his time, being the labour he supplied, rather than paid for his output or a product.”

Thus, it said that “Kane was employed by Raiwaqa Pty Ltd, and that he was an employee who was dismissed.” Therefore, he “has standing to make his application for an unfair dismissal remedy.”