Company argues they had verbal contract that lasted for years
A worker recently filed a dismissal claim before the Fair Work Commission (FWC), alleging that he became an employee at a company where he was hired initially as a contractor.
The worker, Leigh Goss, filed a claim to address a general protections dispute arising from his alleged dismissal. He said that CJD Equipment Pty Ltd (CJD) wrongfully terminated his employment.
CJD, the employer, rejected his application, arguing that Goss did not hold an employee status but rather operated as an independent contractor, offering services through his business, Steering Dynamics, as a sole trader.
CJD operates as a business in the construction equipment and trucking sector, offering services across Australia through its network of branches.
The worker is a qualified diesel mechanic and performed tasks for CJD at its Hobart depot from 2015 until June 2023.
CJD's service manager said that in 2015, he spoke with Goss to provide mechanical services for the company without a formal contract.
The arrangement was verbal, with the worker invoicing CJD for his work weekly. These invoices incorporated an "inflated" rate reflective of his status as a contractor.
Goss had the liberty to service his own clients and occasionally subcontracted work. He initially provided general diesel mechanical services, with wheel alignment services added several months later.
The manager said that CJD ensured Goss consistent work on a weekly basis as long as he continued to return.
The company aimed to provide Goss with ample work, and he worked a typical full-time schedule from Monday to Friday during regular business hours, averaging 38 to 40 hours weekly.
While functioning as a contractor, Goss enjoyed flexibility in taking time off without requiring formal procedures and could determine his work hours. He adhered to company safety policies but was exempt from broader company policies.
CJD required Goss to furnish business details, recorded in CJD's contractor portal, encompassing the business name, ABN, business address, and a contact person.
The portal stored a supplier identification number, supplier risk rating, along with information about Goss's personal and public liability insurance. Goss had to undergo a contractor induction. He continued to serve his own clients alongside his work for CJD.
Later, CJD's general manager for Tasmania at the time expressed a desire for Goss to transition into an employee role.
He had multiple discussions with Goss about this transition from 2020 to 2023, but he declined, citing a preference for contractor status due to flexibility and higher remuneration.
In 2022, CJD requested that Goss work as a temporary workshop supervisor, and he agreed, still functioning as a contractor and invoicing CJD weekly in the standard manner.
According to records, invoices were under the name of Steering Dynamics, featured the business's ABN, and included GST. In addition to hours worked, the invoices itemized a per-axle rate for wheel alignments and other relevant expenses, such as batteries supplied by Goss.
For most of his tenure at CJD, Goss held the highest-ranking mechanic position, affording him considerable autonomy.
He could decide his work hours and take days off with prior notice as a courtesy to the company. He was included in the on-call roster, albeit intermittently.
In mid-August 2021, Goss requested a raise in his hourly rate to $75 due to rising insurance costs and an absence of rate increases in previous years.
However, CJD declined this request. Later, Goss expressed the belief that he was entitled to employment benefits, initiating a lengthy process.
It was only in July 2023 that he received a letter from CJD acknowledging his entitlement to superannuation contributions.
In July 2022, Goss temporarily took on the role of supervisor, involving oversight of service technicians, job allocation, staffing, and managing business affairs. During this period, he was unable to exercise the same flexibility he enjoyed previously.
In May 2023, Goss contemplated transitioning into an employee role at CJD, but certain terms of the contract made him hesitant. His negotiation attempts with CJD failed, leading to a decision to explore other opportunities.
The FWC found that the parties agreed in 2015 that “Goss would provide his services to CJD as a contractor.”
“He knew that he was required to submit weekly invoices in order to be paid. He did so in the name of his business, Steering Dynamics, which had been in existence for several years. He charged GST. The hourly rate of pay that he received for his work greatly exceeded that of mechanical employees. This rate was commensurate with his status as a contractor,” it said.
“In July 2022, when Goss agreed to undertake the supervisory role, he did so within the framework established by the oral contract in 2015. He would perform work for CJD as a sole trader and his business would invoice the company for his services. This framework remained unchanged.”
“What changed over time was the scope of the services. Goss assumed the supervisory duties on a temporary basis after the company had been unable to recruit an employee to do the work. CJD recognised that it was not ideal to have a contractor performing such a role for a long period.”
“It had tried on a number of occasions to have Goss become an employee of the company. But now, it was determined to do so. However, it was not prepared to maintain Mr Goss’s ‘contractor’ rate of pay. And Goss wanted to keep it,” it added.
Moreover, the Commission said that “this is not a case of some sham arrangement.”
“Goss had his own business, which pre-existed his relationship with CJD by four years. Later, CJD wanted him to become an employee of the company. Both [parties] had numerous discussions about this, but he was reluctant to accept, because it would involve a lower hourly rate of pay.”
“Goss wanted to have employment conditions, such as leave and other benefits, as well as a higher ‘contractor’ rate of pay. The company would not agree to this.”
Thus, the FWC said that Goss was not an employee and that ultimately, he resigned on his own. It then dismissed his application.
