Find out which factors are crucial to consider, according to the FWC
The Fair Work Commission (FWC) recently dealt with a case involving a worker who claimed unfair dismissal by her employer.
The worker, who performed duties remotely from the Philippines, sought an unfair dismissal remedy under the Fair Work Act 2009.
She argued that despite being labelled as an independent contractor, the nature of her work and the level of control exercised by her employer indicated an employment relationship.
This case brings to light the ongoing challenges in distinguishing between employees and independent contractors in today's diverse work arrangements.
The worker started performing paralegal work for a company called MyCRA Lawyers, which specialises in credit repair services in Australia.
She worked remotely from the Philippines under a contract with the Doessel Group, a related entity to MyCRA Lawyers.
The work involved legal research, drafting documents, case preparation, and client communication.
The worker used a phone system that made it appear she was calling from the MyCRA Lawyers office in Australia, and she had an email address with the company's domain name.
The employer argued against the unfair dismissal application, saying that the worker was not an employee but an independent contractor.
This led to an examination of their working relationship, focusing on the terms of their written contract.
The FWC said that the true nature of the relationship must be determined by the rights and duties created by the contract, not by how the parties labelled their arrangement or behaved afterwards.
The contract was titled "Independent Contractor's Agreement," but it also referred to the worker as an "employee" in some sections. This inconsistency was one of many factors the FWC considered.
The FWC looked at various aspects of the contract, including the nature of the work, pay, and level of control exercised by the employer. The paralegal duties were not considered to involve a distinct profession or trade, which is often associated with independent contracting.
The contract required the worker to be available to perform the work personally. The FWC noted:
"The right to have a particular person do the work indicates a contract of service rather than a contract for services."
The pay structure also raised questions. The contract specified an hourly rate described as "Salary all inclusive as a Full Time Employee," which the FWC viewed as more consistent with employment than independent contracting.
The level of control exercised by the employer was a significant factor in the FWC's decision. The contract required the worker to follow daily instructions and meet specific key performance indicators.
The FWC also considered whether the worker was operating her own business or was integrated into the employer's business.
The use of the employer's email address and phone system for client communication indicated integration into the employer's business.
After considering all factors, the FWC decided that the relationship was one of employment, not independent contracting. The Commission said:
"[The worker] was not conducting her own business. She was paid an hourly rate of pay that was described as a salary as a full time employee. She took daily instruction as to the work to be performed and was to be supervised in performing the work."
The FWC emphasised that the substance of the relationship matters more than how it's labelled:
"The description of the arrangement as that of independent contractor belied the actual nature of the contract. The contract, in a number of places, referred to the arrangement as employment."
The FWC also addressed arguments about the lack of typical employment benefits, citing previous case law:
"These matters are less important than the adoption by the parties (where this occurs) of rights and obligations which are fundamentally inconsistent with basic requirements of a contract of employment."
This case highlights the importance for employers and HR professionals to consider the true nature of their working arrangements, regardless of how they are labelled. It shows the factors involved in determining employment status in modern workplaces, particularly when dealing with remote and international workers.
