Recent case examines what truly defines an employee-employer relationship
The Fair Work Commission (FWC) recently dealt with a case examining whether a worker was an employee or independent contractor.
The case centred on a female worker who claimed she was dismissed in contravention of the Fair Work Act 2009 (the Act). In her application, she argued she was employed under the terms of the Live Performance Award 2020 and that her dismissal contravened Part 3-1 of the Act.
The employer objected, creating a jurisdictional hurdle that needed resolution before any alleged unfair dismissal claim could proceed. The issue was whether this was an employment relationship with associated protections, or an independent contracting arrangement.
The worker performed at an entertainment venue in Queensland. The contract she signed required her to pay reservation fees to the venue based on when she performed, with fees varying depending on the time slot.
Unlike traditional employment, she wasn't paid wages by the venue. Instead, she earned money directly from clients for private performances, with the venue taking a fee from these earnings. She kept the remainder plus any tips received.
The financial structure created a situation where the worker could potentially lose money on shifts if she didn't secure enough private performances to offset the fees paid to the venue.
The worker performed under a self-chosen stage name, provided her own equipment and props, and wasn't required to wear venue-branded clothing. She received no superannuation contributions or leave entitlements from the venue.
The contract contained contradictory elements. While stating the venue wouldn't direct the worker's performances, it also required her to obey all lawful and reasonable directions and comply with venue policies.
Practically, the worker approached her own clients and wasn't allocated customers by management. Venue staff only intervened if performances breached legal requirements or safety concerns arose.
Despite contract clauses mentioning minimum shift requirements, evidence showed the worker could choose when to perform through a rostering application, with arrangements changeable through discussions with management.
This mixed picture of autonomy alongside some elements of control created the classification challenge faced by the FWC.
The FWC applied section 15AA of the Act in its assessment – a provision introduced by the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 that took effect in August 2024.
This section directs decision-makers to ascertain the real substance, practical reality and true nature of the relationship by considering both contract terms and practical implementation – a return to the multifactorial approach established in earlier High Court cases.
The FWC noted that no list of indicia is to be regarded as comprehensive or exhaustive and the weight given to particular indicia will vary according to the circumstances, highlighting that such determinations remain highly context-specific.
The financial arrangement proved particularly significant. The FWC found it meaningful that the worker paid the employer a reservation fee to perform at the venue and a portion of her earnings from each performance. She could also be penalised for cancelling a reservation.
This structure meant the worker bore the financial risk of earning or losing money for each attendance at the venue – a characteristic more commonly associated with contracting arrangements.
Combined with her autonomy regarding when and how she worked, the FWC ultimately concluded that the worker had considerable control and independence in relation to the timing and duration of her work, the rates charged, the persons for whom she performed, and how the work was actually performed.
The FWC upheld the employer's objection and dismissed the worker's application, finding she couldn't have been "dismissed" under section 365 of the Act because she wasn't an employee.
Notably, this conclusion was based solely on the employer's uncontested evidence, as the worker didn't participate in proceedings despite receiving multiple extensions. The Commission acknowledged that a contested hearing with different findings might have yielded a different result.
The case shows how non-traditional working arrangements can raise classification questions under Australian workplace laws. The financial structure of the relationship, level of worker autonomy, and degree of integration into the business operation all factored into the final determination.
