Employment status case reveals dangers of contractual misrepresentation
The Fair Work Commission (FWC) recently dealt with a dispute where a worker claimed he had been unfairly dismissed after raising workplace concerns with his hiring company.
The worker argued that by questioning overtime entitlements, remote work arrangements, and reporting an injury, he had exercised workplace rights that were protected under the Fair Work Act.
When the company terminated his services following their client's decision to end the engagement, the worker brought an adverse action claim under section 365 of the Fair Work Act 2009.
He maintained that his dismissal was a direct consequence of exercising his workplace rights and also claimed that he was dismissed due to a temporary absence caused by injury.
In August 2024, MTP Services Pty Ltd entered into a document titled "Labour Hire Agreement" with Gamma Plus Pty Ltd and a worker. According to this agreement, Gamma Plus was to provide the worker to perform services for one of MTP's clients.
The worker started working for MTP's client on 19 August 2024. Over several months, he raised concerns with MTP about overtime pay, remote work options, and a claimed ear injury allegedly caused by required air travel for the role.
On 10 October 2024, MTP's client informed the worker they had decided to terminate his engagement. Following this decision, MTP terminated the Agreement on 14 October 2024.
On 31 October 2024, the worker commenced proceedings in the Commission under section 365 of the Fair Work Act 2009. He alleged that in raising his concerns with MTP, he had exercised a workplace right and was dismissed as a result, which would constitute adverse action under section 340 of the Act.
The worker also claimed that MTP had dismissed him because of a temporary absence due to illness or injury, which would contravene section 352 of the Act.
MTP denied breaching any provisions of the Act in its dealings with the worker. More importantly, MTP raised a jurisdictional objection, arguing that the worker was not its employee, and therefore the termination of his services did not constitute a dismissal as defined in the Act.
The Commission needed to determine one critical question to resolve this objection: Was the worker an employee of MTP? If not, he could not have been "dismissed" within the meaning of section 386 of the Act, which states that a person is dismissed if "the person's employment with his or her employer has been terminated on the employer's initiative."
MTP relied primarily on the terms of the Agreement, which created a tripartite relationship between MTP, Gamma Plus, and the worker. The Agreement contained specific clauses defining their relationship:
"The Payroll Company is independent of MTP Services.
The Services Provider is an independent contractor to MTP Services.
By reason of 2.1 and 2.2, nothing in this contract creates or shall be construed to create, as between MTP Services and any of the other parties, a relationship of:
(a) employment..."
The worker claimed the Agreement was "invalid" due to inconsistencies regarding when it was signed and because Gamma Plus had never properly executed it. While the Commission confirmed these factual points, they ultimately did not support the worker's position.
The Agreement's execution page showed signatures from both MTP and the worker dated 16 August 2024. However, the electronic signature audit trail showed that MTP signed on 16 August, the worker signed on 17 August, and Gamma Plus supposedly signed on 19 August 2024 - though evidence would later reveal that Gamma Plus never actually signed the document.
The Commission found that "the involvement of Gamma Plus in the arrangement was a fiction created and maintained by [the worker]." This revelation significantly undermined his case against MTP.
Evidence presented at the hearing showed that the worker had nominated Gamma Plus as the "Payroll Company" despite having no current relationship with it. He had selected Gamma Plus simply because he knew its name and Australian Business Number (ABN) from previous employment "a long time ago."
The worker admitted that Gamma Plus had no actual involvement in the arrangement contemplated by the Agreement.
The worker further complicated his position by issuing invoices to MTP in Gamma Plus's name. He acknowledged to the Commission that he had misrepresented these invoices as coming from Gamma Plus, stating, "I think I did the wrong [thing], but that's what I did."
The worker claimed he didn't understand the Agreement's implications despite having read it, stating he believed he would become an employee of MTP. The Commission found this assertion contradicted by his actions.
By deliberately providing services through a fictitious arrangement with Gamma Plus and issuing invoices in that company's name, the worker had purposefully created the appearance of the tripartite relationship described in the Agreement.
When questioned about his conduct, the worker attempted to shift responsibility to MTP, suggesting they should have conducted more thorough due diligence on Gamma Plus to uncover his misrepresentation. The Commission dismissed this argument, noting that the worker was effectively trying to benefit from his own deception.
The Agreement explicitly created an independent contractor relationship between MTP and the worker, specifically stating that nothing in its terms would create an employment relationship.
The Commission found no evidence that either party doubted these provisions would be fully enforced, and observed that both parties had conducted themselves according to the Agreement's terms.
The Commission's determination relied on section 15AA of the Fair Work Act, which requires an assessment of "the real substance, practical reality and true nature of the relationship" between parties when determining employment status. After reviewing all evidence, the Commission concluded:
"Having regard to all of the evidence, and in particular [the worker's] conduct, I am satisfied that 'the real substance, practical reality and true nature of the relationship' between [the employer] and [the worker] was not one of employment."
The decision emphasized the fundamental legal principle that without an employment relationship, no dismissal could have occurred under the Act:
"The absence of an employment relationship means that [the worker] was not (because he could not have been) dismissed by [the employer] for the purposes of the Act. He was not entitled to make the application under section 365."
Highlighting the importance of examining the totality of the working relationship rather than just contractual terms, the Commission noted:
"In Part 3-1 of the Act, the term 'employee' has its 'ordinary meaning'. Section 15AA sets out how the Commission is to determine whether a person is an employee within the 'ordinary meaning' of the term. That is, the Commission must ascertain 'the real substance, practical reality and true nature of the relationship' between the parties."
Based on this, the Commission upheld MTP's jurisdictional objection and dismissed the worker's application.
