Case examines contractor relationship before and after legislative changes
The Fair Work Commission recently dealt with a case examining worker classification following amendments to the Fair Work Act that took effect in August 2024. The timing of these amendments significantly impacted how the case was assessed.
A worker sought to challenge her dismissal by filing an unfair dismissal application with the Fair Work Commission. Her former employer maintained she was not eligible to make such a claim, stating she was an independent contractor rather than an employee. The employer also argued that no dismissal had occurred.
The case centred on whether the Independent Contractor Agreement reflected the true nature of the working relationship, with the worker claiming it wasn't genuine.
The matter involved a New South Wales disability care services business where the worker began providing services in January 2023. The working relationship continued until October 2024, when she filed her unfair dismissal application with the Fair Work Commission.
Documentation presented by the employer included a signed Independent Contractor Agreement and multiple invoices.
The agreement specified that the worker could undertake other work, needed to submit invoices for payment at $45 per hour including Goods and Services Tax, and was responsible for her own equipment and insurance.
A disagreement emerged regarding what services were covered under the agreement. The worker argued certain support tasks, including making beds, weren't part of the original arrangement.
The Commission noted in its decision: "A dispute arose between [the worker] and [the employer] in September 2024 in relation to what work [the worker] was required to perform under the Independent Contractor Agreement."
The Fair Work Act underwent significant changes on 26 August 2024. As stated in the decision: "The Fair Work Act was amended on 26 August 2024 to essentially override the High Court precedent... requiring consideration of the real substance, practical reality, and true nature of the relevant relationship, including by reference to how the contract was performed in practice."
The Commission explained that these changes meant examining the relationship over two distinct periods: before and after 26 August 2024. Each period required applying different legal tests to determine the worker's status.
The decision detailed how the transitional provisions of the new law affected the assessment: "When determining an individual's length of service and period of employment under the Fair Work Act, whether service prior to 26 August 2024 is to be counted as service as an employee is determined by reference to the High Court precedent."
In examining the relationship, the Commission found no evidence that the Independent Contractor Agreement was not genuine. Their decision stated: "I consider that the Independent Contractor Agreement is a genuine independent contracting agreement that was deliberately negotiated by the parties to reflect that relationship."
Evidence showed the worker had consistently operated as a contractor, with the Commission noting: "[The worker] issued invoices to receive payment for work performed... [The worker] performed other work in the same industry when [they] weren't providing services to [the employer]."
The Commission emphasised that both parties understood the nature of their arrangement: "[The worker] and [the director] were fully aware that they had entered into an independent contracting relationship. There was no intention from either party to establish a 'facade', 'misrepresentation', or 'falsehood.'"
After examining both time periods under their respective legal frameworks, the Commission reached the same conclusion for each.
The decision stated: "[The worker] is not eligible to make an unfair dismissal application because [they were] an independent contractor and not an employee of [the employer]."
This finding led to the dismissal of the unfair dismissal application, as stated in the final determination: "[The worker's] unfair dismissal application is dismissed." The Commission confirmed it had no jurisdiction to continue dealing with the application due to the worker's contractor status.
