FWA: contractor v employee – shades of uncertainty

Tattsbet Limited v Morrow [2015] FCAFC 62

Jessup P with whom Allsop CJ and White J agreed:

[6]   The respondent to this appeal from the Federal Circuit Court, Sharyn Morrow, for many years operated a shopfront betting agency for the appellant, Tattsbet Limited, at Logan Central. On 10 November 2011, the appellant summarily terminated that arrangement. In the proceeding below, the respondent alleged that she had been an employee of the appellant, and (whether or not she was an employee) that the termination of the agency agreement between herself and the appellant was unlawful under s 340 of the Fair Work Act 2009 (Cth) (“the FW Act”). The primary Judge upheld the respondent’s claim that she had been an employee (rather than, as contended by the appellant, an independent contractor), but rejected the allegation that the termination involved a contravention of s 340. His Honour’s finding in favour of the respondent led to her being awarded $7,400 as compensation pursuant to s 545(2)(b) of the FW Act in respect of a contravention of s 44(1) constituted by the appellant’s failure to give proper notice of termination of employment. The appellant appeals from that award, its single ground of appeal, effectively, being that the primary Judge was in error to have held that the respondent was its employee. For her part, the respondent cross-appeals against the dismissal of her case under s 340.

[53] Towards the start of the primary Judge’s reasons, his Honour identified the law to be applied to the determination of the question whether a particular person was an employee or an independent contractor as follows:

The most recent authorities, Stevens v Brodribb Sawmilling Co Pty Ltd[1986] HCA 1; (1985) 160 CLR 16, Hollis v Vabu Pty Ltd (2001) [2001] HCA 44; [207 CLR 21] and ACE Insurance Ltd v Trifunovski (2013) … [2013] FCAFC 3; 209 FCR 146, make the following propositions clear:

a. the characterisation of the relationship by the parties, whilst of some weight, is not determinative of the proper characterisation of that relationship;

b. no one matter is likely to be determinative of whether a particular relationship between two people is that of employer and employee. Some matters will attract more weight in a particular case than those same factors will attract in another case; and

c. the “test”, if there is one, is said to be multi-factorial. All of the relevant circumstances need to be weighed and the totality of the relationship identified.

[54]         At the point where his Honour came to apply the law to the facts and circumstances before him, however, he extracted the following “tests” from the judgment of Bromberg J in On Call Interpreters and Translators Agency Pty Ltd v Federal Commissioner of Taxation (No 3) (2011) 214 FCR 82, 123 [208]:

Simply expressed, the question of whether a person is an independent contractor in relation to the performance of particular work, may be posed and answered as follows:
Viewed as a “practical matter”:
(i) is the person performing the work [of] an entrepreneur who owns and operates a business; and
(ii) in performing the work, is that person working in and for that person’s business as a representative of that business and not of the business receiving the work?
If the answer to that question is yes, in the performance of that particular work, the person is likely to be an independent contractor. If no, then the person is likely to be an employee.


[61]  The area of the primary Judge’s reasons which is said to be problematic is that set out in para 54 above. As will be seen, his Honour ultimately saw the question as one which involved, in effect, a dichotomy between a situation in which the putative employee works in the business of another and a situation in which he or she conducts his or her own business as an “entrepreneur”. To view the matter through a prism of this kind is, however, to deflect attention from the central question, whether the person concerned is an employee or not; or, perhaps, as Mason J put it in Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; (1986) 160 CLR 16, 28, to “shift the focus of attention” to a no less problematic question. As Buchanan J put it in ACE Insurance, “[w]orking in the business of another is not inconsistent with working in a business of one’s own” [2013] FCAFC 3; (209 FCR 146, 182 [128]). On the other hand, if the putative employee’s circumstances exhibit the characteristics of a business, that will undoubtedly be a matter proper to be taken into account in determining the question at hand, so long as sight is not lost of the question itself. The question is not whether the person is an entrepreneur: it is whether he or she is an employee.

[62]         After we had reserved on this appeal, the Full Court handed down judgment in Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] FCAFC 37, in which the question arose whether two serviced apartment housekeepers, who had traditionally been employed by the respondent in that case, were no longer so employed after arrangements were put in place for their services to be supplied by way of an intermediary. The cause of action arose under s 357 of the FW Act, in which respect it was held that the Ombudsman’s case failed because the actual representation which was made in the facts of the case did not satisfy the terms of the section. But North and Bromberg JJ (with the agreement of Barker J) gave detailed attention to the question whether the cleaners were employees or independent contractors, in the course of which their Honours held that the answer to any such question would be yielded by first answering the question whether the workers in question were engaged in the conduct of their own businesses. While I would pay the greatest respect to this recent, considered, judgment of the Full Court, the fact is that their Honours’ observations were, relevantly, by way of obiter. Furthermore, the present case is, on the facts, very different from Quest.

[63]         In the present case, the respondent was, on any view, working in the business of the appellant. Operating in the appellant’s specialised premises, and using the appellant’s equipment, methods and systems as she was, the respondent had little scope to vary the way she worked. Insofar as her actual work was concerned, there would have been little to distinguish her position from that of an employee, such as the employed managers who, it seems, worked for the appellant in some agencies. The primary Judge was justified in pointing to a number of indicia which suggested that the relationship in question was that of employer and employee.

[64]         Notwithstanding that, the situation before his Honour involved a number of features that, in combination, compel the conclusion that the respondent was not the employee of the appellant.

David Cormack – Brisbane Barrister & Mediator

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