[2012] FWA 2943

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Fair Work Act 2009
s.394—Unfair dismissal

Peter Stanley
Jiarong Lin (Kim) T/A IGA Liquor Plus (SPQR Gourmet Groceries)

Kathy Carty
Jiarong Lin (Kim) T/A IGA Xpress (SPQR Gourmet Groceries)



Termination of employment - jurisdiction - not employees.

[1] Applications were made pursuant to s.394 of the Fair Work Act 2009 (the Act) on 30 November 2011 by both Peter Stanley and Kathy Carty for an unfair dismissal remedy in relation to their dismissal by SPQR Gourmet Groceries P/L T/A IGA Liquor Plus (the Respondent).

[2] The applications were listed for hearing on 17 February 2012 for a Jurisdiction Hearing in relation to a jurisdictional challenge to the applications raised by the Respondent on the basis that the two Applicants were independent contractors and not employees.

Respondent’s evidence

[3] Evidence in the matter was given by both Applicants and by Mr Jiarong Lin aka Kim Lin, a Director of the Respondent.

[4] The evidence of Mr Lin was that he employed both Mr Stanley and Ms Carty as shop managers in his 2 supermarkets at Portarlington on the Bellarine Peninsula.

[5] Mr Lin stated that in September 2011 Mr Stanley approached him and proposed that Mr Lin engage him as an independent contractor.  1 On 18 October 2011 Mr Stanley tendered his resignation to Mr Lin with effect from 26 October 2011. Subsequent to resigning Mr Stanley offered to continue to work for Mr Lin but on the basis of being an independent contractor. While Mr Lin was unhappy with this course of action he reluctantly agreed to engage Mr Stanley as an independent contractor as from 27 October 2011.2 Mr Stanley worked for Mr Lin managing one of the supermarkets until the 23 November 2011 when the relationship ended after an argument between Mr Lin and Mr Stanley.

Mr Lin also stated that in early November 2011 Ms Carty rang Mr Lin and told him that she wished to resign and enter into a similar arrangement as applied to Mr Stanley. Ms Carty resigned her employment effective on 16 November 2011 and was engaged as an independent contractor as from 17 November 2011 managing one of the supermarkets. Ms Carty was advised in writing on 25 November 2011 that her service as an independent contractor was no longer necessary.

Applicants’ evidence

[6] The evidence of Mr Stanley was that he was approached on several occasions by Mr Lin with a request that both he and Ms Carty become independent contractors. Due to Mr Lin’s insistence on moving to independent contractor status Mr Stanley and Ms Carty went to the Australian Taxation Office (ATO) in Geelong to seek information in relation to Mr Lin’s requests. Mr Stanley agreed to change to an independent contractor on 14 October 2011 and on 18 October 2011 provided a written resignation at the request of Mr Lin. Mr Stanley continued to work as the shop manager for one of the Respondent’s supermarkets.

[7] On 17 November 2011 Mr Stanley had a heated argument with Mr Lin after Mr Lin informed him that Mr Lin was transferring a female staff member from the supermarket to his house where Mr Lin was relocating his office. Mr Stanley expressed his strong concern over this move as he was concerned for the female employees welfare. The argument ended when both Mr Stanley and Mr Lin settled down and regretted some things said in the heat of the argument. The pair parted after shaking hands. On 21 November 2011 Mrs Lin fired Mr Stanley.

[8] The evidence of Ms Carty was that in August/September 2011 Mr Lin became insistent that both she and Mr Stanley become independent contractors. Due to Mr Lin’s insistence on moving to independent contractor status Mr Stanley and Ms Carty went to the ATO in Geelong to seek information in relation to Mr Lin’s requests. At a meeting between Mr and Mrs Lin, Mr Stanley and Ms Carty both Mr Stanley and Ms Carty agreed to become independent contractors. Mr Stanley already had an ABN and could start immediately but Ms Carty did not have an ABN. Although Mr Lin offered to pay for Ms Carty to go to Mr Lin’s accountant to apply for an ABN Ms Carty went to her own accountant and applied for an ABN which she received on 1 November 2011. On 9 November 2011 Mr Lin asked Ms Carty to write a letter of resignation which was effective as from 16 November 2011 and Ms Carty continued to work as a Store manager at one of the supermarkets. On 25 November 2011 Mrs Lin attended the supermarket and gave a written notice of termination to Ms Carty effective immediately.

Move from employee status to independent contractors

[9] The evidence of all three witnesses was that during the period Mr Stanley and Ms Carty were independent contractors they were remunerated at a higher hourly rate than they had been as employees and that each of Mr Stanley and Ms Carty submitted invoices to the Respondent for their hours of work.

[10] The Respondent paid Mr Stanley and Ms Carty gross amounts for work as independent contractors without any tax being deducted.

[11] The evidence of both Mr Stanley and Ms Carty was that nothing changed in relation to the work they performed when converted from employees to independent contractors.

[12] Mr Lin provided no evidence that there was any change in the way either Mr Stanley or Ms Carty worked on becoming independent contractors. Rather Mr Lin described Mr Stanley’s role after becoming an independent contractor as: “He will be independently running my business and fully, basically, represent me as - you know, as a whole manager.” No evidence was given by Mr Lin as to what changed when Mr Stanley became an independent contractor. Mr Lin gave no evidence at all in relation to Ms Carty’s role as an independent contractor. Yet when Mr Lin gave evidence about Ms Carty as an employee shop manager in April 2011 he described her as follows:

[13] Mr Lin considered the move of both Mr Stanley and Ms Carty from employees to independent contractors as a matter in which his hand was forced by the conduct of Mr Stanley and Ms Carty and as an outcome which he did not genuinely seek or pursue. Rather as Mr Lin would have it, he reluctantly accepted what he was forced into. 4

[14] Both Mr Stanley and Ms Carty considered that they were effectively pressured into accepting becoming independent contractors against their preference to remain employees and against the advice they had received from the ATO.  5

[15] Whilst each side in this matter blames the other for forcing the change to independent contractor status it is abundantly clear that neither side wanted Mr Stanley or Ms Carty to be engaged in a genuine relationship of client (the Respondent) and independent contractor (the Applicants).

[16] I do not need to decide who initiated the move from employee status to independent contractor status. It is clear from the evidence that both the Respondent and the Applicants had the potential to gain from the outcome. For the Respondent, it was relieved of two employees with all the consequences that flow from that and for the Applicants their hourly rate of remuneration increased.

[17] The test for determining whether a relationship is one of employer/employee or independent contractor/client is well expressed in Jiang Shen Cai trading as French Accent v Michael Anthony Do Rozario 6 (French Accent), which refined the test set out in Abdalla v Viewdaze Pty Ltd.7

[18] The test was expressed in French Accent as follows:

[19] In the present matter the Tribunal need not consider the various indicia referred to in paragraph (4) of the above test. This is so because there is a fundamental point which goes directly to the first three paragraphs of the test.

[20] In this matter each of the Respondent and the Applicants disavowed an intention to freely and genuinely enter a relationship of client/independent contractor. There was no written contract in existence. Each of the Respondent and the Applicants assert that they entered into a contractual relationship without knowing the details of the contract. Each of the Respondent and the Applicants asserted that the contract that they entered into was not the relationship they wanted. Each of the Respondent and the Applicant asserted that the contract was not what it appeared to be.

[21] It is irrelevant as to who initiated the move from employee to independent contractor. What is so obvious is that it would be difficult to find a clearer case of a sham arrangement than the present matter.

[22] I find that the Applicants were at the time of the termination of their relationship with the Respondent employees of the Respondent.

[23] The application for an unfair dismissal remedy will be referred back to Commissioner Jones as Panel Head for the Unfair Dismissal Panel for allocation in relation to the issue of merit.



P. Stanley on his own behalf

K. Carty on her own behalf

I. Gude for the Respondent

Hearing details:

17 February

Final written submissions:

Respondent by 9 March 2012

Applicants by 23 March 2012

 1   Transcript at PN40, 43, 45

 2   Transcript at PN59-60

 3   Transcript at PN291

 4   Transcript at PN40-59

 5   Exhibit A2 at paragraphs 6 & 7

 6   [2011] FWAFB 8307

 7   PR927971

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