[2013] FWC 4502 |
FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Cherif Meena
v
Biripi Aboriginal Corporation Medical Centre T/A Werin Aboriginal Medical Centre
(U2013/6286)
VICE PRESIDENT WATSON |
MELBOURNE, 17 JULY 2013 |
Application for an unfair dismissal remedy - jurisdiction - whether employee or independent contractor - Fair Work Act 2009 - ss. 382, 394.
Introduction
[1] This decision concerns an application for an unfair dismissal remedy made in accordance with s.394 of the Fair Work Act 2009 (the Act). The application was made by Dr Cherif Meena. Dr Meena alleges that he was employed by Biripi Aboriginal Corporation Medical Centre T/A Werin Aboriginal Medical Centre (Biripi) and that his employment was terminated on 22 January 2013. Biripi has objected to the application on the basis that it contends Dr Meena was not an employee of Biripi. It contends that he was engaged as an independent contractor.
[2] The issue for determination is whether Dr Meena was employed by Biripi as an employee or whether he was engaged as an independent contractor. If he is found to be the latter, his application must be dismissed.
[3] The parties were directed to file written evidence and submissions on the threshold question of whether Dr Meena was an employee or independent contractor.
Evidence and submissions on Dr Meena’s status
[4] The facts involved in this matter are largely not in dispute. The parties seek to rely on different aspects of their relationship to support their competing contentions.
[5] Biripi relies on the terms of the contract entered into by the parties. It submits that the contract describes the relationship between Biripi and Dr Meena as that of a contractor and that the term “contractor” is used throughout the document. It submits that it is the contract that creates the legal relationship between the parties. Biripi further submits that a number of conditions outlined in Schedule A of the contract point to Dr Meena being a contractor including:
● that Dr Meena was paid an agreed hourly rate, with no pay as you go (PAYG) taxation deducted;
● Dr Meena was required to provide his own workers compensation cover;
● Schedule A of the contract does not impose obligations on Biripi to pay a superannuation guarantee levy for Dr Meena;
● Dr Meena was required to meet his own professional indemnity insurance;
● Dr Meena was required to pay his own registration with the New South Wales Medical Board;
● Dr Meena was required to invoice Biripi on a weekly basis for payment. The invoices were issued in the name of The Good Shepherd Pty Ltd and a GST component was charged.
[6] Schedule A to the contract is reproduced below:
“REMUNERATION/CONDITIONS OF EMPLOYMENT
● Contract Duration: 1st August 2012 to 31st August 2014 inclusive; with an option to extend as per negotiations with Chief Executive Officer.
● Hourly rate: $179.00 per hour.
● Hours: forty (40) per week to be worked, Monday to Friday.
● Study leave: five days paid study leave per year will be provided under this contract arrangement with effect from 1st August 2012
● The contractor to pay entitlements such as workers compensation, superannuation and professional indemnity insurance.
● Registration with the NSW Medical Board to be maintained
● Qualifications: original documents relating to qualifications and registration with the NSW Medical Board to be made available for scrutiny and copying prior to this contract being formalised.
● Professional performance will be reviewed on an annual basis on the anniversary date of the commencement of the contract.
● Contractor to provide invoice a weekly basis for hours worked; the invoices will be in the company name of: The Good Shepherd Pty Ltd (ABN 87 107 637 427).”
[7] Biripi submits that Dr Meena viewed himself as a contractor and not an employee during the time he was working in its medical facility. It relies on an email, dated 22 January 2013, from Dr Meena to Mr Ben Hunter, Chief Executive Officer of Biripi, where Dr Meena states:
“I can understand that you are new to this role and you don’t understand anything.
I AM NOT EMPLOYEE OF THE ORGANISATION, I AM SELF EMPLOYED AND I INVOICE THE ORGANISATION.
I HABVE(sic) BEEN 8 YEARS IN THIS ORGANISATION AND THIS IS MY 1000 TAX INVOICE SO DON’T TELL ME WHAT TO DO.
SO I AM NOT ACCEPTING YOUR RUDE EMAIL TO ME. FULL STOP”
[8] Biripi further submits that Dr Meena took commercial risk and was responsible for his own work, the he had freedom in the performance of his work, including the amount of time spent with each patient, treatment decisions and follow up with patients. It submits Dr Meena had ultimate discretion in relation to his work methods and practices. Biripi further submits that Dr Meena operated his own business independently of Biripi.
[9] Dr Meena submits that the contract between the parties is actually an employment agreement and the intention of the parties is demonstrated at page three where the document is entitled “Employment Agreement”. He submits that it is a contract between himself and Biripi to the exclusion of any other person or entity. Dr Meena submits that during the negotiations leading to the creation of the arrangement it was the mutual understanding of himself and Biripi that the relationship was an employment relationship.
[10] Dr Meena submits that the hourly rate was negotiated between the parties and was arrived at taking into consideration the afterhours work that Dr Meena may be required to perform as well as other entitlements that would otherwise be payable under the contract. He also submits that he was provided with a mobile phone the costs associated with which were paid by Biripi.
[11] Dr Meena submits that it is customary in the medical profession that medical practitioners pay their own professional indemnity insurance and pay for registration with the New South Wales Medical Board, unless employed in a public hospital. He submits that this is not a factor indicative of a contractor arrangement.
[12] In relation to the email of 22 January reproduced above, he submits that the context in which the email was written is important and that it involved a new CEO of Biripi who had recently commenced requesting a change from the practice that had been in place for a period of almost seven years. Dr Meena submits that upon seeking legal advice he realised he was a medical practitioner not a lawyer and realised that Biripi had full control over his employment in every respect.
[13] Dr Meena submits that Biripi exercised total control over his work performance, place of work, how, where and by whom matters should be handled.
[14] Dr Meena submits that the following are indicative of the nature of the relationship:
● that the contract is between Dr Meena, a natural person as opposed to an entity or corporation, and Biripi;
● he was a full-time employee working a minimum of 40 hours per week;
● Biripi had control over the manner in which he worked;
● the time, days and place of work were directed by Biripi;
● Biripi paid for business cards for Dr Meena and he was required to use an email address, cmeena@biripi.org.au, for formal and work related communication;
● the equipment and medical supply used to treat patients was supplied and paid for by Biripi;
● he worked exclusively for Biripi in accordance with the terms of the contract and had no separate place of work during the time period stipulated in the contract;
● he did not advertise his services to the world at large;
● the staff that assisted him were hired and paid by Biripi;
● he did not create any saleable assets or goodwill in the course of his work with Biripi;
● he would receive a full salary regardless of whether there were patients attending the medical centre or not;
● he could not assign, delegate or subcontract his work;
● he was required to wear a shirt bearing the name of Biripi;
● he was required to scan into and out of the premises;
● he did not receive fees and charges relating to patient medical reports prepared for work cover or veterans affairs purposes, instead the fees were paid to Biripi;
● he was required to attend meetings held with the Board of Directors along with all other employees;
● he was not required to pay public liability insurance;
● he received a redundancy payment; and
● he received payment for the 2012 Christmas period in lieu of study leave payments.
Statutory and legal context
[15] The unfair dismissal provisions of the Act are premised on the dismissed person being an employee. 1 There are well established principles of common law that have been developed by courts to determine whether an individual is an employee or an independent contractor. In Jiang Shen Cai trading as French Accent v Do Rozario2 a Full Bench of Fair Work Australia conveniently summarised the general law approach to distinguishing between employees and independent contractors. At [30], the Full Bench said:
“The general law approach to distinguishing between employees and independent contractors may be summarised as follows:
(1) In determining whether a worker is an employee or an independent contractor the ultimate question is whether the worker is the servant of another in that other’s business, or whether the worker carries on a trade or business of his or her own behalf: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own of which the work in question forms part? This question is concerned with the objective character of the relationship. It is answered by considering the terms of the contract and the totality of the relationship.
(2) The nature of the work performed and the manner in which it is performed must always be considered. This will always be relevant to the identification of relevant indicia and the relative weight to be assigned to various indicia and may often be relevant to the construction of ambiguous terms in the contract.
(3) The terms and terminology of the contract are always important. However, the parties cannot alter the true nature of their relationship by putting a different label on it. In particular, an express term that the worker is an independent contractor cannot take effect according to its terms if it contradicts the effect of the terms of the contract as a whole: the parties cannot deem the relationship between themselves to be something it is not. Similarly, subsequent conduct of the parties may demonstrate that relationship has a character contrary to the terms of the contract.
(4) Consideration should then be given to the various indicia identified in Stevens v Brodribb Sawmilling Co Pty Ltd and the other authorities as are relevant in the particular context. For ease of reference the following is a list of indicia identified in the authorities:
Control of this sort is indicative of a relationship of employment. The absence of such control or the right to exercise control is indicative of an independent contract. While control of this sort is a significant factor it is not by itself determinative. In particular, the absence of control over the way in which work is performed is not a strong indicator that a worker is an independent contractor where the work involves a high degree of skill and expertise. On the other hand, where there is a high level of control over the way in which work is performed and the worker is presented to the world at large as a representative of the business then this weighs significantly in favour of the worker being an employee.
“The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter’s order and directions.” “[B]ut in some circumstances it may even be a mistake to treat as decisive a reservation of control over the manner in which work is performed for another. That was made clear in Queensland Stations Pty. Ltd v Federal Commissioner of Taxation, a case involving a droving contract in which Dixon J observed that the reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract.”
The right to the exclusive services of the person engaged is characteristic of the employment relationship. On the other hand, working for others (or the genuine and practical entitlement to do so) suggests an independent contract.
Where the worker’s investment in capital equipment is substantial and a substantial degree of skill or training is required to use or operate that equipment the worker will be an independent contractor in the absence of overwhelming indications to the contrary.
If the worker is contractually entitled to delegate the work to others (without reference to the putative employer) then this is a strong indicator that the worker is an independent contractor. This is because a contract of service (as distinct from a contract for services) is personal in nature: it is a contract for the supply of the services of the worker personally.
Typically, this will arise because the worker is required to wear the livery of the putative employer.
Employees tend to be paid a periodic wage or salary. Independent contractors tend to be paid by reference to completion of tasks. Obviously, in the modern economy this distinction has reduced relevance.
Such persons tend to be engaged as independent contractors rather than as employees.
It should be borne in mind that no list of indicia is to be regarded as comprehensive or exhaustive and the weight to be given to particular indicia will vary according to the circumstances. Features of the relationship in a particular case which do not appear in this list may nevertheless be relevant to a determination of the ultimate question.
(5) Where a consideration of the indicia (in the context of the nature of the work performed and the terms of the contract) points one way or overwhelmingly one way so as to yield a clear result, the determination should be in accordance with that result. However, a consideration of the indicia is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture of the relationship from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another. The ultimate question remains as stated in (1) above. If, having approached the matter in that way, the relationship remains ambiguous, such that the ultimate question cannot be answered with satisfaction one way or the other, then the parties can remove that ambiguity a term that declares the relationship to have one character or the other.
(6) If the result is still uncertain then the determination should be guided by “matters which are expressive of the fundamental concerns underlying the doctrine of vicarious liability” including the “notions” referred to in paragraphs [41] and [42] of Hollis v Vabu.” (References omitted)
[16] The Full Bench in that case highlighted the difficulty in attempting to categorise all employment relationships as either employee or independent contractor:
“The FW Act imposes obligations on employers in relation to their “employees” and confers benefits and rights on “employees” without defining when a worker is an employee as distinct from an independent contractor. The definition of “employee” leaves it to the general law to supply that distinction. The nature of the established general law approach to distinguishing between employees and independent contractors may be seen as contributing to the problem precisely because the nature of the general law test is such that it does not admit a clear answer in every case. Once one adopts the position, as the general law has done, that the distinction is rooted in the objective character of the work relationship two things follow. First, the infinite variety of human affairs means that work relationships present as a spectrum, some of which are clearly relationships of employment and others of which are clearly relationships of independent contract but some of which are less clear cut. Secondly, that character of a work relationship is what it is and cannot be changed simply because the parties agree to label it differently (unless, of course, the relationship is sufficiently ambiguous that a clear determination is not possible, the situation addressed by the Massey proposition). That is a matter clearly recognised by the courts and tribunals.” 3
[17] The circumstances of this case need to be considered against these tests.
Was Dr Meena an employee or independent contractor?
[18] In my view the critical factors are the manner in which the work was performed and the personal nature of the contract. The context is also important. As a professional person, Dr Meena obviously had significant autonomy in the manner in which he provided his services. I find that the nature of the working relationship and the style of the written contract are somewhat incompatible. It will be necessary to determine this matter by weighing competing considerations.
[19] In my view the full time nature of the engagement and the practice of paying for 40 hours per week, Monday to Friday, at times determined by Biripi, regardless of whether the workload required work for that entire period is a strong indicator of an employment relationship. I also find the requirement for Dr Meena to provide the services himself with no right of delegation as a strong indicator of an employment relationship. As a professional doctor, it is unlikely that an employer would direct the doctor as to how to perform his work. However, Biripi did determine many matters concerning Dr Meena’s work that are suggestive of an employment relationship. These include the requirement to wear a Biripi uniform, the provision of Biripi business cards, the provision of supplies and equipment by Biripi, directions as to other administrative arrangements regarding the provision of Dr Meena’s medical services and the lengthy period of an exclusive working relationship.
[20] On the other hand the flavour of the contract between the parties is more suggestive of an independent contractual relationship. In accordance with its terms the requirements to submit invoices, to pay tax and professional expenses such as insurance are not common employment terms.
[21] Many other aspects of the relationship do not point strongly one way or the other.
[22] Considering the totality of the contract and the practices adopted by the parties I conclude that the better view is that Dr Meena was an employee of Biripi. Where a strong inference of an independent contractor relationship arises from the way in which the parties have drafted the contract between them, that inference will only be displaced if there are strong factors as to the practical working arrangements that contradict and outweigh that inference. In my view the inference arising from the contract is displaced by the practical arrangements. I find that Dr Meena was an employee of Biripi.
Conclusions
[23] I find on the evidence of this matter that Dr Meeana was an employee of Biripi and on that basis was entitled to challenge his dismissal by lodging an unfair dismissal application under the Act. Subject to any other matters not considered in this decision, the Commission has jurisdiction to proceed to hear and determine the application. I will ask the unfair dismissal unit to conduct a further conciliation before the matter is listed for arbitration on the merits of the application.
VICE PRESIDENT WATSON
Final written submissions:
Biripi Aboriginal Corporation Medical Centre T/A Werin Aboriginal Medical Centre, 3 May 2013.
Dr Meena, 26 May 2013.
Biripi Aboriginal Corporation Medical Centre T/A Werin Aboriginal Medical Centre, 31 May 2013.
1 Section 382.
3 Ibid at [25].
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