A recent claim heard by the Fair Work Commission used the contractor control over work test to find that there was not an employment relationship.
A continuing trend sees a move towards more flexible work arrangements across many industries and workplaces. However, it can become difficult to understand and negotiate the various facets of different work arrangements, particularly when it comes to contractors vs employees. It is often the case that the complexities become more apparent when a problem arises and both parties are not clear on their rights and obligations.
In the recent case of Smythe v Noilly Pty Ltd T/A Westral Sunshades [2020], Smythe was seeking unfair dismissal as he deemed himself “essentially an employee” but the Fair Work Commission, and its’ employee-contractor control over work test, did not agree.
In this article, we will take a look at the particulars of this case and demonstrate how the control over work test can be used to determine whether the working relationship is employer-employee or contractor-principal.
Facts of the Case
A contractor selling products for a commission has argued against his status as a contractor due to his control over the business in which he was hired. In the case Smythe v Noilly Pty Ltd T/A Westral Sunshades [2020], the worker commenced contractual hire with the business, ‘Westral Sunshades’ in 2011. He agreed to work in a role where he gave potential clients quotes and secured sales for sunshades. In March 2020, however, the worker was phoned by a Westral Sunshades director regarding the worker’s liability for rectifying a sales error. As many will know, contractors are legally liable for their mistakes whereas employees often are not. Due to his disgrace with this, the worker announced he was leaving the company and verbally insulted the director.
The Arguments
In the case, the worker stated he was entitled to unfair dismissal as he argued he was essentially an employee. This was as he averaged 60 – 80 hours a week exclusively for the company and wore company attire including a name badge. The worker claimed that this meant he had little control over how and when work was performed.
Conversely, Westral Sunshades argued the employee was an independent contractor who had absolute autonomy in how he conducted his work. In the agreement between the parties, it was also noted that he was able to work for others and delegate work.
Decision: Contractor Control Over Work Test Pointed to Contractor-Principal Relationship
Using the criteria of the Contractor Control Over Work Test, the Deputy President of the Fair Work Commission agreed with Westral: the worker was a contractor; not an employee. The Deputy President further noted that going through indicators of an employee or contractor relationship was laborious and so, it is always better to look at the whole picture.
In this case, the indicia that were ‘ticked off’ demonstrating a contractor-principal relationship were as follows:
• The worker could delegate and subcontract work
• He could advertise his services and work for other companies if he chose
• He was not supervised
• He enjoyed autonomy and control over his work
The worker’s claim was dismissed and the Commission ruled in favour of Westral Sunshades.
More Factors; not just the Control over Work Test
The common law ‘control over work test’ is not the only factor to take into consideration when categorising a worker as an employee or contractor. As the above case highlights, it is vital to examine the whole picture. As we have explored in our recent book, Everything You Need to Know about Employment and Contracting in Australia, there are 13 facets in general to consider for categorising a worker. Not only this, but each regulatory authority and organisation such as the Australian Taxation Office and the Fair Work Ombudsman, require different criteria to be fulfilled! The indicative factors in general, include: control over work, performance of work, tools and equipment use and, taxation and remuneration, among others.
Need Help?
For expert advice regarding anything employment law related, such as drafting employment contracts or contractors agreements or navigating any of the various issues that can arise during the course of engaging workers in your business, contact our team of experienced lawyers by submitting an online enquiry or calling us on 02 9223 9166.
You can download a free copy of our eBook, Employment and Contracting in Australia and explore our range of other Free Resources on The Quinn Group website.
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