In a full-bench of Federal Court of Australia, in a case of Tattsbet Limited v. Morrow (2015), applied the above test to determine whether an agency contractor is an employee or an IC. The worker named, Sharyn Morrow, was employed at Tattsbet in 2004 as per an agency agreement to manage and operate an agency of betting. The lower court, in pursuance to this fact, held that Morrow was an employee of Tattsbet. It decided this based on whether the alleged employee was working on someone else’s business or was he employed as an entrepreneur. The lower court based their judgement on the following factors (Weil, 2015) -
The Federal Court, however, did agree to the justification of lower court but still held that Ms Morrow was an independent contractor. They applied the multi-factor test and hence came to the conclusion that-
He accepted the offer and set up his own company Safe and Secure Pty Ltd. The weekly wages that he received were credited in a company established account to help him manage his income tax and superannuation funds.
Applying the Multi-Factor Test in such a scenario, so at first, it seems to be that Pena is an independent contractor. He was given liberty to work at some other place while being employed at SE and also given flexible work hours. He was made to take care of his own income and superannuation taxes. However, moving further, when the company decided to not give him any sick or annual leave but did hand him over with a company's wardrobe showing the logo of SE, so that is an inclination to the outside world that Pena is an employee of SE. only employees are given the uniform, showing the logo of a company. He was then asked to count and record the hours of work he invested at his shift and any other events that happened while he is on his shift. Furthermore, the salary that he received was credited to a company established account, so that facility is given to a permanent employee and not some independent contractor. He was employed there for a year i.e., 12 months which is generally along considering the mot-so established fact that Pena was an independent contractor.
As per the Tattsbet case, the justification of the Federal Court is not very convincing and based on reasoning. It held their judgement and overruled the lower court's judgement, but unlike the lower court's judgement, it did not support its observation with reasonings. It just held that lower court judgment is not at par and they based their judgement on the knowledge and skills of the employee, his responsibility to hire people and his participation in GST and BAS.
Hence to interpret the given situation and taking cognizance of the facts of the case, so Pena was an employee of SE as he was employed and made to work just like any other employee of SE would be done. He was given uniform bearing SE’s logo, he got a bank account opened in name of the company, he was asked to maintain her records on time he worked and the events he worked or dealt with. Such things are asked and done for any employee and not for any independent contractor. To top it all, he worked there for a year where he could easily have left after some time. So the decision of Chloe to dismiss Pena was not at par with the oral contract they had and hence Pena is liable to sue Chloe and SE for wrongful termination of her employment.
To get a much more clearer picture, the given facts of the case are very similar to the case of 2009. Freestone v Morris & Partners Pty Ltd (2009), the company asserted the fact the appellant was an independent contractor and not an employee of the firm. Her task involved doing official works, including book-keeping. She was terminated from her employment without being given notice and hence he demanded compensation from the company. The company asserted that they had no written contract and she would release invoices through her registered business name every month. Along with that, she ran other businesses as well. It was held by the Australian Industrial Relations Commission that she was a part-time employee. Reasons were-
Another way, a case of 2013 also justifies the previous judgement. In Fair Work Ombudsman v Metro Northern Enterprises Pty Ltd (2013), the company who shall recruit people to sell kitchenware products, they are contractors and not employees. They were called 'consultants.' Their job was to approach people at public places, like any shopping centre or mall and invite them to participate in a competition and win prizes and rewards. To the winners, they would contact them personally and would give a demo of the products with the sole purpose of selling them. These people had signed a contract stating them to be 'independent agents' and hence they aren't employees. The Federal Circuit Court held them to be employees. It was said that their nature of work would not describe them to be independent contractors. Reasons were-
The company was also liable to be a sham company under the Fair Work Act 2009 and hence liable to pay the liabilities and employee entitlements of payment of modern awards to the people.
As for the conduct of SE, no doubt they did gave Pena the liberty on hours of work and his superannuation and income tax liabilities. They also gave him the freedom to work anywhere else as she so will too. But they did not draw a line of work that he shall be entitled to do. Their mistakes were-
All these acts summarize the intention of the SE to employ Pena as a contractor but get the work done of an employer. Hence to avoid such inconsistencies in future, they must be more elaborative and must know the boundaries of their acts.
Australian Building Construction Commission. 2020. Employee or contractor [Online]. Available at: https://www.abcc.gov.au/your-rights-and-responsibilities/independent-contractors/employee-or-contractor [Accessed on 20/09/2020]
Weil, S. (2015). Australia: Examination of the test to determine worker status: Independent contractor or employee? [Online] Available at: https://www.mondaq.com/australia/employee-rights-labour-relations/423068/examination-of-the-test-to-determine-worker-status-independent-contractor-or-employee [Accessed on: 20/09/2020].
Tattsbet Limited v. Morrow  FCAFC 62
Freestone v Morris & Partners Pty Ltd (2009) AIRC 223
Fair Work Ombudsman v Metro Northern Enterprises Pty Ltd (2013) FCCA 216
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