Wednesday, 2 June 2021

Individual found to be employee, not contractor, despite providing invoices

The Fair Work Commission (FWC) has found that an individual engaged in hosting games at different venues across Victoria was in fact an employee rather than an independent contractor.

The distinction was relevant in this case because if the relationship was found to be one of principal and contractor, the individual’s application to the FWC alleging her employment was terminated in contravention of the general protections provisions in the Fair Work Act could not proceed.

The individual was engaged from July 2018 until November 2020 to work two hour shifts hosting games to “pick a box” which involved setting up boxes and handing out raffle tickets to patrons and conducting a draw.

In considering the relationship between the individual and the company, the FWC referred to the well-established multi-factorial approach developed by the courts. These factors include control, provision of tools and equipment, uniform, entitlement to delegate or subcontract, and the nature of the work.

In applying these factors, the FWC noted that it “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”.

In considering this detail, the FWC noted that even though payment for the work was made through the provision of invoices (normally indicative of a contractor relationship), the individual had not agreed to invoice for her work and had no real ability to influence the mode of payment – she was told it was just the way things would be done. As a result, the FWC gave little weight to the invoicing arrangement.

In addition, there were a number of other factors which also weighed in favour of an employment relationship, including:

  • The individual was required to wear a company uniform.
  • The individual was assigned the venues to work at by the company.
  • Although the individual used her own vehicle to travel to the different venues, the company provided all of the equipment required for each shift, meaning all of the materials to operate the games.
  • The individual was unable to delegate or subcontract her work to another party.
  • If the individual was unavailable for a shift, she would inform the company who would find one of their workers that knew the game to fill her position (she was unable to choose someone herself to fill her place).
  • While the individual had an ABN established prior to working for the company, this had been used for performing in a band. The individual did not regard the “pick a box” work for the company as part of her business and she did not use it as a platform to promote her music business.
  • The work did not involve a profession, trade or special calling, and instead involved relatively simple tasks.

When considering all of the above, the FWC found that the overwhelming weight of the relevant factors pointed towards an employment relationship, despite the invoicing arrangement.

As a result of this finding, the individual’s general protections application involving dismissal from her employment was able to proceed.

Lessons for businesses

This case is a timely reminder for businesses about the importance of distinguishing between employees and independent contractors. It demonstrates that factors that are often common to a contractor-principal arrangement may not necessarily prove that an individual is a contractor.

While providing invoices for services may be one factor that is indicative of a contractor arrangement, in this case, it was not sufficient to satisfy the FWC of a contractor arrangement when looking at the totality of the relationship.

The FWC will look beyond what the parties label the relationship and instead use the approach “requires one to look at relationship the parties have actually brought into existence”.

Employers should therefore examine the true nature of the relationship with their contractors as a whole to determine whether individuals should be properly characterised as employees or contractors. As this case demonstrated, the distinction will be relevant to the cause of action an individual may be able to take.

If you need assistance in reviewing your independent contracting arrangements, HR Legal is available to assist.

Case reference: Erin Shay v Christopher Shannon [2021] FWC 2815 (21 May 2021)


This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.