Introduction

Read the full decision here.

This is a Full Bench appeal of a decision by a Commissioner who found that the person who claimed an unfair dismissal was an “employee” not a “contractor. In this current “gig” economy it is increasingly important that businesses ensure that they put in place practices that ensure they are either “employing” an employee or “engaging” a contractor.

Whilst the Full Bench “allowed” this appeal (as it enlivened the “public interest’) – the appeal was ultimately dismissed, with the original Commissioner’s decision finding that even though the Nurse had a “contractor’s agreement”, she was in fact an employee and therefore eligible to bring an unfair dismissal.

However, this does not reduce the fact that it provides an excellent guide for practitioners that are faced with the question which has kept courts, from the High Court down, busy for decades: “employee or contractor?” That is, just because you call an apple a lemon, does not mean it is a lemon – it remains an apple.

This decision is also a useful addition to my FREE “Employee or Contractor?” guide.

Background

The Company lodged an appeal, for which permission to appeal is required, against a decision of Commissioner Simpson in relation to an unfair dismissal application by what the company argues was a contractor that was found, by the Commissioner, to be an employee.

The contractor/employee provided home care services on behalf of the company.

The Company is a business that provides nursing services to patients in their homes:

  • Its patient base and revenue are obtained via contractual arrangements with government and other health organisations, principally the Department of Veterans Affairs (DVA).
  • It engages qualified nurses for the purpose of providing its services.
  • The [Nurses Name] was engaged by the Company in November 2013 as a community registered nurse.
  • It was a term of her engagement that she obtain an Australian Business Number (ABN) and enter into an agreement as a contractor.

The contractor agreement

The [Nurses Name] has entered into three successive contractor agreements with the Company during the period of her engagement. Each of these were in a standard form determined by the Company for the purpose of the engagement of all its in-home nursing workers. Her latest (the 2020 Contract) is entitled “Independent Contractor Agreement” and relevantly provides that the [Nurses name] is required to:

  • Have an ABN.
  • Provide Community Nursing Services…and to provide the Services to a commercially acceptable and professional standard.
  • Immediately notify the Company so that the Company may engage another contractor to provide the Services if the Contractor becomes incapable of performing the Service through illness or involuntary injury.
  • The Company may vary the Services by increasing, decreasing, or omitting any of them, changing their character or content, changing their direction or dimensions, or requiring the Contractor to perform additional duties.
  • To ensure that the Services are provided properly and carefully, in a reasonable and professional, businesslike manner, and promptly and to industry standard.
  • Comply with the DVA Service Charter and Australian Public Service values.
  • Follow any lawful direction of the Company in providing the Services.
  • Ensure that the performance of the Services are not interfered with, delayed, or hindered by any other work the Contractor may be doing under any other contract or arrangement with any other person or organisation.
  • Provide its own tools of trade to enable it to provide the Services.
  • Provides that the “Service Fee” (specified in Schedule 1 Item 3 in a table of monetary amounts payable for visits which vary depending upon when the visit is conducted and how long is spent at the client’s premises to deliver the requisite care) is payable within 7 days of receipt by the Company of a fortnightly tax invoice and worksheet.
  • Allows the Company to vary the Service Fee by notice in writing to the Contractor.
  • Provides that the Contractor may engage in other work and assignments provided that they do not involve a conflict with their duties and responsibilities to the Company.
  • To give absolute priority at any time to the provision of the Services to the Company…over any other work or assignments they may be engaged in.
  • “The relationship of the parties is such that the Contractor is appointed as an independent contractor and not as an agent or an employee of the Company. Nothing in this Deed shall be deemed to create an employment relationship between the Company and the Contractor”.
  • That the “Contractor is solely responsible for all payments to the Contractor” in respect of annual leave, sick leave, long service leave, public holidays, redundancy payments and other similar benefits under any law or industrial instrument, superannuation, workers’ compensation and taxation “for and on behalf of the Contractor and any other persons employed or engaged by the Contractor to provide, or assist in providing, the Services to the Company”.
  • The Contractor to hold and maintain any necessary insurance relating to or arising out of providing the Services, including workers’ compensation insurance, public liability insurance and other insurances required by law or regarded as good commercial practice, and provide proof of such to the Company on request, provided that the Company may elect to assist the Contractor in taking out professional indemnity insurance and/or reimburse the Contractor for the cost of this.
  • “The Contractor acknowledges that, as an independent contractor, it is responsible for the cost of providing the Services and for any loss or damage to any third party caused by the manner in which the Services are provided, or arising out of providing the Services, or any related activities or conduct by the Contractor in providing the Services” and provide for an indemnity in this respect.
  • A restraint clause which requires among other things that the Contractor not seek or accept the custom of any of the Company’s customers and not interfere with the relationship between the Company and its customers, franchisees, employees, or suppliers.
  • The Contractor assigns all intellectual property rights to the Company.
  • The 2020 Contract may be terminated by either party on 4 weeks’ notice, and that the Company may in its sole discretion terminate the 2020 Contract immediately without notice upon the occurrence of various specified events, including that the Contractor in the Company’s reasonable opinion fails to remedy its failure to properly perform the Services within one week of the Contractor being advised in writing by the Company of any complaint or performance issues relating to the provision of the Services.
  • “The Contractor must not sub-contract all or part of its obligations under this Deed without the prior approval of the Company. Any permission to sub-contract all or part of the Contractor’s obligations under this Deed does not discharge the Contractor from any liability for the performance of its duties and obligations under this Deed”.

The work of the [Nurses name]

The [Nurses Name] was provided with induction training upon engagement. She was assigned patients to whom she had to provide home nursing services. She initially worked only part-time hours providing the services, and also provided nursing services for another business. However, after a period of time, the Company increased the work assigned to her to a degree which constituted full-time hours, and the Company either instructed or requested that she resign from her role with the other business.

It was up to the [Nurses Name] to determine when and how regularly services would be provided subject to the patient’s requirements and management’s approval. When the [Nurses Name] visited a patient’s residence, she would wear the Company’s name badge and provide the patient with a business card with the Company’s branding. The business cards were provided to the [Nurses Name] by the Company.

Branding

Patient paperwork and folders were supplied by the Company and bore the Company’s logo. At the time of the termination of her engagement, the [Nurses Name] had ordered uniforms from the Company, which were provided to nurses to wear on a voluntary basis at their expense.

Management

The Company had a management structure that oversaw the provision of the services. It would from time-to-time issue instructions to the [Nurses Name] about the performance of her nursing work, including instructions to attend staff meetings from time to time. If the [Nurses Name] wished to take any period of unpaid leave, the approval of management was required. As a matter of practice, if the [Nurses Name] was going to be absent and unable to provide nursing services to the patients allocated to her, she had to arrange another of the Company’s nursing contractors to cover for her. The [Nurses Name] assisted in the training of other newly engaged nursing contractors.

Tools of trade

The [Nurses Name] used her own car to travel to and from patients’ homes, and she bore the expense of this. The [Nurses Name] has also provided “tools of trade” at her expense, at least on a replacement basis, including a stethoscope, oximeter, pen torch, blood pressure monitor, thermometer and blood sugar measurer. Consumables such as gloves, aprons, sacrum protection, anti-microbial alginate dressings, bandages, wound care dressings, numerous creams, incontinence pads, protective sheets and catheter packs were provided by the Company, and the [Nurses Name] took these as needed from the Company’s storeroom at its place of business. Any administrative duties were performed by the [Nurses Name] in her own home using her own computer.

Taxation

The [Nurses Name] was responsible for the payment of tax on her income, and no tax was deducted by the Company from the fees which it paid to her. The [Nurses Name] began charging for GST only towards the end of her engagement, when she was prompted to do so by the Company after it became aware her annual income exceeded $75,000. The [Nurses Name] reported to the Australian Taxation Office (ATO) that she was a Sole Trader/Contractor in her tax returns. She claimed deductions for business expenses in her tax returns over the course of her engagement, with the highest amount claimed being $26,563 in 2015.

The Commissioner’s decision under appeal

In his decision, the Commissioner proceeded on the basis of the multi-factor test for distinguishing between employer-employee relationships and principal-independent contractor relationships as summarised, on the basis of the relevant court authorities, in the Full Bench decision in Kimber v Western Auger Drilling Pty Ltd. The Commissioner also identified the ultimate question to be determined, by reference to the Full Bench decision in Abdalla v Viewdaze Pty Ltd t/a Malta Travel, as being whether the worker is the servant of another in that other’s business, or whether the worker carries on a trade or business on his or her own behalf such that the worker could be said to be conducting a business of his or her own.

Control?

The Commissioner then proceeded to analyse and make findings in relation each of the factors in the multi-factor test identified in the Kimber decision. The Commissioner first dealt with “[w]hether the putative employer exercises, or has the right to exercise, control over the manner in which work is performed, place or work, hours of work and the like” and, after referring to the evidence given and some of the provisions of the 2020 Contract, made the following findings:

“[47] On the basis of the evidence it is apparent that the patients were assigned to [the Company] by [the Nurses name] and [the Nurses name] did not seek to obtain patients to provide care herself independently of [the company]. Further, she needed approval for leave and any work not performed by her was required to be performed by another nurse connected to [the company]. I am also satisfied on the evidence that [the Nurses name] was directed to assist in the training of others in connection with the performance of nursing work for [the company…and the company] retained the ability to reallocate a particular patient from one nurse to another if for example a patient raised a concern about a particular nurse. The evidence was also that in the event of a patient ceasing to use the services provided to [the company], the patient file was returned to [the company].

“[48] While the Independent Contractors Agreement on its face is written with a clear intent to establish a contracting and not employment agreement, a range of clauses within the Agreement provide [the Company] a greater right of control and direction over [the Nurses name] then is often the case in a contracting arrangement. The overall picture also includes that of [the respondent] appearing to be required to report through a structure of management at the Company. This is indicative of the Company exercising a level of control more indicative of employment than a contracting arrangement.”

Able to work for others?

The Commissioner then dealt with “[w]hether the worker performs work for others (or has a genuine and practical entitlement to do so)”. The Commissioner found:

“[51] The evidence established that [the Nurse name] performed hours of work for the Company commensurate with what would be regarded as approximating full-time employment. While [the Nurses name] did perform brief periods of work for other entities in years gone by this had not been the case for a lengthy period of time. Whilst her most recent employment contract included a term allowing her to engage in other work, the reality is given the amount of work provided by the [company] to [the Nurses Name], that such work could only have been performed on the two days of the week she was otherwise not engaged by the Company, or in the evening after 5.30 pm when she had already completed a full day of work with the Company. This indicia [sic] tends more to indicate employment rather than a contracting arrangement.”

As to “[w]hether the worker has a separate place of work and or advertises his or her services to the world at large”, the Commissioner found that “The evidence does not indicate [the Nurses name] had a separate place of work and [the Nurses name] did not advertise her services to the world at large. This indicia [sic] is more indicative of employment than of contracting.” In relation to “[w]hether the worker provides and maintains significant tools or equipment”, the Commissioner stated the following conclusions:

“[65] The Full Bench decision in Gupta v Portier Pacific Pty Ltd, Uber Australia Pty Ltd t/a Uber Eats ([2020] FWCFB 1698, 296 IR 246 at [65]) did not consider that because Ms Gupta in that matter was required to provide her own vehicle in order to carry out her work necessarily pointed to her being an independent contractor as the vehicle in that case was not a specialised item of equipment and was already owned and used for personal purposes, and the provision of a vehicle is common feature of employment relationships. The same can be said in this case.

. . . .

“[69] Based on the evidence…it would appear that besides the fact [the Nurses name] used her own vehicle to travel, virtually all equipment and medical supplies required by [the Nurses name] to perform her nursing role were provided to her by the Company. [the Nurses name] gave evidence concerning the Company maintaining an inventory of such supplies. The [Nurses name] appears not to have made any significant investment in capital equipment. This evidence is indicative of employment and not an independent contracting arrangement.”

Able to delegate work to others?

In relation to “[w]hether the work can be delegated or subcontracted”, the Commissioner found:

“[78] Based on the evidence it is apparent that [the Nurses name] did not have an unfettered ability to delegate or subcontract work in that it was not a matter entirely within her discretion. The evidence is that [the Nurses name] had to follow certain protocols in providing work to someone else and it was also the case that such work had to be provided to another person also engaged by the Company, presumably so the Company could still retain a degree of control over the performance of that work.

“[79]…Overall the evidence concerning the extent that [the Nurses name] could delegate or subcontract her duties tends more to indicate employment than independent contracting.”

The Commissioner found in relation to whether the putative employer has the right to suspend or dismiss the person engaged that clause 10.2(f) of the 2020 Contract tended to indicate employment rather than contracting. As to “[w]hether the putative employer presents the worker to the world at large as an emanation of the business”, the Commissioner found that “Given [the Nurses name] wore the Company name badge and had a business card, used the Company email address, and used the Company paperwork, folders and a Company bag during consultations with patients, [the Nurses name] was presenting to the world at large as a emanation of the Company which tends to indicate employment rather than a contracting arrangement”.

Taxation?

In relation to “[w]hether income tax is deducted from remuneration paid to the worker”, the Commissioner referred to the evidence given by…a taxation accountant who was called by the Company to give evidence, to the following effect:

“[92] In cross-examination, [the accountant] was asked whether [the Nurses name] would be able to claim expenses if she was an employee. [The accountant] said she would. [The accountant] was asked whether she could claim the same amount on her motor vehicle if she were an employee and was entitled to a travel allowance. [The accountant] said the ability to claim as an employee would not be impacted by a travel allowance.

“[93] It was put to [the accountant] that if an employee uses equipment as part of their role, they could still claim these and that there would be no difference between an employee and a contractor making these claims and Mr Molesworth agreed.”

[18] The Commissioner then concluded: “The evidence is that The Company did not deduct income tax from remuneration paid to [the respondent] which tends to indicate a contracting arrangement and not employment. It is notable however that much of what was claimed by [the respondent] could also be claimed by an employee.”

Paid by results or wages?

As to “[w]hether the worker is remunerated by periodic wage or salary or by reference to completion of tasks”, the Commissioner found:

“The evidence is that [the respondent] was paid fortnightly on the basis of the amount of time she had recorded spent with clients as provided by her. Its seems the method of payment does not fall neatly into the category of a periodic wage or salary in that it was subject to [the respondent] reporting the number and length of visits with clients. However, it also cannot be said that the method of payment is based on purely completion of tasks in that it is not based on a completion of a tasks such, but on the amount of time spent with a client. If anything, the overall method of remuneration tends more to indicate contracting then employment.”

Paid holidays or sick leave?

In relation to “[w]hether the worker is provided with paid holidays or sick leave”, the Commissioner found that [the Nurses name] was not paid for holidays or sick leave and on that basis this was more indicative of contracting. As to “[w]hether the work involves a profession, trade or distinct calling on the part of the person engaged”, the Commissioner found that: “Given that in order to practice as a Registered Nurse, a tertiary level qualification and specialist skills are required, this tends to favour the prospect of the engagement being a contracting relationship rather than employment.”

Creates goodwill?

In relation to “[w]hether the worker creates goodwill or saleable assets in the course of his or her work”, the Commissioner accepted [the company’s] evidence that she did not obtain goodwill or saleable assets in the course of her work over 6½ years, and this tended to support a conclusion that the engagement was employment and not independent contracting.

Business expenses?

Finally, the Commissioner considered “[w]hether the worker spends a significant portion of remuneration on business expenses” and made the following findings:

“[115] The primary costs [of the Nurses name] incurred were in relation to running costs associated with her vehicle. However, as was observed in the matter, in the event that [the Nurses name] was an employee there are means to recover a significant portion of these costs. [The Nurses name] said that she purchased gloves on one occasion when she could not access the inventories of the Company and replaced the blood pressure machine, she had initially been given by the Company on commencement herself when it became outdated.

“[116] Besides expenses associated with her vehicle I have not been persuaded that [the respondent] did spend a significant proportion of her remuneration on other business expenses despite her submitting a number of tax returns which appeared to claim significant business expenses that on her own evidence she is unlikely to have incurred. For example, her evidence was to the effect that she did not do a significant amount of work from home however has claimed reasonably significant home office expenses in several tax returns.”

The Commissioner concluding…

The Commissioner then stated the following overall conclusions:

“[117] I have made findings in relation to each of the indicia as set out above. I have considered the various employment contracts which describe the relationship as one of contracting however as was stated in French Accent ([2011] FWAFB 8307) the parties cannot alter the true nature of their relationship by putting a different label on it.

“[118] I have also given consideration to the fact while [the Nurses name] said the much of the work was equivalent to that of Assistant Nursing or Enrolled Nursing work, at times [the Nurses name] would have exercised a high degree of skill and expertise given her qualifications as a Registered Nurse. As was observed in Stevens v Brobribb ((1986) 160 CLR 16) 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.

“[119] Using the multi-factorial approach, whilst certain indicia would indicate the relationship was that of independent contracting, and it is clear [the Nurses name] submitted tax returns and claimed expenses as if she were an independent contractor, the overall picture on the evidence is not ambiguous to the extent that the Independent Contracting Agreement of itself sways the matter in favour of the Company. The evidence is sufficiently clear to weigh in favour of concluding that [the Nurses name] was performing work for the Company in the capacity of an employee rather than an independent contractor.

“[120] In the recent Full Bench decision of the FWC in Gupta v Portier Pacific ([2020] FWCFB 1698, 296 IR 246) the Full Bench gave significant weight in that matter to there being no control over the when and how long Ms Gupta performed work, Ms Gupta’s ability to accept work through other competitors, and Ms Gupta not presenting as an emanation of Uber ([2020] FWCFB 1698, 296 IR 246 at [69]). This matter is distinguishable on all three counts. The evidence indicates that in practical terms the Company did exercise a degree of control over when and how long [the Nurses name] worked. Given [the respondent]’s ongoing commitments to the same patients the Company had allocated to her to provide care for on a week in week out, year in year out basis occupying the equivalent of full time employment, and given her contract required her to ensure performance of the service is not interfered with or delayed by the performance of any other work with any other person or organisation (clause 3.1) it is not realistic to say that [the Nurses name] was free to accept work from others of her own choosing. Finally, as was concluded earlier unlike the case in Gupta, [the Nurses name] did present as an emanation of the Company.

“[121] The ultimate question is whether [the Nurses name] was a servant in the Company’s business or viewed practically, she was carrying on a trade or business of her own. I am satisfied on the evidence that in practical terms the Company retained rights of control over [the Nurses name] to such an extent that [the Nurses name] was an employee of the company and was not conducting her own business…”

The Full Bench’s decision

Consideration

The FB reviewed the facts and the Commissioner’s previous decision (ie the decision under appeal):

“We consider that it is in the public interest to grant permission to appeal in this case. The question of whether [the Nurses name] for an unfair dismissal remedy was, at the time of the alleged dismissal, an employee of the party against which a remedy is sought is one of jurisdictional fact. This means, for the purpose of the exercise of the appellate function, that the decision is not be treated as one involving the exercise of a discretion; rather it involves the application of a legal standard to a given set of facts. Appealable error will be found if on appeal a different conclusion on the facts and the law is reached than that arrived at by the primary decision-maker. Further, notwithstanding the conclusion we reach later in this decision, it cannot be said that the question of whether [the Nurses name] was an employee of the Company or performed services for the Company in the capacity of an independent contractor has an easy and obvious answer. Appellate review is appropriate in these circumstances. Accordingly, permission to appeal is granted”.

The company’s appeal

“For the most part, the Company’s grounds of appeal invite us to reach a different conclusion concerning [the Nurses name] status than the conclusion reached by the Commissioner by reconsidering the proper conclusion to be reached on a number of the factors relevant to the multi-factor test identified in a number of High Court decisions, most notably Stevens v Brodribb Sawmilling Co Pty Ltd…[I]t is necessary at the outset to consider…by which The Company contends that primacy in the analysis is to be given to the characterisation of the relationship between the Company and [the Nurses name] in the 2020 Contract and its predecessors, and that the way in which the contracts were implemented in practice should not have been given more significance than the contractual labelling”.

The contract

“We do not accept this contention, and we agree with the approach taken by the Commissioner whereby he considered the substance of the rights and obligations under the 2020 Contract, and how those rights and obligations were applied in practice, to be the primary considerations. The correct approach, derived from the relevant court authorities, was described in the recent Full Bench decision in Gupta v Portier Pacific Pty Ltd as follows:

“However all the above provisions may be regarded as merely labelling or characterising the nature of the contractual relationship between Ms Gupta and Portier Pacific/Uber; none of them set out the substantive rights and obligations of that relationship. It is well established that such labels cannot alter the substantive nature of the relationship. As was stated by Isaacs J in Curtis v Perth & Fremantle Bottle Exchange Co Ltd ([1914] HCA 21, 18 CLR 17):

‘Where parties enter into a bargain with one another whereby certain rights and obligations are created, they cannot by a mere consensual label alter the inherent character of the relations they have actually called into existence. Many cases have arisen where Courts have disregarded such labels, because in law they were wrong, and have looked beneath them to the real substance.’”

The way the work is carried out

“More recent decisions of the Federal Court Full Court have elucidated this principle in the context of the identification of whether an employment relationship exists. In ACE Insurance Limited v Trifunovski, Buchanan J (with whom Lander and Robertson JJ agreed) said that “the nature of the relationship may be legitimately examined by reference to the actual way in which work was carried out” ([2013] FCAFC 3, 209 FCR 146, 235 IR 115 at [91]). In Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd, North and Bromberg JJ (with whom Barker J relevantly agreed) said that: “…appellate courts in Australia and the United Kingdom have been particularly alert, when determining whether a relationship is one of employment, to ensure that form and presentation do not distract the court from identifying the substance of what has been truly agreed. It has been repeatedly emphasised that courts should focus on the real substance, practical reality or true nature of the relationship in question…” ([2015] FCAFC 37 at [142], Barker J agreeing at [316]). And in WorkPac Pty Ltd v Skene the Full Court said “The conduct of the parties to the employment relationship and the real substance, practical reality and true nature of that relationship will need to be assessed ([2018] FCAFC 131 at [180]).”

“To the above summary might be added the following statement made by the High Court majority (Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ) in Hollis v Vabu Pty Ltd:

“It should be added that the relationship between the parties, for the purposes of this litigation, is to be found not merely from these contractual terms. The system which was operated thereunder, and the work practices imposed by Vabu go to establishing “the totality of the relationship” between the parties; it is this which is to be considered.”

“Accordingly, although not irrelevant, the characterisation of [the Nurses name] status in the 2020 Contract and its predecessors as that of an independent contractor and not employee is of lesser significance in the face of substantive contractual rights and obligations which, as applied in practice, point in a different direction.

Arrangement of her affairs

“The Company…seeks that significant and indeed decisive weight be placed on the fact that [the Nurses name] arranged her affairs as if she were an independent contractor, consistent with the contractual characterisation of her relationship with the Company. This included that she operated with an ABN, issued tax invoices to the Company, eventually charged the Company with GST, and declared in her tax returns that she was a contractor. It is to be accepted that these are matters which weigh to some degree in favour of a conclusion that [the Nurses name] was a contractor. However, we do not consider that these matters are to be given the decisive weight contended for by the Company since they are all consequential upon the contractual characterisation of the relationship – a characterisation in substance determined by the Company through the standard-form contracts it used as the sole basis for the engagement of its in-home nursing staff, including [the Nurses name]. As was stated in the Federal Court Full Court decision in ACE Insurance Limited v Trifunovski (per Buchanan J, with whom Lander and Robertson JJ agreed):

“One of the strongest arguments in favour of the appellant’s position was that the agents themselves had organised their affairs on the basis that they were not employees, an arrangement which met Combined’s requirements. The arrangements to which the trial judge referred, whereby for taxation purposes the agents were treated as non-employees, are clearly not decisive in their own right. They follow the prior assumption about employment (or more correctly non-employment). That assumption led to what was done about income tax deductions, GST, payroll tax, superannuation contributions and the like.”

“Buchanan J added:

“It is also difficult, in my view, to give much independent weight to arrangements about taxation, or even matters such as insurance cover or superannuation. These are reflections of a view by one party (or both) that the relationship is, or is not, one of employment. For that reason, in my view, those matters are in the same category as declarations by the parties in their contract (from which they often proceed). They may be taken into account but are not conclusive.”

“In respect of [the Nurses name] tax returns, The Company submitted that the work expenses claimed by [the Nurses name] as deductions from her taxable income should have been treated as a substantial indicator of her being a contractor. We disagree, for a number of reasons. First, the mere fact that a person performing work for another claims expenses incurred in the performance of that work as tax deductions, even when the amounts claimed are of significance, is not of itself determinative of the person’s status, as the decisions in ACE Insurance Limited and Jamsek v ZG Operations Australia Pty Ltd demonstrate.

“Second, the expenses claimed were primarily for the provision of [the Nurses name] motor vehicle and for her home office. It is not uncommon for workers who are undeniably employees to use their personal motor vehicle for work travel, and also to establish home offices for the purpose of working from home. In this connection it may be noted that clause 16.5(a) of the Nurses Award 2010 provides for an allowance of $0.80 per kilometre for an employee “required and authorised to use their own motor vehicle in the course of their duties”. The tax expert called by The Company to give evidence…said that there is no distinction in the capacity of employees or contractors to claim tax deductions for the cost of personal motor vehicle and home office use for work purposes…

“The motor vehicle provided by [the Nurses name] was not a specialised piece of equipment requiring particular skill or expertise to operate, but simply a car which could equally be used for private purposes. There is no basis to conclude that it constituted a capital investment of significance for the purpose of the operation of a business. The same can be said of the establishment by [the Nurses name] of a home office. The evidence as to the “tools of trade” did not establish that any substantial cost was involved in their purchase.

“Third, the Company’s characterisation…of the amount of expenses claimed as deductions as being ‘substantial’ or ‘significant’ requires scrutiny. The tax returns for the earlier years of her engagement with the Company, which nominally show a high proportion of her income being consumed in business expenses, are problematic. In those years [the Nurses name] was also earning income from [another company], with this appearing to be her primary income source initially, so they do not necessarily provide an accurate picture with respect to her engagement with the Company. Additionally, in the 2014/15 financial year, [the Nurses name] seems to have obtained an instant asset write-off for the purchase of a car, which added $14,692 to her deductions for that year, resulting in an unusually high 63.9% of her income being deductible in that year. The later years for which tax returns were available, during which [the Nurses name] was working exclusively for The Company, give a more consistent picture: in 2016/17, [the Nurses name] earned $96,420 and had expenses of $13,858 and, in 2017/18, [the Nurses name] earned $104,155 and had expenses of $15,493. We do not regard tax deductions of this order necessarily to be indicative of a contracting rather than employment relationship”.

Work was obtained by the company

“There are, as the Commissioner found, a number of indicia which firmly point to the existence of an employment relationship. The first is that it cannot be said that [the Nurses name] was conducting a business of her own. The patients she provided services to were obtained by the Company through its commercial contractual arrangements and allocated to [the Nurses name]. There was no evidence that [the Nurses name] had the capacity on her own initiative to increase the number of her patients and thus increase her income. The patients had no separate contractual or commercial relationship with [the Nurses name] and the 2020 Contract expressly restrained [the Nurses name] from such arrangements. As a consequence, [the Nurses name] acquired no goodwill or saleable asset

No right to sub-contract or delegate

“The second is that there was no effective right for [the Nurses name] to subcontract or delegate the performance of the services under the 2020 Contract or its predecessors, as the Commissioner found, with the consequence that the arrangement was in substance one for personal service. Under clause 13.8 of the 2020 Contract, [the Nurses name] was not permitted to sub-contract her obligations under the contract without the prior approval of the Company, and there was no evidence that such approval was ever sought or obtained. She was not permitted or required to supply another nurse to replace herself if she were sick or injured, since clause 2.2 simply required her to immediately notify the Company in this eventuality so that the Company could arrange another contractor to provide the services. In practice, [the Nurses name] was required if absent to arrange for another nurse contracted to the Company to replace her. However, we reject the contention advanced by the Company…that this amounted to a right of delegation. The proper characterisation of this practice is that the Company assigned to [the Nurses name] its administrative task under clause 2.2 of arranging another contracted nurse to replace her. The evidence showed that she was certainly not allowed to arrange anyone external to the Company to replace her. We also reject the Company’s contention that the requirement for [the Nurses name] to communicate instructions and advice to another contracted nurse if handing over a patient was in some way indicative of a right to delegate. This was a sensible administrative arrangement required by the Company to ensure quality and continuity of care and is indicative of [the Nurses name] being employed in a business conducted by the Company”.

Control of work

“Third, The Company controlled the work of [the Nurses name] in important ways. The legal means of control were provided by the 2020 Contract (and its predecessors). Clause 2.3 of the 2020 Contract gave The Company the power to determine the quantity and nature of the services to be provided by [the Nurses name], and under clauses 2.1 and 3.1(a) [the Nurses name] was required to perform those services promptly to a commercially acceptable and professional and industry standard and to dedicate an appropriate time for the provision of the services. Clause 3.1(g) required [the Nurses name] to follow any lawful direction made by the Company as to the provision of those services. Assessed cumulatively, these provisions gave the Company legal control over what amount of work was to be performed by [the Nurses name], what the nature of the work was to be, and how it was to be performed.

“The evidence showed that, in practice, The Company gave considerable latitude to [the Nurses name] as to when and how the work was to be performed. This may be regarded as consistent with allowing [the Nurses name] to exercise quasi-professional judgment as to the degree and timing of the nursing care to be provided to individual patients. However, the Company certainly did exercise its legal powers of control over the allocation of work, to the extent that in or about 2016 it instructed or requested that [the Nurses name] resign her engagement with [the other company] in order for her to provide services to additional patients. Additionally, it exercised control through the arrangements required to be made when [the Nurses name] was sick or injured, as previously discussed, the requirement that [the Nurses name] attend staff meetings from time to time, and the requirement for her to obtain permission from the Company before taking any period of unpaid leave. We therefore agree with the Commissioner’s conclusions that the extent of the Company’s control over the performance of work by [the Nurses name] was indicative of the existence of an employment relationship…”

Work exclusively for the company

“Fourth, the Company had the legal right to, and did in practice, require [the Nurses name] to work exclusively for the Company. Although, as the Company submitted, clause 5.2 of the 2020 Contract allowed [the Nurses name] to engage in other work provided that this did not conflict with her duties and responsibilities to the Company, clause 5.4 empowered the Company to require [the Nurses name] to give absolute priority to the provision of services to the Company under the contract over any other work or assignments. This provision, together with the capacity of the Company under clause 2.3 of the 2020 Contract to require [the Nurses name] to provide a quantity of services amounting to full-time work, meant that the Company had the legal means to require exclusivity. The evidence did not establish that the Company invoked its equivalent powers under earlier contracts to achieve exclusivity, but it is clear that this is what it did by increasing the allocation of patients to [the Nurses name] to a level that required a full-time commitment and instructing or her requesting her to resign from her engagement with [the other company]. We consider that the Commissioner was correct in concluding that this indicium supported a finding that an employment relationship existed…”

System of payment

“Fifth, the payment system is one more relatable to [the Nurses name] being an employee rather than an independent contractor. Under the 2020 Contract, the rate of payment was as provided for in Item 3 of Schedule 1, or as varied by the Company on notice pursuant to clause 4.2. There was no capacity for [the Nurses name] to set or bargain for a price for the provision of her services to The Company. The rate structure provided for in the 2020 Contract was a hybrid of a piece rate and a time-based rate, in that [the Nurses name] was paid per visit to patients at their homes, but the payment varied depending on the length of the visit. Because, as earlier explained, the 2020 Contract was in substance one for personal services, the payments were made for the provision of [the Nurses name] personal labour, and not for the production of a result by whatever means [the Nurses name] selected”.

Emanation of the company

“Finally, to a limited degree, [the Nurses name] presented herself to the patients as an emanation of the Company in that she had the Company-branded name badge, business card, folder and paperwork and, at the time of the termination of her engagement, she had the Company uniforms on order. There was no countervailing evidence to the effect that she presented herself to the patients or the public at large as operating her own business.

Disagreement with the Commissioner’s decision

“There is one conclusion reached by the Commissioner with which we disagree. In paragraph [113] of the decision, the Commissioner found that because [the Nurses name], as a Registered Nurse, held a tertiary level qualification and exercised specialist skills, this “tends to favour the prospect of the engagement being a contracting relationship rather than employment”. This cannot be correct. The same proposition is true of all nurses, as well as other occupations such as teachers, engineers and lawyers, the large majority of whom work as employees. In the absence of evidence that [the Nurses name] performed her work as a nurse in a business of her own, we consider that this must be treated as a neutral consideration. This conclusion is, of course, not one that favours the Company in its appeal.

The FB’s summary

“The degree of control which the Company had over [the Nurses name] work, its capacity to require her to work exclusively for the Company, the system by which she was remunerated, her lack of capacity to subcontract or delegate her work, the lack of any evidence that [the Nurses name] ran a business on her own account, and her presentation as working in the Company’s business rather than her own, lead us to conclude that she was an employee of The Company. These are matters going to the substance of the relationship. [The Nurses name] conduct of her tax affairs and the fact that she held an ABN, charged GST (at the Company’s insistence) and rendered tax invoices are matters of lesser weight because they are merely consequential upon the contractual label given to the relationship – a label which arose because the Company required its nurses to contract with it on that basis”.

Cases cited

1   [2020] FWC 4782

2   [2015] FWCFB 3704, 252 IR 1

3   [2003] AIRC 504, 122 IR 215 at [34]

4   [2020] FWC 4782 at [58]

5   Ibid at [80]

6   Ibid at [87]

7   Ibid at [97]

8   Ibid at [103]

9   Ibid at [113]

10   Ibid at [114]

11   [2017] FWC 1264

12   [2020] FWC 3122

13   [2020] FCAFC 119, 297 IR 210

14   [2011] FCA 366, 214 FCR 82, 206 IR 252

15   [2020] FWC 3122

16   Sammartino v Foggo [1999] FCA 1231, 93 IR 52 at [9]-[10]; Jamsek v ZG Operations Australia Pty Ltd [2020] FCAFC 119, 297 IR 210 at [2] per Perram J and at [171]-[174] per Anderson J

17   [1986] HCA 1, 160 CLR 16

18   [2020] FWCFB 1698, 296 IR 246

19   [2001] HCA 44; 207 CLR 21, 106 IR 80 at [24]

20   [2013] FCAFC 3, 209 FCR 146, 235 IR 115 at [122]

21   Ibid at [37]

22   [2013] FCAFC 3, 209 FCR 146, 235 IR 115 at [133], [137]

23   [2020] FCAFC 119, 297 IR 210 at [189]-[190]

24   Transcript, 23 June 2020, PNs 209-211

25   See Roy Morgan Research Pty Ltd v Commissioner of Taxation [2010] FCAFC 52, 184 FCR 448 at [40]-[41]; ACE Insurance Limited v Trifunovski [2013] FCAFC 3, 209 FCR 146, 235 IR 115 at [133]; Jamsek v ZG Operations Australia Pty Ltd [2020] FCAFC 119, 297 IR 210 at [206]-[207]

26   [2020] FWC 3122

27   Ibid at [68], [70]

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Introduction

This is Full Bench decision of the Fair Work Commission is a perfect example where things can get well out of hand, ending in a lot of frustration (for all parties) and huge costs to a business. The problem being that he was achieved the outcome he sought! All this before we even kick off the case in proper.

The “litigant” or “applicant” in this matter was described as a lawyer. Whether his legal skills were required by the applicant was unclear. However, put this was one determined person, who was determined to get his own way…and did (to a point).

As I noted in the headline, this matter is still to be determined despite at least (by my count and set out at the end of this report) 50 separate actions, involving:

  • The Fair Work Commission.
  • The Full Bench of the FWC (2 appeals).
  • The Federal Court of Australia (5 applications).
  • Allegations by the applicant, including letters to the President of the FWC and Commonwealth Attorney General that the DP hearing the matter was unfit to hold office.
  • Disputing the right of the respondent to be legally represented and objecting to the legal firm they chose.

Background

The applicant was engaged to perform work by the respondent, on 19 November 2018. There is a dispute about whether he was engaged in the capacity of employee or independent contractor. The engagement was terminated effective from 31 January 2020. The applicant filed an unfair dismissal application in respect of the termination.

Cutting to the “last step” (ie beyond the 50 previous actions) the FB found somewhat in favour of the applicant (the “squeaky wheel” does indeed get the oil), finding that in the first instance there was no proper process that clearly identified that the DP had formally allowed the respondent to be legally represented (a matter the FB allowed in the appeals hearting). As a consequence of allowing the appeal and finding in the applicant’s favour, the matter was to be heard by another member of the FWC. The FB stating:

“The two errors we have identified – namely allowing [the respondent] to be represented by [law firm] without having decided to grant permission for legal representation pursuant to s 596, and denying the applicant procedural fairness in relation to the genuine redundancy issue – are significant matters. At least the latter, and arguably the former, constitutes jurisdictional error, and both involve manifest injustice to [the applicant]. In the circumstances, we consider that it would be in the public interest to grant permission to appeal…

“We consider that the appropriate course, having regard to the history of this litigation, is to remit [the applicant’s] unfair dismissal application to a member of this Full Bench for further consideration (including the determination of any application for permission for legal representation) on the basis of the evidence admitted to date and such further evidence as the member may decide to admit.

“It is not necessary in the circumstances to deal with the other matters raised by the first appeal. In relation to the various allegations made against [legal firm], it is sufficient to say that we are not satisfied that [legal firm] did anything other than to act bona fide on the basis of the instructions provided by its client…[the applicant] largely conceded at the appeal hearing that he could not provide evidence of any deliberate malfeasance on the part of [legal firm]. Certainly, the record of the proceedings before the Deputy President does not provide any indication to us that [legal firm] has acted in any improper way”.

With the FB side-stepping the second appeal by:

“The grounds for Mr McKerlie’s second appeal, including the grounds for the grant of permission to appeal, were as follows:

‘1. Deputy President Boyce is unfit to hold judicial office.

  1. Deputy President Boyce has demonstrated egregious and deliberate bias against the Applicant in the conduct of the proceedings to date including in his decision on the application for disqualification.
  2. It is contrary to the obligation of the members of the Fair Work Commission to allow Deputy President Boyce to continue to preside over these proceedings or any other proceedings as his widely publicised conduct since his appointment to the Fair Work Commission is calculated to diminish public confidence in the Fair Work Commission’.

“The first ground is not reasonably arguable. The Commission is not invested with power to rule on the fitness for office of its own members. In relation to the second and third grounds, the relief which [the applicant] could expect to obtain if he is granted permission to appeal and his second appeal is upheld is that his matter is remitted for further consideration by a different member of the Commission. Having regard to our disposition of the first appeal, there would be no utility in us considering the second and third grounds of the second appeal. For these reasons, we refuse permission to appeal in relation to the second appeal”.

After all this effort and expense, the applicant is effectively back to square one: he still needs to provide that he was an employee (not a contractor) and that his redundancy amounted to an unfair dismissal. I suspect the FWC will find that if the applicant had put his energies to finding another job, all the trouble he has gone to is for naught.

Litigation leading up to and including two appeal in the Fair Work Commission

As mentioned earlier, before setting out the list of legal challenges by the applicant, let me summarise that the applicant was not happy with the way the Deputy President addressed his case (calling for “his head”) or the respondent’s lawyers who he also made unflattering observations.

The history of the applicant’s litigations are dot-pointed as follows:

1.       The applicant was engaged to perform work by the respondent on 19 November 2018.

2.       There is a dispute about whether he was engaged in the capacity of employee or independent contractor.

3.       The engagement was terminated effective from 31 January 2020.

4.       The applicant filed an unfair dismissal application 5 February 2020.

5.       The matter was listed for a telephone conciliation to be held on 6 March 2020.

6.       However, on 21 February 2020, the applicant wrote to the Commission alleging that he had received an “extortionate letter” from lawyers acting for the respondent. He requested that a hearing be organised so that he could seek orders including that the respondent’s lawyers be barred from further participation in the proceedings and that the Commission appoint lawyers to act on the respondent’s behalf.

7.       The conciliation conference was cancelled and the matter given over to Deputy President Boyce (the “DP”) for a formal arbitration 27 February 2020.

8.       [By this stage neither the respondent nor its lawyers had submitted the appropriate forms required by the FWC].

9.       2 March 2020 the applicant complains to the DP’s chamber (by email) that the respondent’s legal representatives had “flouted, without reason, a clear direction made by the Commission … could undermine the respondent’s application to be legal[ly] represented…”. The DP responding by ordering that the lawyers provide the appropriate forms within 7 days.

10.   The matter was listed for a mention and directions hearing, by telephone, to be conducted on 6 March 2020.

11.   The respondent’s legal representatives filed the appropriate forms on 4 March 2020, raising two jurisdictional objections, namely:

  • The Applicant was not an employee; and
  • The dismissal was a case of genuine redundancy.

12.   Also on 4 March 2020, the applicant filed a submission with a number of accompanying documents in which he alleged that respondent’s lawyers had engaged in conduct which was “misleading and deceptive” and which “amounted to an attempt to extort the Applicant’s compliance with demands made by the Respondent’s solicitors and an act of contempt of the jurisdiction of the Commission”. The applicant went on to say in his submission:

“The Applicant seeks orders to redress the conduct of the Respondent’s solicitors including but not limited to an order that the Respondent instruct new solicitors drawn from a list provided by the Fair Work Commission”

13.   The DP conducted the directions hearing on 6 March 2020.

14.   16 March 2020, at the request of the parties, the matter was listed for a conciliation conference before a different member of the Commission to occur on 25 March 2020.

15.   This conference was not successful in resolving the matter, which was then allocated back to the DP.

16.   The respondent’s lawyers then raised its jurisdictional objections (by email 27 and 30 March 2020) with the DP’s chambers.

17.   On 30 March 2020, the applicant sent an email to the DP’s chambers:

“I write to request clarification of the issues which are to be the subject of the hearing on 8 May.

The matter was escalated to a hearing without conciliation on my request for consideration of the conduct of the Respondent’s solicitors in the matter.

I can understand that this would translate to a hearing on the Respondent’s request for legal representation but I am unsure of the ambit of the hearing regarding jurisdiction.

Is this hearing intended to be solely in regard to those two issues or is it intended that all issues between the parties are to be determined in this hearing?

I understand that the jurisdictional issue may be determinative, but I am not sure if it is intended to address the substantive issues between the parties if it is decided the Applicant has jurisdiction.

Could you please advise by return, thank you”

18.   The DP’s Associate sent the following reply that afternoon:

“I refer to your email below.

The matter is programmed for a hearing on the jurisdictional objections only. The hearing is not intended to address the “substantive issues” between the parties.”

19.   On 8 April 2020, the applicant filed an application for an order for the production of documents. The same day, the respondent sent the Commission an email indicating that it opposed the order sought and wished to make submissions about it.

20.   On 9 April 2020, directions were issued by the DP’s chambers for the parties to file outlines of submissions about the issue, and it was listed for an interlocutory telephone hearing to be held on 21 April 2020.

21.   On 17 April 2020, the applicant filed a document entitled “Applicant’s Amended Outline of Submissions on Legal Representation”, which addressed at length the applicant’s contention that the respondent ought not be permitted to be represented by its current lawyers. He also filed a witness statement made by himself, which was entitled “Applicant’s Statement Regarding the Issues of Representation, Jurisdiction and Notice for Production of Documents”. This statement addressed the issue of the basis of the applicant’s engagement (whether he was an employee or independent contractor) but did not deal with the circumstances of the termination of his engagement or the issue of whether he had genuinely been made redundant. The statement also briefly dealt with the issues of legal representation and the production of documents.

22.   At the interlocutory hearing on 21 April 2020, a solicitor employed by the respondent’s lawyers, appeared for the respondent. The transcript of the hearing shows that the respondent’s lawyer neither sought nor was granted permission to appear for the respondent, albeit no objection was made by the applicant.

23.   On 24 April 2020, the respondent filed two further witness statements, in response to the applicant’s submissions, which dealt with the basis of his engagement and the question of whether he was covered by an award.

24.   Up until this point, there was no communication from the DP’s chambers to suggest that the respondent had been granted permission for legal representation.

25.   However, at the hearing on 8 May 2020, the DP (mistakenly) stated that: “Okay. I note permission has already been granted for [name] to appear today as the legal representative for the respondent”. The DP pressing:

“And as I’ve said, I’ve already determined under section 596 of the Act, that it would be more efficient, given the complexity of some of the arguments and issues being raised, to go to jurisdictional questions for the respondent to be represented. And I note that they have some evidence in their evidence that was already filed going to the capacity for the respondent to represent itself”.

26.   The DP also (in conjunction with a technical issue which required resolution) allowed the applicant a 40-minute adjournment “to do any further preparation or collect your thoughts in relation to the issue of genuine redundancy…”.

27.   There was insufficient time for the respondent’s lawyer to undertake his cross-examination, so the matter was set down for further on 15 May 2020.

28.   12 May 2020, the applicant filed written submissions on the issue of genuine redundancy and, in addition, a further witness statement made by himself with a number of annexed documents in relation to that issue. Upon being copied into this material when it was filed by email, the respondent immediately sent an email to the Deputy President’s chambers which, omitting formal parts, stated:

“The respondent opposes the tendering of the additional statement as the applicant has already finished his examination in chief and therefore cannot tender new statements.

“Could the Commission advise whether this statement will be accepted as that will increase our time to prepare for cross-examination on Friday.”

29.   The Deputy President’s chambers sent the following email (omitting formal parts) to the applicant later the same day:

“I refer to the matter above, and the Applicant’s email below (and the attachments therein).

Leave has neither been requested nor granted for the Applicant to tender (or otherwise rely upon) further evidence in these proceedings.

Leave has only been granted to the Applicant for him to make further submissions on the jurisdictional issue of genuine redundancy. I note that he has filed those submissions.

In view of the foregoing, the Deputy President advises that the parties should proceed on the basis of the evidence filed as at the 8 May 2020 (i.e. the time that the Respondent’s evidentiary case in these proceedings closed).”

30.   In response to this email, the applicant sent an email in reply stating that he would seek leave to tender the evidence he had filed when the hearing of the matter resumed.

31.   On 13 May 2020 the applicant sent a complaint to the President of the Commission, Ross J, about the Deputy President’s conduct. In this complaint, the applicant contended that the Deputy President was unfit to hold judicial office, had displayed incompetence, ignorance and disinterest in the conduct of his case, and was personally biased against him. He requested that the President intervene in the matter to vacate the hearing listed for 15 May 2020, declare the proceedings in the case to date null and void, and allow the matter to be relitigated. The applicant sent a complaint raising similar matters to the Commonwealth Attorney-General on 14 May 2020.

32.   At 6.16 pm on 14 May 2020, the applicant sent an email to the Deputy President’s chambers giving notice that, at the commencement of the hearing on 15 May 2020, he would make an application for the Deputy President to recuse himself from further involvement in the proceedings and that, should the Deputy President decline to recuse himself, he would seek an adjournment to enable him to file an appeal against that decision.

33.   At 7.41 pm that evening, the Deputy President’s chambers issued directions requiring the applicant and the respondent to file any written submissions and evidence in respect of the recusal application by 11.30 am on 15 May 2020 (i.e. the following day). The parties were notified in the same email that at the conclusion of the hearing, the matter would be adjourned for a date to be fixed after any decision and written reasons in relation to the recusal application had been issued. Neither party filed submissions in response to these directions. the applicant sent an email that simply outlined the matters he intended to raise at the hearing, and the redone declined to file any submissions at all.

34.   At the hearing on 15 May 2020, the applicant re-agitated the matters he raised in his complaint to the President and the Attorney-General and handed up copies of both complaints. At the conclusion of the hearing, the Deputy President reserved his decision.

35.   On 25 June 2020, the Deputy President invited submissions concerning whether s 16 of the Parliamentary Privileges Act 1987 (Cth) applied such as to preclude the admission into evidence of the applicant’s complaints to the President and the Attorney-General and, if so, whether there was any utility in determining the issue of the alleged apprehension of bias. the applicant (on 30 June 2020) filed a submission in which he rejected the proposition that the Parliamentary Privileges Act applied, denied that he had tendered into evidence the two complaints, and said it was not necessary for him to prove facts which were within the personal knowledge of the Deputy President.

36.   On 26 May 2020, the applicant filed an application in the Federal Court of Australia (Court), seeking that the following relief:

(1) A writ of prohibition prohibiting the Deputy President from further involvement in the applicant’s unfair dismissal application.

(2) A declaration that the Deputy President is not a fit and proper person to hold judicial office, particularly the office of Deputy President of the Commission.

(3) An order that the applicant’s unfair dismissal application be transferred to the Federal Court to be heard together with other matters arising.

(4) An interlocutory injunction against the Deputy President from taking any further action or having any further involvement in the applicant’s unfair dismissal application pending the determination of Mr the applicant’s application before the Court.

37.   The applicant lodged the first appeal on 29 May 2020. His notice of appeal included an application for a stay pursuant to s 606 of the FW Act. The presiding member of this Full Bench heard and dismissed the applicant’s stay application on 2 June 2020.

38.   Following the stay decision, the applicant wrote to the presiding member’s chambers on 3 June 2020 inquiring as to the procedure for the determination of whether the respondent has permission to be legally represented at the appeal hearing. The presiding member’s chambers responded stating that when the matter is listed and directions are issued, the parties will be directed to file and serve submissions should they wish to seek permission to be legally represented at the appeal hearing and that it is at the discretion of the Full Bench when the issue of permission to be legally represented is to be determined. The applicant was informed that he would be given an opportunity to respond prior to any such determination being made.

39.   On 9 and 26 June 2020, the applicant filed two further applications in the Federal Court. The application filed on 9 June 2020 sought, among other things, an injunction preventing the Commission from further proceeding in any manner in respect of the unfair dismissal application or the first appeal. The application filed on 26 June 2020 sought an order that the respondent’s lawyers be restrained from acting in respect of that application, the unfair dismissal application and any other legal proceedings in which the applicant is a party.

40.   On 3 July 2020, the Deputy President issued a document entitled “the applicant Decision” which set out the Deputy President’s reasons for a decision which was said to have been earlier made by him granting the respondent’s permission to be legally represented in the proceedings (representation reasons). In the representation reasons, the Deputy President stated that the recusal application would be determined in due course.

41.   On 6 and 8 July 2020, the applicant filed two more applications in the Federal Court. The application filed on 6 July 2020 sought an order restraining the Commission from taking any further action in respect of the unfair dismissal application and the first appeal until further order. The application filed on 8 July 2020 sought a suppression order prohibiting the publication or disclosure of the identity of the applicant in respect of that proceeding and any proceedings currently before the Commission.

42.   On 15 July 2020, the Deputy President issued the recusal decision, in which he dismissed the applicant’s recusal application.

43.   The applicant’s unfair dismissal application was then listed for mention/ directions on 16 July 2020, and also listed for a further jurisdictional hearing on 3 August 2020 before the Deputy President.

44.   The respondent filed an application for costs on 24 July 2020.

45.   On 28 July 2020, the applicant lodged the second appeal and sought a stay of the whole of the proceedings before the Deputy President, specifically before the hearing of the unfair dismissal application which was to resume on 3 August 2020. That same day, the Deputy President’s chambers sent an email to the parties noting the multiple appeal proceedings pending before the Commission and the application for interlocutory relief pending before the Court. The email advised that the listing in that matter was vacated to a date to be fixed, being a date subsequent to the resolution of the appeals before the Full Bench of the Commission and the matter before the Court.

46.   On 5 August 2020, the Court dismissed the applicant various applications for interlocutory relief.

47.   The same day, the presiding member of the Full Bench issued directions and both appeals the applicant has lodged two appeals, application lodged by the applicant relating to the termination of his engagement with the respondent.

48.   The first appeal filed on 29 May 2020 relates to a number of decisions interlocutory and procedural decisions (or purported decisions) made by the Deputy President, which are characterised by the applicant as follows:

  • the decision not to take any action in regard to the applicant’s complaint that the respondent’s solicitors had committed extortion by sending a letter to the applicant demanding the performance of various demands before the respondent company would pay him monies already owed to him;
  • the decision not to take any action in regard to the applicant’s complaint that the respondent and/ or the respondent’s solicitors had committed conspiracy to defeat justice in order to put before the Commission a document that had been obtained by fraud;
  • the decision not to take any action in regard to the applicant’s complaint that the respondent’s solicitors had sought to mislead the Commission by submitting a document purporting to be the applicant’s resume, constituted a “representation” by the applicant to the respondent relevant to the proceedings before the Commission;
  • the decision to give the respondent permission to have legal representation in the proceedings;
  • the decision to allow the respondent’s lawyers to represent the respondent in the proceedings;
  • the decision that the issue of “genuine redundancy” is a “jurisdictional objection”;
  • the decision to refuse to grant the applicant an adjournment to prepare submissions and evidence in regard to the issue of “genuine redundancy”;
  • the decision of the Deputy President on 12 May 2020 not to allow the applicant to file a statement and annexures relevant to his submissions regarding the issue of “genuine redundancy” ; and
  • the decision of the Deputy President on 14 May 2020 to compel the applicant to prepare and file submissions on the issue of his application that the Deputy President recuse himself from further proceedings on the basis of his not being fit to hold judicial office, his demonstration of active prejudice and the apprehension of bias against the applicant both as a member of a class of persons, unrepresented workers, and personally.

49.   The second appeal, filed on 28 July 2020, relates to a decision issued by the Deputy President on 15 July 2020  in which he dismissed the applicant’s application for the Deputy President to recuse or otherwise disqualify himself from further involvement in the proceedings.

50.   At the commencement of the hearing of the appeals on 4 September 2020 and over the opposition of the applicant, the Full Bench granted permission for the respondent to be legally represented in the proceedings for reasons that it was considered that legal representation would permit the matter to be dealt with more efficiently, having regard to the complexity of the matter. The FB (ironically) finding: “…[The applicant’s] unfair dismissal application has been the subject of a significant degree of procedural complexity…”

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Introduction

Full decision here.

Full Bench overturns Hitler parody decision, reinstatement & $180,000 backpay

A BP worker who was sacked for his role in producing a Hitler parody and (as I previously reported) the FWC did not see the funny side either, in rejecting the unfair dismissal application, is now laughing all the way to the bank! All thanks to a Full Bench appeal.

I previously reported on this matter with the same caption. I used this caption to illustrate what I thought was an employer taking itself too seriously.

Without using the exact words, the FB cautioned the original decision-maker in having fun in the workplace.

Background

By way of catch-up, the original decision found the producer of the Hitler parody of the BP management scenes from a German movie on the last days of Hitler’s regime (which was a popular method of satirising various issues using caption-making software) using made-up captions deriding management in relating to a very difficult enterprise bargaining process was serious misconduct by the presiding Deputy President.

[One would have thought the company which was the subject of its own movies “Deepwater Water Horizon” would have a more positive view of the art of movie making].

For those of you with the time and technical know-how, the video was prepared using a website called “Caption Generator”. This website contains a small collection of video clips with non-English dialogue and allows the user to add subtitles to create an alternate story or theme for the video. The most well-known of the videos is a clip from the German language movie Downfall, which portrays the last days of the Third Reich and is centred on events in Adolf Hitler’s bunker near the Reich Chancellery building in Berlin.

The FB in this appeal took into consideration that the video appeared (as one of thousands of videos) on the Caption Generator website; and

“It is reasonable to say that it could only be found on that website if one already knew it was there and used the browse function to search for it”.

The original decision

In the original decision, the DP found:

“[99] I do not accept that by labelling something as a parody is a ‘get out of jail free card’ and necessarily means something is not offensive. A racist joke is by name humour but is likely to offend a person of the nationality at which it is aimed.

“[100] Depending on the circumstances in which it occurs ‘poking fun’, ‘taking the mickey’ or ‘sending up’ might be disrespectful, rude, demeaning and/or offensive. For example, ‘sending up’ a religious deity might be deeply offensive to some groups of people.

“[101] The FWC and its predecessors have previously considered cases in which an employee has made references, or likened their employer, to Hitler or the Nazi regime. In APS Group (Placements) Pty Ltd v O’Loughlin [2011] FWAFB 5230 it was held that carving the words “Welcome to hell” and etching a swastika into an ice block in protest of the conditions of work in a freezer room was insulting and offensive conduct (whether or not the business employed Jewish people or the employee intended to offend anyone). Such conduct was held to have been a valid reason for the relevant employee’s dismissal.

“[102 In CPSU v Australian Broadcasting Corporation [2005] AIRC 737 SDP Drake held that calling an employer a ‘Nazi’ was ‘inappropriate and offensive’ even in the ‘context of a heated industrial meeting’.

“[103] In Pitt v Woolworths (SA) Pty Ltd [2003] AIRC 673 an employee’s actions in calling his employers ‘Nazis’ was found to amount to a valid reason for his dismissal.”

“[105] I am satisfied that when viewed in context that a reasonable person would consider the Hitler Video inappropriate and offensive”.

The Deputy President’s overall conclusions as to the fairness of the dismissal were as follows:

“[207] While [the applicant] expressed remorse during the Investigation and in these proceedings, his remorse is expressed in terms of him not intending to cause offence, if it occurred. He does not appear to accept that his conduct did cause offence or that it could reasonably be said to cause offence. Given this lack of insight it is likely that he would come into further conflict with his employer.

“[208] In all the circumstances, and taking into account the heavy emotional and financial impact of the dismissal on [the applicant] and his family, and taking into account the payment in lieu of notice, I am satisfied that his dismissal was not harsh, unjust and unreasonable.”

Appeal grounds and submissions

The Full Bench’s Consideration

In granting permission to appeal (as we know, to appeal a FWC decision, you must enliven “the public interest”) the FB found:

“…Accordingly, the critical issue which the Deputy President had to determine was whether the conduct was of such a nature to justify dismissal. This required the making of an evaluative judgment on her part as to the character of the video’s content”.

The FB finding that is was not open to the DP to find that there was no evidence that characterised the video as offensive or inappropriate. The FB finding:

“We do not accept that it was reasonably open for the video to be characterised in the way it was by the Deputy President. Even considered in isolation from its memetic context, it is apparent that the video does not liken BP management to Hitler or Nazis in the sense of stating or suggesting that their conduct or behaviour was in some sense comparable in their inhumanity or criminality. What it does do is to compare, for satirical purposes, the position BP had reached in the enterprise bargaining process…to the situation facing Hitler and the Nazi regime in April 1945. The position might be different if the clip used from the Downfall film depicted Hitler or Nazis engaging in inhumane and criminal acts (as many other parts of the film do); in such a case a comparison in terms of conduct or behaviour might be inferred and reasonably be regarded as offensive. But it does not. By way of illustration, if it is said that someone is like Napoleon at Waterloo, this is obviously not to be understood as drawing a comparison between the person and the personality, behaviour, deeds or stature of Napoleon Bonaparte; rather, it is a stock way to say that the person is facing a final, career-ending defeat”. [My emphasis]

Criticism of management is reasonable

The FB, in granting permission to appeal, finding that:

“The Deputy President’s erroneous determination that there was a valid reason for [the applicant’s] dismissal was fundamental to her decision that his dismissal was not unfair and that his unfair dismissal remedy application should be dismissed. Because the decision was affected by error in this way and manifests an injustice to [the applicant], and because the appeal raises issues of general application concerning the capacity of employees to engage in legitimate criticism of management in the conduct of an industrial dispute, we consider that the grant of permission to appeal would be in the public interest”. [My emphasis].

The FB then went on to re-determine the matter, using the materials from the original hearing.

Remedy

In this decision, the FB reinstated the applicant to his former permission, because the video did not identify any management person by name, stating:

“Reinstatement is the primary remedy provided for in respect of unfair dismissals under the FW Act in the sense that s 390(3)(a) requires that there be a finding that reinstatement is inappropriate before consideration can be given to the award of compensation. Accordingly, in respect of remedy, the primary issue which must be considered is whether it would be appropriate to make an order for [the applicant’s] reinstatement. In considering whether to exercise its discretion in favour of the making of an order of reinstatement, the Commission will treat as an important consideration whether the necessary trust and confidence for a workable, viable and productive employment relationship can be restored”.

Orders and directions

We make the following orders:

(1) Permission to appeal is granted.

(2) The appeal is upheld.

(3) The decision ([2019] FWC 4113) is quashed.

(4) BP Refinery (Kwinana) Pty Ltd is ordered to reinstate the applicant to the position in which he was employed immediately before his dismissal within 14 days of the date of this decision.

(5) BP Refinery (Kwinana) Pty Ltd shall maintain the continuity of the applicant’s employment and the period of his continuous service upon the applicant’s reinstatement taking effect.

Direct that the applicant and BP file any evidence and submissions concerning the making of a compensation order pursuant to s 391(3) within 21 days.

The compensation order

With the subsequent back pay decision awarding the applicant $177,324.93 on account of lost salary and bonus (less applicable taxation), and should additionally pay the amount of $24,069.99 on account of lost superannuation into a superannuation fund nominated by the applicant. The amounts shall be payable within 14 days of the date of this decision.

Commentary

There is a lot to like about this decision. There is an old saying “without malice or aforethought” which seems just right for this matter. In my view BP management should have used the video parody as a training video or at a management meeting so that they could allow an opportunity to see the humour in what, was a no doubt, a very tense situation. Who knows, there might even be opportunities for BP to use the obvious talents of their employee in its public relations department!

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Full decision here.

Introduction

Having lost his unfair dismissal application before a single member of the Commission, the applicant sought leave to appeal this decision before a Full Bench of the FWC – and won reinstatement.

This is a history lesson on the many Hitler parodies that you may have seen over the past 10 years, and the origin of the “meme”. And not to mention, that sometimes a joke is just that, a joke.

Background

The applicant had been employed as a process technician from 16 January 2012.

The applicant’s employer was involved in a long running industrial dispute relating to the bargaining of a new enterprise agreement with the applicant’s union.

The application was dismissed effective from 18 January 2019, with four weeks’ pay in lieu of notice. His dismissal arose from a video which he prepared together with his wife, on 3 September 2018 entitled “Hitler Parody EA Negotiations”.

Parody videos and Memes (a history)

The video was prepared using a website called “Caption Generator”. This website contains a small collection of video clips with non-English dialogue and allows the user to add subtitles to create an alternate story or theme for the video. The most well-known of the videos is a clip from the German language movie Downfall, which portrays the last days of the Third Reich and is centred on events in Adolf Hitler’s bunker near the Reich Chancellery building in Berlin. The scene depicted in the clip shows Hitler breaking down when he learns that a counterattack against advancing Russian forces, which he had previously ordered SS Obergruppenfuhrer Felix Steiner to initiate, had not occurred and launching into an angry and bitter tirade in which he blames various persons for the situation into which he had led Germany. It marks Hitler’s final realisation that all his plans had come to nothing, that the complete defeat of Germany could not to be avoided and that Berlin would soon fall.

Parody videos of this scene from Downfall began not long after the film was released in 2004. Typically, they use subtitles to adapt the scene’s depiction of Hitler’s realisation of defeat to contemporary political, cultural or social issues. In many cases, the humorous effect is achieved by the juxtaposition of the grave and dramatic events depicted in the film and the relative banality of what is being discussed in the subtitles and the degree of inventiveness displayed in the adaptation of the scene to an entirely different context. There were already thousands of these parody videos on the internet by 2010 such that the use of the clip in the way described can be said to have become a meme. A “meme” – a term coined by the evolutionary biologist Richard Dawkins in the 1970s – is a cultural element, concept or behaviour which is passed from one individual to another by imitation and communication.

The applicant’s video

The subtitles added in the applicant’s version of the clip refer to the bargaining for the new agreement. In summary, it is apparent that Hitler is assigned the role of an unnamed manager in charge of the bargaining strategy. He is informed that the employees have voted overwhelmingly to reject the employer’s proposed enterprise agreement, and then falls into a rage about the failure of the company’s bargaining strategy and the continued resistance of employees.

The applicant’s video appeared (as one of thousands of videos) on the Caption Generator website. It is reasonable to say that it could only be found on that website if one already knew it was there and used the browse function to search for it. On 3 September 2018, the applicant posted a link to the video on Facebook, but access to the video was confined to a restricted group of people – a closed group the members of which were all employees of the applicant’s worksite. That same day, while working the nightshift, the applicant showed the video to his workmates. He did this in two ways: first, by using the work computer of another employee to access his Facebook account and, second, by showing the video using his personal device.

The employer became aware of the video

Management became aware of the existence of the video (presumably by word of mouth from someone who had seen it) and commenced an investigation. On 31 October 2018, the applicant was required to attend a formal investigation meeting, at which he admitted that he had shared the video but beyond that declined to provide information. The following day he was, by letter, stood down on pay on the basis of the following allegations:

“It is alleged that you:

  • Have shared and distributed material which is highly offensive and inappropriate;
  • Utilised another employee’s BP logon to share the material;
  • Were involved in creating this material; and
  • Are aware of other/s involved in creating the material and are potentially covering up.”

The applicant’s remorse

After a number of further steps were taken in the process, the applicant emailed a letter to his employer, explaining that he had not intended to offend anyone; that the video was created by his wife, was intended to be humorous and boost employee morale and did not identify the employer or any individual; that it was posted on a private Facebook page and was not intended to be viewed by members of his employer’s management or negotiation team; and that he removed the link on the Facebook page once he became aware that it may have been viewed outside of the private group. He also said that he suffered from a mental illness which affected his thought processes and caused him to tend to impulsivity and poor judgment, and he had an unblemished work record of 7 years.

The dismissal

Following further investigation, the employer’s management (located external to the applicant’s worksite) dismissed the applicant for breaching the company’s code of conduct.

The original decision

The Deputy President, in dismissing the application:

“Notwithstanding that the…Facebook Group is a private group which only members of the…Facebook Group can access; the evidence is that many of the 2014 Agreement covered workforce are members of the…Facebook Group. While a member of the public would be unlikely to relate the video to the industrial events then occurring at [the employer], the members of the…Facebook Group were familiar with the negotiations and the identities of those involved and could easily draw parallels between the words attributed to Hitler and the Nazi generals via the captions and events which occurred during the negotiations”.

And further:

“Notwithstanding that the audience of the…Facebook Group was restricted, the very identity of that audience made the sharing and distribution of more significance than a larger audience with no relationship to the [the employer’s] worksite.”

Sense of humour – not

The Deputy President then gave consideration as to whether a reasonable person would consider the video to be offensive or inappropriate, and said:

“I do not accept that by labelling something as a parody is a ‘get out of jail free card’ and necessarily means something is not offensive. A racist joke is by name humour but is likely to offend a person of the nationality at which it is aimed.

“Depending on the circumstances in which it occurs ‘poking fun’, ‘taking the mickey’ or ‘sending up’ might be disrespectful, rude, demeaning and/or offensive. For example ‘sending up’ a religious deity might be deeply offensive to some groups of people”.

Then citing:

“The FWC and its predecessors have previously considered cases in which an employee has made references, or likened their employer, to Hitler or the Nazi regime. In APS Group (Placements) Pty Ltd v O’Loughlin [2011] FWAFB 5230 it was held that carving the words “Welcome to hell” and etching a swastika into an ice block in protest of the conditions of work in a freezer room was insulting and offensive conduct (whether or not the business employed Jewish people or the employee intended to offend anyone). Such conduct was held to have been a valid reason for the relevant employee’s dismissal”.

And:

“In CPSU v Australian Broadcasting Corporation [2005] AIRC 737 SDP Drake held that calling an employer a ‘Nazi’ was ‘inappropriate and offensive’ even in the ‘context of a heated industrial meeting’”.

And…

“In Pitt v Woolworths (SA) Pty Ltd [2003] AIRC 673 an employee’s actions in calling his employers ‘Nazis’ was found to amount to a valid reason for his dismissal”.

Concluding:

“I am satisfied that when viewed in context that a reasonable person would consider the Hitler Video inappropriate and offensive”.

Appeal grounds and submissions

In paraphrasing the seven grounds for appeal, it was contended that the Deputy President did not appreciate that it was a joke – and nothing more.

Consideration (they do have a sense of humour?)

The Full Bench decide that the critical issue which the Deputy President had to determine was whether the conduct was of such a nature to justify dismissal. This required the making of an evaluative judgment on her part as to the character of the video’s content. Stating:

“We do not accept that it was reasonably open for the video to be characterised in the way it was by the Deputy President. Even considered in isolation from its memetic context, it is apparent that the video does not liken BP management to Hitler or Nazis in the sense of stating or suggesting that their conduct or behaviour was in some sense comparable in their inhumanity or criminality. What it does do is to compare, for satirical purposes, the position [the employer] had reached in the enterprise bargaining process as at September 2018 to the situation facing Hitler and the Nazi regime in April 1945. The position might be different if the clip used from the Downfall film depicted Hitler or Nazis engaging in inhumane and criminal acts (as many other parts of the film do); in such a case a comparison in terms of conduct or behaviour might be inferred and reasonably be regarded as offensive. But it does not. By way of illustration, if it is said that someone is like Napoleon at Waterloo, this is obviously not to be understood as drawing a comparison between the person and the personality, behaviour, deeds or stature of Napoleon Bonaparte; rather, it is a stock way to say that the person is facing a final, career-ending defeat”.

Reinforcing (that they “get-it”):

“The position becomes even clearer when one considers the context of the development of the use of the Downfall clip into a meme. That the clip has been used thousands of times over a period of more than a decade for the purpose of creating, in an entirely imitative way, a satirical depiction of contemporary situations has had the result of culturally dissociating it from the import of the historical events portrayed in the film. After this period, any interest which remains in the clip will usually reside in the degree of inventiveness involved in successfully adapting the scene to fit some new situation. Anyone with knowledge of the meme could not seriously consider that the use of the clip was to make some point involving Hitler or Nazis”.

Concluding

“For these reasons, we consider that it was not reasonably open to the Deputy President to find that…the dismissal…constituted a valid reason for dismissal. The allegation was premised on the proposition that the video was offensive and inappropriate because it compared [the employer’s] negotiating team to Hitler and Nazis – a proposition which we consider to be unsustainable…”

The applicant was reinstated to his former position, with the Full Bench reserving its decision on the amount of money to be afforded to the applicant considering deductions for any alternate employment he may have undertaken and a discount for misconduct.

Commentary

Whilst I recognise that the depiction of Hitler may still be a very “raw” subject to those who suffered under the Nazi regime; I have seen these videos (mainly in the context of AFL controversies) and find them both amusing and clever. In explaining the context (and long history) of the parody videos, the Full Bench showed common sense. Also, the video probably acted in the employer’s favour by instilling a sense of humour into a tense industrial standoff.

And let’s not forget the late great Charlie Chaplin, depiction of Hitler in the “Great Dictator”. Admittedly, before my time…

Have a laugh and have a great day!