Long-time Contractor an Employee, entitled to pursue unfair dismissal

A roadside assistance mechanic who worked with Prestige Automotive Services Pty Ltd for approximately two years before his engagement was terminated in February 2018, and who had worked previously for the Director of Prestige Automotive Services Pty Ltd (under another name) for nearly 10 years prior to that, has been found to be an employee entitled to pursue an unfair dismissal claim, despite the company’s insistence he was engaged as an independent contractor.

The mechanic was engaged by Prestige Automotive Services Pty Ltd (the Respondent) in May 2016, subject to an agreement document which purported the mechanic to be ‘the Contractor’ and the Respondent to be ‘the Company’. The mechanic disputed ever seeing or signing the agreement until his dismissal, at which time he claimed his signature on the document must have been forged. The mechanic’s services were terminated in February 2018 by way of a letter titled, “Termination of Agreement” which stated that the agreement between the parties was terminated, thereby concluding their working relationship. In the time the mechanic was working under the disputed ‘agreement’, the Respondent was contracted to Allianz Global Assistance (AGA) and the mechanic provided services to AGA’s customers on behalf of the Respondent. The ‘agreement’ was ultimately brought to an end because the mechanic refused to attend a job allocated to him by the Respondent.

In considering the jurisdictional objection of the Respondent (who argued the mechanic was a contractor and therefore was not entitled to pursue an unfair dismissal claim) to the unfair dismissal application which was lodged on 26 February 2018, Deputy President Gostencnik of the Fair Work Commission applied a “multi-factorial test” assessing factors such as the element of control, whether the mechanic performed work for others, whether work could be delegated or sub-contracted, salary and taxation issues, provision of uniform, tools and equipment and the categorisation of the relationship between the parties. The Deputy President found the mechanic to be an employee, as opposed to a contractor, for the following reasons:

Control

The Deputy President accepted the mechanic’s claims that he was required to perform particular hours each fortnight, that those hours didn’t change, that he had to perform the jobs allocated to him and could not assign them to someone else, that his whereabouts were monitored through GPS (fitted to the vehicle provided by the Respondent) and he was provided instruction and asked about the performance of his work.

Performs work for another

Whilst Deputy President Gostencnik acknowledged that, “in a theoretical sense” the mechanic could have worked for others “in the same way as an employee could do so when not working for his or her employer”, he said the mechanic “could not practically work for others doing the work he undertook for the Respondent”.

Delegation or sub-contracting

The disputed agreement document required the mechanic to obtain the Respondent’s written approval to delegate or sub-contract out work and the Respondent’s approval could be “withheld in its absolute discretion”. The Deputy President found, there was “no practical capacity to delegate or sub contract” under the arrangement.

Uniform

The mechanic was supplied an AGA branded uniform by the Respondent and was advised when he was and wasn’t to wear it.

Salary and tax

It was accepted that the Respondent generated “invoices” for the mechanic to enable payment and he was “taxed pursuant to the independent contractor relationship”. The Deputy President found this was “hardly surprising” noting that something resembling a contractor relationship was “what the Respondent at least sought to achieve”. He added, “Little weight is given to matters that have the trappings of an independent contractor relationship in the circumstances of this case”.

Description of relationship

Although the disputed agreement sought to identify the relationship as that of a contractor engagement, the Deputy President commented, “Though the description of the relationship is important, it is not determinative. That which is relevant is the substance of the relationship and not its form”.

Tools or Equipment

The Respondent supplied an AGA branded vehicle and “most of the substantial equipment” the mechanic used to perform his work.

Signing of the Agreement

Despite the mechanic’s claims that he had never sighted the agreement document in May 2016 and that his signature may have been forged, the Deputy President accepted the Respondent’s evidence that he indeed had, but stressed that the “totality of the relationship” must be considered, “not just its form”. Deputy President Gostencnik noted that the mechanic’s ‘business’ was absent some of the “typical indicia of a business” and observed as follows:

“[43] In the instant case there is no evidence of [the mechanic] taking risk in pursuit of profit. He simply was assigned and worked shifts in the Respondent’s business. Apart from working shifts in the Respondent’s business there is no evidence that [the mechanic] engaged in any, let alone repetitive or continuous, business with other customers who might purchase he (sic) services. [The mechanic] did not employ any person in any business conducted by him. There is no goodwill assignable to any business conducted by [the mechanic] and indeed the agreement between [the mechanic] and the Respondent expressly reposes goodwill in the Respondent’s business.  There is no evidence of any advertising or other promotional activities undertaken by [the mechanic]. Indeed when he undertakes work he does so under cover of a uniform and livery provided by the Respondent. There is no evidence of any tangible assets belonging to the business said to be conducted by [the mechanic]. The only invoicing that occurs is that generated by the Respondent. [The mechanic] is not registered for GST and does not appear to have registered any business name.

[44] None of the indicators save for the provision of skilled labour by [the mechanic], point to [the mechanic] conducting his own business. The services provided by [the mechanic] through his skilled labour bear none of the hallmarks of a business. It is thus a very short step to conclude that [the mechanic] was an employee of the Respondent.

[45] Moreover, the weight of relevant matters discussed above points squarely towards a conclusion that [the mechanic] was an employee of the Respondent. [The mechanic] did not conduct his own business. He used a vehicle provided by the Respondent which bore the Respondent’s Principal’s insignia, and wore a uniform bearing that insignia. The equipment used was also predominantly owned and supplied by the Respondent. The Respondent exercised a high degree of control and there was no practical capacity for [the mechanic] to delegate or to subcontract. [The mechanic] worked according to a roster prepared by the Respondent and was paid for the whole period while rostered rather than on a job by job basis. Such indicia as point the other way, such as the description of the relationship and the method of taxation are given little weight in circumstances where the preponderance of the indicia show that the substance of the relationship was one of employment.”

For all of the above reasons, the Deputy President found the mechanic was an employee at the time of his dismissal and is therefore entitled to pursue his unfair dismissal application.

Nguyen v Prestige Automotive Services [2019] FWC 93 (16 January 2019)