Introduction
The most basic and most contested unfair dismissal claim is at the heart of evaluating whether a relationship is one of employment or something else, such as an independent contractor. There cannot be a wrongful termination or dismissal claim unless an employer-employee relationship exists (Van der Waarden, 2017). The Fair Work Act 2009 includes laws relating to employer-employee relations. According to section 385 of the Fair Work Act 2009, an employee was terminated unfairly if they were fired forcefully, arbitrarily, and unjustly, and the dismissal was not due to redundancy. The ‘control test’ and the ‘multifactor test’ are important elements of the criteria looked at by courts in Australia to determine the true nature of a relationship.
Control Test
Zuijs v Wirth Brothers Pty Ltd (1955) HCA 73 – 93 CLR 561
Control tests are used to establish whether an employee (Ee) or an independent contractor (I’Ktor) is the employer-employee relationship has been determined using a control test by Australian courts. It is stated in Zuijs v Wirth Brothers Pty Ltd (1955) HCA 73 – 93 CLR 561 that both parties have the right to specify when, where, and most importantly, how and what work is to be done. The employer-employee relationship is deemed to exist if the employer has greater power over the employee.
According to Latham CJ in Zuijs v Wirth Brothers Pty Ltd (1955), the difference between an employee and a contractor is that an employer may not only tell a servant what to do, but also how to do it. Accordingly, control includes more than just how much control is used. It also includes what kind of control is used and how it is done (3015EHR – Employment Relations Law, n.d.). However, true and absolute control may be difficult to discern when a person has a specialized skill or competence. To be able to control something without really having it is the right to control it. Therefore, the multi-factor test should look at more variables.
Multifactor Test
Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16
To determine whether someone is an employee or an independent contractor, several other indicators must be looked at. This clarity was made by Wilson and Dawson JJ, who held that control is no longer the deciding factor in Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16. In Stevens’ instance, the following factors were considered:
- To get compensated, is it necessary for the worker to bring their tools and equipment?
- Can other principals recruit other people to conduct similar work?
- While financial losses can be held accountable, what about missed opportunities?
- Is the employee rewarded for job performance rather than time spent?
- Can workers subcontract their work?
- Can workers determine their schedules?
- Are workers’ compensation and general liability insurance required by law?
If the response is ‘yes’ to any of the above-mentioned questions, then one is classified as an independent contractor rather than an employee.
In Stevens v Brodribb Sawmilling Company Pty Ltd (1986), Mason J held that all components of contracts for services must be evaluated to determine whether they are contracts for services or not. Gray and Brodribb were sued by Stevens, the truck driver, for damages after he suffered serious injuries. The court ruled that truck drivers were contractors since they had to construct and maintain their vehicles and were paid job-by-job rather than hourly. However, the firm controlled their working hours and professional attire.
To determine whether a person has command power, courts may look at whether they are a part of or incorporated into the company’s activities. Working for oneself qualifies as self-employment. Stevens V Brodribb Sawmilling Co Pty Ltd (1986) shows he was not an employee.
Hollis v Vabu Pty Ltd (2001) HCA 44 (207 CLR 21)
In Hollis v Vabu Pty Ltd (2001) HCA 44 (207 CLR 21), an anonymous bicycle courier was analyzed for the extent of his work connection. The plaintiff was injured when the courier struck Hollis while on duty. Vabu stated he was not liable for Hollis’ injuries because the couriers were independent contractors under the riders’ service contracts. The High Court determined that the courier who struck Hollis was an employee, and Vabu was held accountable.
- No special education or training was required to perform the duties of the office:
- Attendance and rostering rules were strictly enforced.
- The couriers had no choice but to take the assignment.
- The couriers had to dress in uniforms.
- Rates were fixed, and annual vacation and leave requests were severely restricted.
In a joint judgment, the High Court held that the parties’ relationship is not to be built only on contractual obligations. This means examining both the system and Vabu’s work habits.
As seen in Hollis v. Vabu (2001), Stevens pays insufficient attention to a contractor’s tools. According to Stevens’ case scenario, the courier has been deemed an employee rather than a contractor. Even if the couriers provided their tools and equipment, they already had their tools and equipment that might be used for other reasons. The test identified whether the people were employees or contractors.
In Stevens v. Brodribb (1986) and Hollis v. Vabu (2001), general circumstances and control are important in determining the nature of a working partnership, which is why they are so important.
Application
Jonesy seeks to bring claims against TEL for unfair dismissal under section 385 of the Fair Work Act 2009, as he feels HR Manager Ms. Ivanka has terminated his contract based on false and malicious allegations. Jonesy, on the other hand, will need to show that he and TEL have a working relationship. The common-law test could be applied to evaluate whether Jonesy fits the legal conditions for an employer-employee relationship. Under the common-law test, an employer’s power to control how and when the assignment is completed is the most important (Van der Waarden, 2017). Whether TEL can control, and command Jonesy’s job will be looked at by the courts not only in terms of the job’s goal but also in terms of how and why that goal was reached.
At common law, there cannot be a wrongful termination or dismissal claim unless an employer-employee relationship exists. Here, a ‘control test’ applies to determine whether Jonesy and TEL have the right to specify when, where, and, most importantly, how and what work is to be performed. If TEL has more control over Jonesy, the relationship is more likely to be labeled ‘employer/employee.’ Consistent with the ruling in Zuijs v Wirth Brothers Pty Ltd (1955), Jonesy has the authority not only to prescribe what work he completes but also to regulate how the job is done. In effect, Jonesy was not subject to strict TEL oversight and could even use his equipment to perform the work. As argued in Stevens v. Brodribb Sawmilling Co. Pty Ltd (1986), the right to control is sufficient, but not the actual element of control. This implies that the multi-factor test should also be applied in Jonesy and TEL’s case.
Consistent with the ruling in Stevens v. Brodribb Sawmilling Co. Pty Ltd (1986), the following considerations are taken into account when determining the relationship between Jonesy and TEL: Jonesy had to provide his tools and equipment to complete the work efficiently and was paid based on hours worked rather than job performance. He also had the option of contracting out the work. In addition, TEL could allow Jonesy to pick his work schedule. Besides, TEL did not have workers’ compensation and general liability insurance, which is required by law, but they didn’t. The response is ‘yes’ to five of the considerations listed in Stevens v. Brodribb Sawmilling Co., Pty. Ltd. (1986), which means that the relationship will be classified as an independent contractor rather than an employee. Stevens completed his contract with his equipment, which showed that he was not an employee. Jonesy also used his equipment, which showed that he was an independent contractor. In a labor hire agreement, Jonesy worked as a contractor for TSPL and was paid for his work by the hour. When people first worked for TSPL, they would be hired as independent contractors so that they could cancel their expenses and pay less tax. Similarly, Jonesy was engaged as an independent contractor to supply his services to other firms as part of a labor-hire agreement, and he signed a one-page form saying that he would be hired permanently for 38 hours per week.
Jonesy agreed to be paid a prescheduled hourly rate based on the appropriate award plus $50 per week in return for paying his worker entitlements and driving his business work vehicle. Besides being paid by the hour, he also used his tools. This statement implies that he did both. The same arrangement arose with TEL, where he would also be paid only for the hours worked. TEL was also aware that he was working on other jobs, which implies that Jonesy had more control over his job and work hours, thus qualifying him as an independent contractor under the ‘control test.’ He could also provide his low-cost equipment and tools and subcontract painters and use his second-hand vehicle. As held in Stevens v. Brodribb Sawmilling Company Pty Ltd (1986), unlike employees, independent contractors cannot be held responsible for their acts. When it comes to the law, independent contractors are viewed as capable individuals who must take ownership of their conduct. In the case of Jonesy, it looks like TEL should hold him accountable for his actions because he was found guilty of theft.
Conclusion
The nature of the relationship between Jonesy and TEL was not an employer-employee relationship because Jonesy had more control over his work and could use his equipment and even subcontract painters. Therefore, Jones should be advised that he is not entitled to bring claims for unfair dismissal as he was previously engaged as an independent contractor rather than as an employee. The most basic and debated wrongful dismissal accusation is determining whether a relationship is one of employment or not. A wrongful termination or dismissal claim requires the existence of an employer-employee relationship.
References
3015EHR – Employment Relations Law. (n.d.). [Lecture notes, PowerPoint slides].
Van der Waarden, N. (2017). Employment law: Concepts and cases. LexisNexis Butterworths.