Worker was responsible for expenses, insurance, and her own equipment, says employer
A sessional trainer challenged the employer's argument that she was an independent contractor, contending the totality of the relationship, including how the contract was performed in practice, demonstrated she was an employee who was dismissed.
The worker argued that the employer determined her days and hours, allocated courses, provided course materials, supervised her work through reports and meetings, and exercised control over what she did and how she did it.
The employer maintained the relationship was one of principal and independent contractor, pointing to the contract title, requirement to submit invoices with Australian Business Number (ABN), responsibility for expenses and insurance, and provision of own equipment.
Contract terms and employee details form
The worker was engaged by the employer in a position described as a 'sessional trainer assessor' in a written contract that was entered into by the parties and which commenced operation on 22 July 2024.
The contract had the title'Independent Contractor Agreement'. The employer provided educational services and traded under a school name. The worker delivered classes to students at the employer's premises in Sydney.
The classes were delivered during 10-week terms, at the end of which the worker would have a period of three weeks off. When the worker first commenced in 2024, she was working three days per week.
The worker was advised by the employer of the course or courses and days that she would be teaching in advance of the commencement of each term.
At the time the relationship ended, the worker had been working on Mondays and Tuesdays each week, delivering a salon management course to students.
In June 2025, the worker was the subject of a complaint to the employer by one of the students. Following the complaint, the worker was advised by the employer that the complaint had been considered and the decision had been taken not to renew the worker's contract for the upcoming July teaching term.
The worker was told in writing by the employer that the 'difficult decision' had been taken not to renew the contract, not only on the basis of the complaint, but because of a need to 'focus on preparing for an upcoming audit'.
Legal framework for determining employee status
According to the FWC, the method by which the ordinary meaning of the terms 'employer' and 'employee' is to be ascertained for the purposes of the Act is set out in legislation.
Whether an individual is an employee of a person within the ordinary meaning of that expression is to be determined by ascertaining the real substance, practical reality and true nature of the relationship between the individual and the person.
For the purposes of ascertaining the real substance, practical reality and true nature of the relationship, the totality of the relationship between the individual and the person must be considered, and in considering the totality of the relationship, regard must be had not only to the terms of the contract governing the relationship, but also to other factors relating to the totality of the relationship including, but not limited to, how the contract is performed in practice.
This provision requires a consideration of the totality of the relationship, which involves a consideration of, amongst other things, the terms of the contract between the parties and an assessment as to how the contract is performed in practice.
The approach to a consideration of the totality of the relationship is guided by common law principles and involves a reversion to the multifactorial test that was well known and widely applied prior to recent High Court decisions.
Contract terms pointing both directions
Although the contract was titled 'Independent Contractor Agreement' and included terms which suggested the relationship was one of principaland independent contractor, there were also terms of the document which pointed to or supported a conclusion that there was an employment relationship.
The Commissioner considered the terms of the contract in its totality. The contract referred to the worker as the 'contractor' and cited the worker's ABN. It required the worker to submit invoices on a fortnightly basis.
It provided that the worker was responsible for expenses incurred in the performance of the services. The contract required the worker to take out insurance against public liability and workers' compensation claims.
It provided that the worker was to provide their own equipment in the provision of services, although the employer was to provide such additional equipment as it deemed necessary.
The contract expressed the intention that the parties were creating the relationship of principal and contractor, and not that of employer and employee.
The contract contemplated that the worker could employ employees to perform work under the contract.
On the other hand, the contract also provided that the worker was to perform the duties set out in the contract and the position description and 'any other duties which the company may reasonably require which the worker is skilled and capable to perform'.
The contract also required the worker to always act in good faith and in the best interests of the employer and work 'in accordance with any written direction, procedure or other specifications provided by the company relating to the performance of the worker's work or anything connected with it'.
The worker was required to attend meetings and professional development or training sessions as reasonably required by the employer. The hours of work of the worker were set out in the schedule of the contract.
This schedule provided that the worker was to work the hours as per the allocated timetable for the contract period.
The contract allowed the employer to allocate such additional hours as reasonably required and to cancel or open classes dependent upon student demand, and thereby alter the worker's hours. The schedule provided that the worker was to report to, amongst others, the employer's directors.
Sign-in sheets and policies compliance
Theworker was requiredby the contract to sign a sign-in sheet and enter start and finish times for 'every shift appointed to work'.
These sheets were to be validated by the supervisor, manager, or delegate daily, and if they were not completed, the worker did not get paid.
One clause provided that the employer could terminate the contract without notice if the worker refused to carry out a lawful and reasonable direction.
Another clause provided that the worker was to comply with the employer's policies and procedures, which varied from time to time.
The policies and procedures were expressed as taking effect as lawful and reasonable instructions, but as not forming part of the contract.
A further document was tendered into evidence at the hearing by the worker. It was titled 'Employee Details Form'. It was described as a document to be completed by an employee when starting employment with the employer.
It was completed and signed by the worker and a representative of the employer. It included the worker's personal details and qualifications.
It said that the worker had completed and returned a choice of superannuation fund form and had been provided with a copy of the Fair Work Information Statement.
Under the heading 'Office use only', the worker's 'employment status' was described as 'casual'. The worker's evidence was that she was given this form along with the agreement, when she attended her interview for the position with the employer. The Commissioner accepted that evidence.
How contract performed in practice
The evidence given at the hearing established that as a matter of practice: the employer determined the days and the hours that the worker was to work; the worker generally worked 18 hours per week over two days, 9 am to 6 pm Monday and Tuesday, although there were some small variations; the allocation of courses and days and hours was done by the employer and provided to the worker in advance of each term and could change from term to term; the course material presented by the worker to the students was created by the employer's academic
team and provided to the worker to deliver; the worker reported to a manager, including through written reports and weekly meetings at which the course, class issues and student attendance would be discussed and the manager reviewed the worker's work.
The manager supervised the worker's work and gave instructions or directions as to what the worker had to do and how the work needed to be done.
The courses were delivered by the worker at the employer's premises. The employer provided equipment to the worker to enable her to perform her work, including whiteboards and projectors.
The worker invoiced the employer for work performed and was paid fortnightly. The worker was paid a single hourly rate for the work performed.
The worker did not work for anyone else while she was engaged by the employer.
Multi-factorial assessment and control
The FWC explained that the common law approach to determining the question of whether a person is an employee or independent contractor has been set out in numerous decisions.
Previous decisions summarised the approach including whether the worker is the servant of another in that other's business or whether the worker carries on a trade or business of his or her own behalf, the nature of the work performed and the manner of its performance, the identification and application of the relevant indicia to the circumstances, and the terms of the contract between the parties.
Case law identified the various indicia that are ordinarily considered in an assessment of the nature of the relationship.
They included the actual exercise, or the right to exercise, control over the putative employee, whether the worker performs work for others, or provides tools and equipment, whether the job can be delegated, whether the worker is remunerated by periodic wages or salary or by reference to completion of tasks and whether the worker is presented to the world at large as an emanation of the putative employer's business.
Previous decisions also cautioned that no list of indicia is to be regarded as comprehensive or exhaustive and the weight to be given to particular indicia will vary according to the circumstances.
In the Commissioner's assessment, the evidence in this case established that the worker was an employee of the employer.
Although the contractual document was styled as establishing a contractor relationship and some of the terms were indicative of that relationship, overall, the substantive rights and obligations created by the document supported the view that the relationship was one of employment.
The legal capacity of the employer to direct and control the work of the worker, conferred by the contract, was in very wide terms. The employer had effective control over the worker's hours of work and the scope of the worker's job.
Wide contractual control provisions
According to the decision, the contract reserved to the employer the right to issue general instructions or directions as to how work was to be performed and where, and to terminate the contract without notice for a failure to comply with lawful and reasonable directions.
It provided that the worker was obliged to conform to the employer's policies and procedures as varied by the employer from time to time.
The contract went so far as to oblige the worker to act in good faith and in the interests of the employer. This was something akin to the obligation of good faith and fidelity that is ordinarily implied in contracts of employment.
The Commissioner noted that the contract said that it was intended that the agreement would create a relationship of principal and contractor and not that of employer and employee. The Commissioner regarded this term as having limited weight in the overall analysis.
The Commissioner also regarded the terms in relation to insurance as of limited assistance to the employer in that they followed from the labelling of the arrangement adopted in the agreement. These terms could and should be taken into account, but were not conclusive.
The contractual term requiring the worker to provide her own equipment pointed to a contract for services. However, the term also allowed for the employer to provide such equipment as it deemed necessary, and the evidence clearly demonstrated that equipment, from course materials to whiteboards, was supplied by the employer.
To the extent the contract permitted the worker to engage or employ others to do the work, or did not require that the services be delivered personally, this would weigh in favor of a conclusion that it was a contract for services.
However, as a matter of practice, the evidence was that the work was performed by the worker personally, and there was no evidence of the delegation of work.
It was necessary to consider the totality of the relationship, including how the contract was performed in practice, to ascertain the real substance, practical reality and true nature of the relationship.
Control exercised in practice
The right to control the work of a person is an indicator of an employment relationship. The substance of the right to control was described in previous cases as whether the contractual arrangement subjects the person engaged to the command of the person engaging, not just as to what shall be done, but how it shall be done.
In this case, the employer had the contractual right to control the worker's work and exercised that control as a matter of practice.
The manager for the employer readily conceded that he supervised the worker's work and gave instructions or directions as to what the worker had to do and how the work needed to be done.
He said he supervised the worker's work and required regular written reports as well as in-person meetings for the worker to report on the work that was being undertaken.
The content of the coursework that was delivered by the worker was determined by the employer.
The employer controlled how, when and where the worker's work was performed both as a legal and practical matter.
There were also aspects of the arrangement that showed that the worker was integrated into the employer's business.
Those aspects were supportive of the view that an employment relationship existed, but they were not determinative.
The employer was in the business of delivering educational services to students.
The worker delivered the courses determined by the employer to the students at the employer's premises. The worker was presented to third parties as an emanation of the employer.
Dismissal found and no fixed term
The employer's position in relation to the circumstances of the termination was inconsistent. On the one hand, they submitted that the contract had a limited duration and concluded automatically at the expiration of its term.
The employer said the contract did not end because of action by the employer but was 'a natural conclusion of a fixed-term agreement'.
On the other hand, the employer submitted that 'unless otherwise notified, contracts are renewed automatically' and that they had made a decision 'not to renew a contract based on serious conduct-related concerns'.
There was no doubt about the evidence that the relationship was terminated on the initiative of the employer.
The worker was notified in writing that the employer had determined that the contract would not be extended for the July term. The decision was made primarily as a result of the complaint.
The employer's actions directly and consequently resulted in the termination of the worker's employment. It was an action that was intended to bring the employment to an end or had that probable result. The worker was dismissed.
There was no substance to the argument that the contract was for a specified period of time, and the employment ended at the end of that period.
The employer accepted that the written contract did not specify any end date.
That was the end of the matter. Even so, the worker's evidence, which the Commissioner accepted, was that there was no discussion about the periodic renewal of a contract of a specified period.
The manager accepted that there was no such discussion and that the worker was engaged on an ongoing basis, subject to performance and student numbers.
There was no contract for a specified period, and the exception did not apply. The employer's objections were dismissed.
https://www.hcamag.com/au/specialisation/employment-law/worker-claims-employment-relationship-despite-independent-contractor-agreement-and-abn/555687
