Worker who moved to Canada learns signed contractor agreement eliminated dismissal protections
The Fair Work Commission (FWC) recently dealt with a jurisdictional objection in an unfair dismissal application where a worker claimed she was unfairly dismissed despite having signed an independent contractor agreement.
The worker argued she was still effectively an employee despite the contractual change when she relocated overseas. She claimed she performed the same duties, couldn't subcontract without permission, used company equipment, and maintained similar working arrangements.
The case hinged on whether the written contract terms or the practical working relationship determined employment status - an issue with significant implications for remote workers, particularly those working internationally.
The worker had originally been employed as a project delivery manager starting April 2021. In September 2022, she informed the financial technology company she worked for that she planned to move to Canada for personal reasons and asked if she could continue working while overseas.
The employer, which had no business presence in Canada or the United States, advised the worker that her arrangement would need to change from employee to independent contractor if she wished to work from Canada. This change was proposed because of tax and administrative concerns related to remote overseas work.
As part of this change, the worker resigned from her employment in June 2023, traveled to Canada on June 12, and entered into a written independent contractor agreement with the employer on July 3, 2023. She provided services under this agreement until July 9, 2024, when the employer ended the arrangement with 30 days' notice.
The worker subsequently filed an unfair dismissal application, arguing she remained an employee despite the contractor agreement.
The FWC reviewed the case in light of the High Court's 2022 decision in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd, which established that when a written contract clearly sets out the parties' rights and obligations, those terms determine the relationship's nature.
The Commission noted that before this High Court ruling, employment status disputes were decided using a multi-factorial analysis looking at how the relationship worked in practice.
However, this approach was rejected because it "impinged upon one party's legitimate contractual freedoms, and encouraged or enabled the other party to depart or walk-away from promises and agreements otherwise validly made or agreed to."
The FWC explained that "the (old law) multifactorial analysis used a 'checklist' to tick off various factors or indicia when determining whether the totality of a relationship was that of employee, or independent contractor. But a checklist is not used in an analysis that applies the law flowing from Personnel Contracting."
The decision emphasized that after Personnel Contracting, "one only looks to the terms of the contract itself to identify or determine the totality of the relationship. One does not look at broad or specific factors or indicia from a generalized checklist that gives rise to ticks or crosses in boxes concerning factors or indicia that are considered around the conduct of the parties."
The contractor agreement included several provisions that distinguished it from an employment contract. The worker needed to submit fortnightly invoices specifying services provided, maintain her own insurances, and obtain all necessary licenses and permits.
The agreement contained no fixed hours or days of work, and there was no obligation to perform on any particular schedule. It also explicitly stated: "This Agreement is not intended to create a partnership, joint venture, employment or agency relationship between the Parties."
During the arrangement, the worker issued tax invoices to the employer that included her Australian Business Number and Goods and Services Tax component, describing her services as "project and product management consultancy."
After approximately one year of this arrangement, the employer gave the worker 30 days' notice of termination in accordance with the terms of their agreement.
The worker claimed the contractor agreement was a "sham" and that she lacked genuine consent when signing it. She argued her work in Canada was essentially unchanged from her previous employee role in Australia.
She said she was required to provide services solely to the employer, couldn't subcontract without permission, was provided a laptop by the employer, worked hours aligned with Australian time zones despite being in Canada, and continued receiving benefits under the employer's share option scheme.
The FWC rejected these arguments, finding no evidence of fraud, misrepresentation, or other special circumstances that would render the contract void.
The Commission cited established legal principles: "in the absence of fraud or some other of the special circumstances... a man cannot escape the consequences of signing a document by saying, and proving, that he did not understand it."
In examining whether the worker was operating her own business or working in the employer's business, the FWC gave significant weight to the "right to control" aspect under the contract.
The Commission found that "the terms of the Contractor Agreement provide the [worker] with full control over how she performs her work, and do not stipulate fixed days or hours or times of work." There was no evidence that anyone tracked or recorded her hours, or that she reported her work schedule to the employer.
"The focus is upon what the Contractor Agreement allows or enables (directly or indirectly), not what actually occurred, or the practicalities of actually doing what the Contractor Agreement provides for," the FWC explained.
The Commission noted: "I find that the terms of the Contractor Agreement on the issue of a 'right to control' weigh and point towards (and are consistent with) the existence of an independent contractor and principal relationship, as opposed to an employee and employer relationship."
The FWC determined that the written agreement's terms, rather than the practical day-to-day conduct, established the legal relationship between the parties.
"Labels may not be determinative, but they can be relevant. They ought not be ignored, or simply said to be neither here nor there. They form part of the factual matrix to be considered," the Commission stated.
The decision highlighted that "the facts are that the [worker] signed the Contractor Agreement, and issued tax invoices to the [employer] for work she performed providing the Services (using the descriptor of 'project and product management consultancy' services)."
"In the ultimate sense, on the basis of the evidence that is before me, and considering the submissions of the parties, I find that the nature of the relationship between the parties (or its totality), as disclosed by the terms of the Contractor Agreement, is that of an independent contractor and principal relationship, not an employer and employee relationship," the FWC concluded.
The Commission dismissed the unfair dismissal application on the basis that it lacked jurisdiction to hear the matter, as the worker was not an employee for the purposes of the Fair Work Act 2009.
