In brief 3 min read
A rental car broker's appeal has failed after the Federal Court dismissed his adverse action claim, finding that he was engaged as an independent contractor, rather than an employee.1
- Although not solely determinative of the issue, employers should carefully consider taxation arrangements with independent contractors (including in relation to GST, PAYG and superannuation), as these factors may be indicative of an employment relationship.
Mr Parker was engaged by the managing director of HG Innovations Pty Ltd and its related entities (the HG entities) in late October 2017 as a 'hire car broker', which involved providing finance for and hiring out motor vehicles to Uber drivers.
The parties did not execute a formal written agreement, but the terms and conditions of engagement were discussed in email correspondence, which included an email in which Mr Parker stated that he was a sole trader and provided his ABN.
His engagement was terminated via email on 1 June 2018. He subsequently alleged that his engagement was terminated because he had exercised a workplace right to make a complaint, as to excessive working hours, in relation to his employment.
The court confirmed that an adverse action claim arising from an alleged complaint in relation to a person's employment is only available to employees, not independent contractors. Accordingly, the critical issue before the court was whether Mr Parker was an employee or an independent contractor.
In dismissing his appeal against the Federal Circuit Court's decision, the Federal Court found that he had failed to prove he was engaged as an employee, rather than an independent contractor. Some of the key considerations in reaching this decision were:
- Taxation arrangements: Mr Parker received a weekly retainer of $1000 (GST exclusive), plus a percentage of the value of business he had brought in for the preceding month. No deductions were made for PAYG payments or superannuation.
- Level of control: Although Mr Parker submitted that the managing director exercised a high level of control over his work, the court found that the directions were 'results focussed', with the detail of how to bring in clients left to Mr Parker. As part of this arrangement, the mutual understanding was that he would set his own hours so as to achieve results.
- Working for competitors: The parties accepted from the beginning of Mr Parker's engagement that he was not obliged to devote himself exclusively to the HG entities, and could run other businesses himself or work for other people.
- Conception of the parties: Having regard to the correspondence between the parties over the course of Mr Parker's engagement, the court concluded that both parties had a mutual conception that he was a contractor, rather than an employee.
The court paid particular attention to the taxation arrangements between the parties, the judge stating that where decisions regarding revenue law and regulatory obligations are not inconsistent with other aspects of the parties' relationship, these choices may be a 'useful indicator' of whether a worker is engaged as an independent contractor or employee.
Parker v HG Innovations Pty Ltd  FCA 1051.