Few expressions do greater disservice to fair trading in business than the term, “consumer protection”. That’s because consumer protection laws were first framed to protect purchasers of goods and services for personal, domestic or household use. That use qualification still holds good in many jurisdictions; but over time, the protections have been extended to encompass a wide range of business-to-business transactions … some of which may suprise you!
The role of codes of professional conduct & ethics.
And to prime your knowledge of the topic, I’ll be sharing and discussing key features of the protections in this forum and through my social media channels.
Photo by Sora Shimazaki on Pexels.com. Woman advocate carrying brief, leaving court.
Notre Vie Enterprises Pty Ltd V Saturnian Pty Ltd[i] is a recent VCAT matter that involved a public relations business, which engaged an employment agency to find a personal assistant for it.
The client claimed that the agency recommended an unsuitable candidate, who resigned after two weeks. It also claimed that the agency’s shortlisting decision was biased in favour of the successful candidate because of a prior work relationship between the agency’s consultant and the candidate, which was not disclosed until after the first round of interviews. The client sought a refund of $3,960 based on the misleading and deceptive conduct provisions of the Australian Consumer Law (ACL). It did not contend, and the Tribunal did not find, that the agency breached any of the statutory guarantees in the ACL.
The agency denied the allegations and argued that its shortlisting decision was based on objective evidence.
The Tribunal found that the successful candidate was given preferential treatment due to the former work relationship with the agency’s consultant. It also found that the agency failed to re-advertise the position as it was required to do under the contract.
However, the agency argued that, although the applicant had the benefit of a 100% satisfaction guarantee in the contract, the client chose not to use it and managed to a replacement by itself within 48 hours.
In the circumstances, the Tribunal found that the client did not prove that the agency engaged in misleading or deceptive conduct, and therefore was not entitled to a refund.
The application was dismissed.
The decision serves as a useful reminder that good arguments and correct statements of legal principle do not win cases if they are not supported by the facts.
Andrew C. Wood
[i]Notre Vie Enterprises Pty Ltd v Saturnian Pty Ltd (Civil Claims) [2023] VCAT 95 (31 January 2023)
Amongst the professional contracting issues, which we’ll be discussing in our first Tuesday TalkAbout Live! masterclass for 2023, is the issue of how one interprets and applies the Professional Employees Award 2020. You’ll be interested to learn that last Friday, 20 January 2023, the Full Bench of the Fair Work Commission, on its own motion, varied the coverage provisions of that Award to remove difficulties caused by the “principal purpose test”, which the Commission considered had led to excessive litigation.
You can read the full decision here. However, the gist of the decision to vary the coverage provision can be found at paras [80]-[84], where the Commission said:
[80] … the classifications have the function of determining in what grade an employee covered by the Award will fall rather than whether an employee is covered by the Award in the first place…
…
[82] … We think that a better approach would be to add a provision to Schedule A which makes it clear that the classifications will apply in the way identified above — that is, that they apply to all employees who perform professional engineering duties, professional scientific duties, professional information technology duties or quality auditing unless the person holds a position which is principally managerial in nature…
[83] We conclude … that Schedule A of the Award should be varied by deleting the sentence appearing immediately under the heading and inserting in lieu thereof the following provision:
An employee performing professional engineering duties, professional scientific duties, professional information technology duties or quality auditing must be classified in one of the following classifications provided that the employee is not employed in a wholly or principally managerial position.
[84] The effect of the above variation will be to remove the need to apply the “principal purpose” test and thus resolve the difficulty identified in Zheng. For the reasons earlier outlined, and contrary to the submissions of the APESMA, we do not consider that the express exclusion of managerial employees will narrow the coverage of the Award and thus engage s 163(1) because no classification in Schedule A currently applies to a manager. Nor do we consider that the variation will expand the coverage of the Award, since its purpose is clarificatory and consistent with the current classification definitions. The variation is necessary, we consider, to achieve the modern awards objective in s 134(1) of the FW Act. In reaching this conclusion, we regard the consideration in s 134(1)(g) as having determinative weight, with the other identified considerations being neutral.
The Commission has published a draft determination and the parties now have until Parties may file submissions in response to the draft determination by 4:00 pm (AEDT) on Friday, 10 February 2023 to file submissions in response to the draft determination.
To find out what else we’ll be covering in our Tuesday Talkabout Live! livestream masterclass, and to reserve your place, check out the Eventbrite online event page here.
Person talking with online meeting participants via mobile device. Photo by Canva.
It’s been almost 12 months since the High Court delivered its decision in the landmark case, CFMMEU v Personnel Contracting and that’s the perfect opportuinity for Tuesday Talkabout Live! to kick off its 2023 program with an exploration of the topic, Professional Contracting …One Year On. You can check out what we’ll be convering via the Eventbrite registration page here.
Throughout 2023, WorkAccord will be presenting monthly masterclasses for recruitment, staffing and HR professionals on the following topics:
February: Professional Contracting.
March: Fair Trading
April: Fair Competition
May: Privacy
June: Human Rights
July: Reference Checking
August: Licensing & Regulation
September: Ethics & Professional Conduct
October: Care & Support Sector
November: Sustainable Employability.
Tuesday TalkAbout Live!
Tuesday TalkAbout Live! masterclasses are small group, interactive livestream discussions. We’ve strictly limited registrations to 15 for each session to give all participants an opportunity to join in, ask questions and have their say. However, to make sure nobody misses out, you have a choice of multiple sessions that you can register for. *
So that discussion can occur freely, we don’t record the live sessions. If, for some reason, you can’t attend the live session you’ve registered for, you’ll be able to access a pre-recorded session and have an opportunity to raise your questions with our presenter by email, or else book a short (10 minute) private call to raise your question by phone or video conference.
Continue the Conversation
Tuesday TalkAbouts Live! are carefully designed to create significant learning experiences and provide a grounding that allows you to carry on the conversation confidently in other forums, where you can learn with and from your peers. That’s where the action really happens! So, after you’ve completed your live masterclass, you can head across to the RCSA-hosted Labour Hire Licensing & Regulation (Aust. & N.Z.) LinkedIn Group, where you’ll be able to continue your exploration and deepen your understanding of our topic.
You don’t need to be an RCSA member to join the LinkedIn Group.
NEW for 2023 … Mobile Microlearning!
And for the first time in 2023, we’ll be supporting your learning with short, accompanying mobile microlearning courses that you can access on your mobile device! There will be a modest charge for these courses, but masterclass registrants will be able to take advantage of atrtractive concessional pricing.
So, make sure you register for one of the sessions, head across to our LinkedIn discussion area and…
A recent Fair Work Commission decision might be worth a read if you’re scanning the labour hire horizon for signs of squalls ahead. It was an unfair dismissal case in which the applicant claimed she had been dismissed by Hays from her labour hire engagement as a project manager. However, it was not a typical tri-partite labour hire scenario.
Contractual Arrangements
Here’s how the Commission, described the multi-party contractual arrangements that underpinned the work relationship:
[13] It is necessary to briefly mention the contractual arrangements that were applicable to the work performed by [the applicant]. [The applicant] had entered a contract with a company called PayMe in May 2017 to provide what is in effect a payroll service to her …
[14] In November 2020 [the applicant] contracted through PayMe to provide her services to a client of Hays… Hays made weekly payments to PayMe in relation to the hours worked by [the applicant] while she was on the assignment.
per Deputy President Dean
Jurisdictional Contest
Although it was not included as a respondent to the application, the interposition of PayMe, in the arrangement for the supply of the applicant’s labour to Hays’ client, raised a question about the identity of her true employer (as distinct from her employer-of-record). Was it Hays, or was it PayMe?
Hays contested jurisdiction[i]on the grounds that:
the applicant was not an employee of Hays;
the applicant was not dismissed;
Her application was out of time; and
She earned more than the high-income threshold.
The parties agreed to contest the high-income threshold point as a preliminary issue on the basis that, if the application was knocked out on that ground, there was no need to argue the other points.[ii]
The Commission held that the applicant earned above the high-income threshold and that she was not an Award covered employee. It appears that only three awards were contended by her to apply to her employment:[iii]
Australian Government Industry Award 2016;
Clerks Private Sector Award 2020; or
Miscellaneous Award 2020.
Coverage under the Professional Employees Award 2020, which might also have been a contender, was not argued.
In view of its findings on income and Award coverage, the FWC determined that the applicant was an excluded employee and that her unfair dismissal claim was beyond its jurisdiction.[iv]
A “Missed Opportunity” or a “Near Miss”?
Consequently, the question of who was the true employer did not need to be decided.
There was no examination of Hays’ back-to-back contract with its client, as there was in Personnel Contracting[v]; and therefore, no core asset analysis of the type that might have determined whether Hays or PayMe controlled the provision of the worker’s labour[vi], or rendered the work performed by her dependent upon and subservient to[vii] either Hays or PayMe.
An answer to those questions may have provided further clarification of how the approach adopted by the High Court in Personnel Contracting and Jamsek[viii] should be applied in cases, where the contest is not merely about whether a worker is an employee or an independent contractor, but concerns the need to identify the true employer when there is more than one contender for that honour.
Whilst those questions remain unanswered, workers will continue to bear the cost and uncertainty of having to decide who, as between the person who pays them and the person who controls the supply of their labour to its clients, should respond to matters such as their worker entitlements, casual conversion and unfair dismissal claims, and their applications for anti-bullying orders. In harsh cases, they may be left without timely, reliable and effective remedies.
So, we will have to wait for answers to those questions.
[v]Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd(2022) 96 ALJR 89; [2022] HCA 1. See in the judgments of Kiefel CJ, Keane & Edelman JJ at paras [11]-[13], despite the view taken by their Honours that it was not necessary to refer to the LHA “in detail”. See also in the judgments of Gageler & Gleeson JJ at paras [144] and [158]; and Gordon J at para [168].
[vi]Personnel Contracting per Kiefel CJ, Keane & Edelman JJ at para [89].
[vii]Personnel Contracting per Kiefel CJ, Keane & Edelman JJ at para [90].
Six months on from the High Court’s decisions in Personnel Contracting[i] and Jamsek,[ii] the dust is beginning to settle and we’re getting a clearer look at how those decisions may be affecting the labour hire landscape. In that time, I’ve seen many things written about the High Court’s new approach to determining whether a work relationship is one of employment or independent contracting. But one of the clearest and most helpful explanations of the new approach that I’ve seen so far, comes from the recent Federal Court decision in JMC Pty Limited v Commissioner of Taxation.[iii]
Background
The case concerned JMC’s liability as an employer to pay superannuation to a worker whom it engaged to provide it with “teaching services”. Those teaching services comprised delivering lectures to JMC’s students at its Melbourne campus and marking student examinations or assignments.[iv] JMC contended that the worker was an independent contractor and that it was therefore not required to make superannuation contributions on his behalf. The Commissioner for Taxation disagreed.
Six Key Principles
In the course of holding that the worker was an employee, Wigney J outlined six key principles that can be extracted from Personnel Contracting; Jamsek and related cases. I’ve set them out in “digest” form below, without their references and additional elaboration.
The decision from paragraphs [16] to [27] is worth reading in full. It should only take you about five to ten minutes. But if you’re pressed for time, here are the six key principles in digest form:
Where the rights and duties of the parties are comprehensively committed to a written contract, the legal rights and obligations established by the contract are decisive of the character of the relationship provided that the validity of the contract has not been challenged as a sham, or that the terms of the contract have not been varied, waived or are subject to an estoppel.
In order to ascertain the relevant legal rights and obligations, the contract of employment must be construed in accordance with the established principles of contractual interpretation. …regard may be had to the circumstances surrounding the making of the contract, as well as to events and circumstances external to the contract which are objective, known to the parties at the time of contracting and which assist in identifying the purpose or object of the contract.
…the characterisation of the relationship between the parties is not affected by circumstances, facts or occurrences arising between the parties that have no bearing on their legal rights.
The contractual provisions that may be relevant in determining the nature of the relationship include, but are not limited to, those that deal with the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work, the provision for holidays, the deduction of income tax, the delegation of work and the right to exercise direction and control.
Characterisation of the relationship …, often hinges on two considerations. The first consideration is the extent to which the putative employer has the right to control how, where and when the putative employee performs the work. The second is the extent to which the putative employee can be seen to work in his or her own business, as distinct from the business of the putative employer. Neither of those considerations are determinative and both involve questions of degree
A “label” which the parties may have chosen to describe their relationship is not determinative of the nature of the relationship and will rarely assist the court in characterising the relationship by reference to the contractual rights and duties of the parties. The characterisation of a relationship…, is ultimately an evaluative judgment that takes into account the totality of the parties’ contractual rights and obligations.
My emphasis
A common mistake
One common mistake that I’ve observed, both in commentary about the High Court’s new approach and in attempts to apply it in drafting contracts, is that there is often a failure to distinguish between what the contract says, on the one hand; and the legal rights and obligations that it creates, on the other.
So, you get the situation where employers are still going to great lengths to include and rely on acknowledgements that the relationship is one of independent contract.
Then they say something like: “Well, the High Court decided that you can only look at what the contract says. And look, see, it says right here that our relationship is one of independent contract. So, it can’t be anything else.”
They’re entirely wrong, of course. What they’ve missed is that the High Court was really saying that you look to contract to find “the totality of the parties’ rights and obligations”, and proceed from there. Look, again, at points 1, 2, 4, 5 and 6 of the principles summarised so comprehensively by Wigney J in JMC.
Don’t confuse mere acknowledgments with legal rights or obligations. You can acknowledge, in your contract if you want to, that the world is flat, or that a duck is a rooster; but it doesn’t make it so. Neither does it give you the legal right to make it so; or to oblige someone else to make it so for you.
Some emerging issues
There are also several emerging issues that it may be important to note in labour hire arrangements that do not conform to the traditional tripartite model.
Loose and uncertain arrangements
Personnel Contracting and Jamsek apply in cases where the parties’ rights and obligations are “comprehensively committed to a written contract”. But in cases where there is some uncertainty or looseness in the arrangement, the courts may still undertake a more wide-ranging examination of the totality of the relationship.
At least, that was the view of the Fair Work Commission in Waring v Hage Retail,[v]where the specific terms under which the work was to be performed were found not to be the subject of any express agreement, oral or written arrangements between the parties;[vi]and their arrangements, whatever they were, were described as “vague, opaque and amorphous”.[vii]
The issue should not arise where carefully drafted contracts that are used in traditional labour hire tri-partite settings. However, it may crop up in non-standard arrangements involving additional parties as supply or payment intermediaries, including where payroll services providers are appointed as employer-of-record, or where “pyramid” or tiered supply arrangements are used – especially if the written contracts used to support those arrangements are misaligned.
Where arrangement not contractual; or alternatives not limited to employment and independent contracting
Personnel Contracting and Jamsek both “start from the position that there is a contract between the worker and the organisation”.[viii] However that may not be so in all cases.
For example, various unpaid work trial, work experience, internship and volunteer arrangements might not be underpinned by an identifiable “work contract”. In those cases, it may be difficult to identify what the terms of the arrangement were, and a court or commission might still embark on a wider inquiry.
That is what happened in the Victorian Supreme Court case of O’Connor v Comensoli, where a question arose concerning the vicarious liability of the Catholic Archdiocese of Melbourne for alleged conduct of one of its priests.
After observing that the relationship between the Archdiocese and its priests is not contractual and that the employee/ independent contractor dichotomy, which permits only two alternatives neither of which applied in the circumstances of the case, Keogh J held that High Court’s decision in Personnel Contracting did not authoritatively dispose of the vicarious liability issue.[ix]
The case highlights that there may still be situations that were not addressed by the High Court’s new approach and that parties will need to be on their guard to identify situations in which that approach will not apply.
In a labour hire setting, the issue could arise between a labour hire provider and its temps, noting that a person can still be a “worker” for a labour hire provider even in the absence of a contractual arrangement between them[x] – especially where non-standard arrangements that involve additional parties as supply or payment intermediaries are used.
Parties to such arrangements will need to exercise special care to identify where the legal rights and obligations fall, how they control the provision of the worker’s labour, and who is responsible for them.
Employer identity question
Whilst Rossato,[xi]Personnel Contracting, and Jamsek clarified the approach to determining employment status questions, they did not deal with the separate employer identity question – that is to say: who, amongst more than one contender, is the true employer.
In Spitfire Corporation[xii], the NSW Supreme Court carefully distinguished the High Court decisions, saying that they did not apply to a determination of the employer identity question, in the circumstances of that case.
Conclusion
Whilst the High Court’s decisions in Personnel Contracting and Jamsek have clarified the approach that the courts will adopt in classifying a work relationship as either employment or independent contracting, a number of issues regularly encountered in the labour hire setting were not addressed. Moreover, the approach can be difficult to apply for anyone who is not familiar with the categorisation of legal rights and obligations. Those difficulties can be exacerbated in cases where the parties’ arrangements are loose and uncertain, or where they are misaligned.
Labour hire providers and their intermediaries (as well as their advisors) will therefore need to exercise considerable care in applying the approach adopted by the High Court in Personnel Contracting and Jamsek and remain alert to identify those situations in which it might not apply at all.
[x] See for example, Labour Hire Licensing Act 2017 (Qld) s. 7(2)(b); Labour Hire Licensing Act 2018 (Vic) s. 9(3)(b), Labour Hire Licensing Act 2020 (ACT) s. 7(3)(b).
A recent NCAT decision in the Health Care Complaints Commission’s proceedings against an Enrolled Nurse (2021/00171685) should serve as a reminder to staffing and recruitment professionals of the importance of conducting thorough inquiries into nurse registration conditions when screening job applicants.
Background
A candidate, who completed a qualification as an Enrolled Nurse in South Africa in 2004, was first registered in South Australia as an Enrolled Nurse in 2009. In 2016, she moved from South Australia to New South Wales, where her registration under the National Law was subjected to conditions imposed by the Nursing and Midwifery Council of NSW (“the NSW Council”).
The Conditions
In summary, the relevant conditions were:
Administer medications only under direct supervision.
Must be supervised by a Nurse Manager who has been informed of conditions.
Must inform all current and future employers of conditions.
Must only be employed in circumstances where the employer has agreed to notify the Council of any breach of conditions.
The Private Hospital Placements
The candidate obtained a position as an Enrolled Nurse at a private hospital, which provided sub-acute healthcare services, having previously worked there as a temp agency nurse. The evidence suggested that the private hospital was not aware of the conditions when it employed her; or, if it was aware, did not follow through.
The candidate gave evidence that she was approached by the private hospital manager to join the hospital because the manager saw her performance at work while she was working as an agency nurse. She never went through any interview, except to be asked to bring relevant documents which she did. She said that she never said anything about her registration because she was aware that companies were not employing nurses whose registration was subject to conditions.
Her employment was subsequently terminated after the hospital became aware of the conditions.
The Respite Facility Placement
The candidate thereafter applied, through a different recruitment agency, for a position as a Medically Enrolled Nurse with a facility, which offered short term accommodation and respite for people with an intellectual disability, high physical support and/or complex health needs.
The evidence indicated that she did not disclose the registration conditions to either the new recruitment agency or to the respite facility, neither of whom seem to have been aware of them.
Having successfully obtained the position, she undertook various duties unsupervised, including performance of tracheostomy management.
The Tribunal Proceedings
In proceedings against her by the NSW Council for unsatisfactory professional conduct and professional misconduct arising from breach of conditions, the Tribunal held that her conduct constituted “a flagrant disregard for [her] obligations … and a serious risk to the public”.
The Tribunal ordered that the EN’s registration be cancelled, and that she not be permitted to apply for review of the cancellation for a period of two years.
Observations
The outcome, of course, was a very unhappy outcome for the EN.
However, what is of equal concern is that the staffing and recruitment agencies, the private hospital, and the respite facility all seem to have been unaware of the conditions that attached to the EN’s registration. It would surely have been easy enough to have checked. They were fortunate, perhaps, to have escaped adverse comment.
The case highlights the importance of developing and monitoring rigorous and reliable controls to ensure that applicants and candidates are thoroughly screened – not only in terms of their having current vaccinations and work entitlements; but also in terms of ascertaining any limiting or disqualifying aspects that could adversely impact the candidate’s suitability. It also higlights the need to follow through if your inquiries do reveal the presence of conditions.
It is no longer satisfactory (if it ever was), in this writer’s opinion, for staffing and recruitment professionals to occupy an all-care-no-responsibility stance, when the care fails to identify what may prove to be “a flagrant disregard for [the candidate’s] obligations … and a serious risk to the public”.
If you’ve been following the CFMMEU v Personnel Contracting saga, you may be interested to know that the case is back in the Federal Court, with the HCA Remittal Order having been filed on 30 March 2022.
What that means, is that the FCA will now have to decide if Personnel Contracting breached award terms and conditions when it engaged, supplied, and paid its labour hire worker as though he were an independent contractor, when in reality, he was its employee.
This story still has a way to go, and the shouting is not over yet.
Is it possible to free or emancipate contractors from the type of control that the Court now regards as indicative of employment in a labour hire context? What sort of control is that, anyway?
What would emancipation involve? How would you present it in a contract – given that the court will focus on the terms of the contract to determine the nature of the legal relationship.
Could an on-hire engagement and supply model that doesn’t promise “compliant” or “controlled” labour really work? Is it marketable? Are the on-demand platforms already doing something similar?
Why would anyone NOT want to be an employee? Is it possible to point to any intelligible business purpose that could underpin an emancipated labour contracting model?
Join the Conversation
I hope you’ll start to ask some questions of your own and either bring them along to WorkAccord’s Tuesday TalkAbout on 29 March 2022, or engage in the extended discussion via the Labour Hire Licensing & Regulation (Aust. & N.Z.) LinkedIn Group? We’d love to hear from you.
Recruiters' Casebook 