EFEX Group Pty Ltd v Bennett [2024] FCAFC 35

Introduction

This case concerns an appeal of a decision made by a primary judge of the Federal Court relating to an unfair dismissal application brought against EFEX Group Pty Ltd (“EFEX Group”) by Mr Gerard Bennett (“Mr Bennett”) in the Fair Work Commission (“the Commission”). The judge agreed with and upheld the Commission’s findings that Mr Bennett was an employee of EFEX Group rather than an independent contractor, and as a consequence, the Commission had jurisdiction to hear Mr Bennett’s unfair dismissal application. EFEX Group contested this decision by appealing to the Full Federal Court.

Facts

Mr Bennett worked as a business development manager for EFEX Group for about 22 months between 1 February 2018 to 8 November 2019 (“the relevant period”). Notably, there was no written contract for the relevant period. Mr Bennett agreed that he was initially engaged as a contractor, invoicing the company for his services as the trustee of a family trust, however due to the nature of his job and his day-to-day activities he argued that he became an employee of EFEX Group. Accordingly, when the period of his employment ended, he maintained that he was dismissed as an employee. Mr Bennett filed an unfair dismissal application to the Commission which decided that the evidence weighed in the favour of Mr Bennett being an employee rather than an independent contractor.

EFEX Group appealed this decision by submitting that the unfair dismissal application should not continue since Mr Bennett was not an employee and the Commission did not have the jurisdiction to hear the application under the Fair Work Act 2009 (Cth).

Primary judge’s reasonings

The primary judge acknowledged that there were factors which favoured a finding that Mr Bennett had been hired as an independent contractor, however, these were outweighed by the factors which favoured the finding that Mr Bennett was hired as an employee. Mr Bennett’s role was primarily in generating sales and there were sales targets that he was expected to achieve. Mr Bennett however was not paid by his sale results. He was entitled to receive $10,000 plus GST every month irrespective of how he performed in terms of sales. The judge found that the circumstances of the case pointed to the expectation that he would devote his time, or the bulk of his time, to his work for EFEX Group. Whilst he was allowed to attend university and the gym during business hours, the judge found that his relationship with EFEX Group was one of full-time employment with some flexibility. In addition, the judge found that the level of control EFEX Group had over Mr Bennett’s work led to the conclusion that Mr Bennett was an employee of EFEX Group.

Appeal

On appeal, EFEX Group contested the primary judge’s decision and submitted that the control they had over Mr Bennett’s freedom in work practices, his taxation arrangements and informal leave arrangements were incorrectly interpreted by the primary judge who therefore erred in his decision.

EFEX Group submitted that Mr Bennett’s autonomy in how he chose to pursue and meet his sales targets demonstrated the lack of control which EFEX Group exercised over Mr Bennett’s activities. There were no required hours of work, no requirement to work from a particular location, and he was also free to pursue work with other companies.

EFEX Group further submitted that Mr Bennett’s payment and taxation arrangements heavily favoured an independent contractor relationship between EFEX Group and Mr Bennett. Mr Bennett invoiced EFEX Group monthly in the name of his family trust from which he received his income and through which he also paid for his work expenses without reimbursement by EFEX Group.

Decision

The Court found that the primary judge undervalued Mr Bennett’s considerable autonomy during the relevant period which stemmed from the verbal employment arrangement. For example, he was not contractually bound to devote all his time to EFEX Group and had great flexibility in how he managed client interactions and work hours. In a similar sense, Mr Bennett was not given specific task directives – EFEX Group prioritised overall results over micromanagement. Moreover, the Court found that the tax and remuneration structures were integral to the determination of whether Mr Bennet was an employee or a contractor. These structures were established upfront, namely, at the time the verbal contract between EFEX Group and Mr Bennett was made, through a family trust for its tax advantages to Mr Bennett. EFEX Group agreed to the arrangement and it became pivotal in defining the relationship between EFEX Group and Mr Bennett as one of contractor and principal. The autonomy and financial arrangements outweighed any limited control exerted by EFEX Group, affirming Mr Bennett’s status as an independent contractor in the absence of a written contract.

Compliance Impact

Organisations should exercise caution when hiring individuals as independent contractors. They should ensure that any contract is in writing and contains a full description of the relationship between the organisation and the contractor and clear terms relating to the services the contractor is to provide; how the services are to be provided; the term during which they are to be provided; payment and taxation arrangements; and whether the contractor is able to provide services to other organisations.