“Control test” reveals accountant was a subcontractor, not employee

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“Control test” reveals accountant was a subcontractor, not employee

The Fair Work Commission (FWC) has ruled that an accountant who worked for a tax and accounting firm was a subcontractor, not an employee. Therefore, he could not make a claim of unfair dismissal.

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The Fair Work Commission (FWC) has ruled that an accountant who worked for a tax and accounting firm was a subcontractor, not an employee. Therefore, he could not make a claim of unfair dismissal.

The FWC applied the well-known “control test” to his employment and found that, on an overall basis, the factors pointing towards a contractor relationship outweighed those pointing to an employment relationship.
 

Facts of case


When Samuel Selvakumar approached Northcity Accountants seeking work, he was told that they could offer him work as a subcontractor, but not as an employee. He accepted the offer and signed a contract to that effect. At the time, he had his own ABN and was working for other organisations. He claimed that Northcity said it would consider making him an employee once he had completed some training.

When Northcity ceased providing him with work, he claimed he was an employee at the time and had been unfairly dismissed. The FWC had to decide whether he was a subcontractor or an employee at the time. This required taking an overall view of the relationship between each the parties. The “control test” requires analysing a range of factors. Each of these is summarised below.

Control over manner of performing work, place of work and hours of work

Although Northcity required Mr Selvakumar to work in its office, the evidence was that he mostly chose his own hours and was not directly supervised. He submitted time billing sheets, but could choose when he took leave provided he gave advance notice. This all weighed against there being an employment relationship.

Whether he performed work for others

The evidence was unclear as to whether he was performing work for others while working for Northcity. However, he was entitled to do so, which weighed against an employment relationship. 
Whether he had a separate workplace and advertised his services to others
He voluntarily leased two rooms from Northcity and sublet one of them. The evidence was unclear as to

Whether he had advertised his services to others.

Whether he provided and maintained significant tools and equipment
He used his own laptop and other work equipment initially, but later for financial reasons was allowed to use employer-provided equipment. Northcity provided him with a company car but he reimbursed it for the lease payments. This weighed in favour of an employment relationship.

Whether work could be delegated or subcontracted

He could not do so, which weighed in favour of an employment relationship.

Whether he could be suspended or dismissed

Northcity claimed it could not do so and there was no evidence that it attempted to do so. This weighed against an employment relationship.

Whether he was promoted as being part of the business

Northcity did advertise his services. It had a company t-shirt but did not require him to wear it. The advertising weighed in favour of an employment relationship.

Whether income tax was deducted from his remuneration

He submitted tax invoices as a sole trader under his ABN and PAYG tax was not deducted. This weighed against an employment relationship.

Whether paid periodically or upon completion of tasks

He invoiced and collected payments from clients, after which he invoiced Northcity for his own remuneration. This weighed against an employment relationship.

Whether he received paid holidays or sick leave

He was not paid for any leave that he took. This weighed against an employment relationship.

Other factors

The FWC found the following control test factors to be neutral in this case:
  • Whether the work involved a profession, trade or distinct calling
  • Whether the worker created goodwill or saleable assets
  • Whether he spent a significant part of his remuneration on business expenses

Decision


Taking all the above factors into account, Mr Selvakumar was an independent subcontractor, not an employee. Therefore he was ineligible to make a claim of unfair dismissal. 
 

The bottom line


Independent contractors cannot make claims of unfair dismissal. To decide whether someone is a contractor or an employee, tribunals and courts will apply the “control test”, assessing all the factors listed above. No single factor is dominant – an overall view of the situation is taken. 
Note also that applying the control test – in other words, determining the actual situation – overrides what either party may have claimed to be the case, eg in titles used on signed documents.
 

Read the judgment

 
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