Jafarian v WildFire Interiors Pty Ltd [2021] NSWWCC 12

On 8 January 2021, Senior Arbitrator Glenn Capel found that the Applicant, Masoud Jafarian, was not a ‘worker’ in the employ of the Respondent, within the meaning of s4 of the Workplace Injury Management and Workers Compensation Act 1998 (the WIMA). He entered an award in favour of the Respondent.

The issue as to whether or not the Applicant was in fact a worker or an independent contractor arose between at the parties at the teleconference. Leave was granted to the Respondent to place that issue in dispute, and this issue was addressed first and separately by the Arbitrator.

The Facts

The Applicant was engaged as a painter by the Respondent in around July 2017. There was no written contract, but he was paid an hourly rate plus GST for work performed.

The Applicant suffered an injury to his neck and lower back when he blacked out and fell from a ladder on 15 February 2018.

His claim principally sought payment pursuant to s60 of the Workers Compensation Act 1987 (the WCA) in respect of proposed lumbar spine surgery.

The arguments

The Applicant submitted that the matters outlined in On Call Interpreters and Translators Agency Pty Ltd v Commissioner for Taxation (No 3) [2011] FCA 366, (On Call Interpreters) pertained to his claim, and outlined what had to be established for an employer/employee relationship to be established. He asserted that although he invoiced the Respondent for work performed through his business (Efficient Handyman Services Pty Ltd, or EHS) and was paid by the Respondent in keeping with those invoices into a business bank account, the work practices make it clear that he was a worker under the direction and control of the Respondent.

EHS held a policy of workers compensation insurance, but this was cancelled by the Applicant, after the injury, with such a cancellation to take place as and from the date of injury. EHS was deregistered in December 2017, and as such there was no relationship between the Respondent and EHS as at the date of injury.

He submitted that the Respondent set his rate of pay, his hours of work, supplied supervision and direction and supplies to perform the work. He further contended that he had to seek permission from the Respondent to undertake any other painting work outside of that with the Respondent.

The Respondent in turn, submitted that it was clear the Applicant was running a business: he advertised his business, and maintained a business bank account. He provided tax invoices for services which were paid by the Respondent. He was not paid sick leave, annual leave, wages or insurance premiums. The Respondent conceded it did supply the Applicant with materials on occasion, however often the Applicant would supply his own.   The Respondent did not dictate the days the applicant was to work. The Respondent contended the Applicant ws generating income in an entrepreneurial way to the benefit of his company, and the Respondent.

The Respondent contended it was not told of the deregistration of EHS, and the Applicant continued to render Tax Invoices to the Respondent under EHS letterhead. It also noted that the Applicant undertook work elsewhere, and denied the Applicant sought permission to undertake such work.

Discussion and Findings

Section 4 of the WIMA  defines a worker as follows:

“In this Act, worker means a person who has entered into or works under a contract of service or a training contract with an employer (whether by way of manual labour, clerical work or otherwise, and whether the contract is expressed or implied, and whether the contract is oral or in writing) …”.

Accordingly, in order for the Applicant to be considered a worker, there must be a contract of employment between the Applicant and Respondent. Senior Arbitrator Capel referred to Deputy President Roches decision in Drive Recruit Pty Ltd v Back [2013] NSWWCCPD 32 where it was noted that a contract of employment involved:

• Work done by a person in performance of a contractual obligation
• Wage or other remuneration
• An obligation on one party to provide, and the other to undertake, the work.

Further for a contract to exist, there must be an intention to create legal relations between a worker and an employer: Secretary, Department of Family and Community Services v Bee (014) NSWWCCPD 66.

Senior Arbitrator Capel also set out the indicia as outlined in Malivanek v Ring Group Pty Ltd (2014) NSWWCCPD 4 which referred to both On Call Interpreters and Hollis v Vabu Pty Ltd (2001) HCA 44:

1. is the person performing the work an entrepreneur who owns and operates a business; and
2. in performing the work, is that person working in and for that person’s business as a representative of that business and not of the business receiving the work?

If the answer to that question is yes, in the performance of that particular work, the person is likely to be an independent contractor. If no, then the person is likely to be an employee.

Accordingly, in order to assess the nature of the relationship between the Applicant and the Respondent, Senior Arbitrator Capel considered the various indicia, looked at the totality of the relationship and analysed the evidence before him, which largely consisted of the parties statements, invoices and tax returns.

He found that the facts and evidence surrounding the contract between the parties, the manner of remuneration, and the payment of benefits, tax, superannuation and insurance all supported the Respondent’s claim that the Applicant’s company was engaged to provide painting services as an independent contractor, as opposed to the Applicant himself being an employee. He found that the evidence established minimal control by the Respondent over the Applicant’s activities when he was painting for him. Further, the evidence established that the Applicant did not work exclusively for the Respondent, and this is not consistent with an employee/employer relationship.  There was little evidence which went to issues such as the right of dismissal, or the right to delegate work activities.

The evidence as to the Applicant’s various business entities was complicated and convoluted. However, the Senior Arbitrator ultimately reached the view having considered various ASIC, PAYG, BAS and taxation records, that the documents were consistent with his having an intention to run a business as an independent contractor. He also actively advertised his services as a business.

Ultimately, in keeping with Malivanek and Hollis, the Applicant was found to be undertaking work that was incidental to a trade or business regularly carried out by him for his company at the time that he sustained injury.  Further, in keeping with On Call Interpreters, the Senior Arbitrator was satisfied that the Applicant was an entrepreneur who owned and operated a business and in performing the work, he was working in and for his business as a representative of that business, rather than in and for the respondent’s business.

Accordingly, an Award was entered for the Respondent.

Lessons for Employers and Insurers

While each matter will very much turn on its own facts as to whether or not an Applicant is a ‘worker’, there are lessons to be taken from this matter and the judgments referred to within it as to what evidence needs to be marshalled in order to mount a defence of this nature.

The question as to whether an Applicant is a ‘worker’ as defined is the first question which must be contemplated when faced with a claim for compensation. The Respondent here was most fortunate to have been given leave to ventilate this previously unnotified matter: had such leave not been granted, the outcome of the claim would likely have been markedly different. It is an issue which ought to be the subject of a s78 notice at the earliest available opportunity.

This matter outlines the importance of evidence gathering if one is to establish that an individual is a contractor rather than a worker- the success of the defence relied largely on the quality of the evidence relied upon. The following classes of documents ought to be called on in order to give proper consideration to this question:

1. Is there a contract of employment?
2. How was the Applicant paid for work performed? Was it by way of salary/ wage or were invoices rendered and then paid?
3. Obtain copies of Tax Returns and bank statements.
4. Searches:
   1. to ascertain the presence or otherwise of any business enterprises; and
   2. to ascertain if any business was openly advertised (website, yellow/ pink pages/ facebook/ trade pages etc)

Further, carefully prepared statement evidence ought to be obtained addressing each of the relevant indicia of employment, with specific care given to the language used in those statements, in order to avoid the submission that the statements themselves, by virtue of the wording used, could be suggestive of an employee/employer relationship.

The material contained in this publication is in the nature of general comment only, and neither purports nor is intended to be advice on any particular matter. No reader should act on the basis of any matter contained in this publication without considering, and if necessary, taking appropriate professional advice upon their own particular circumstances.