Rebecca Huggett v FinXL Professional Services Pty Ltd & IP Australia [2023] FWC 3008 (17 November 2023)

By Dr Laura Sowden, Partner,  Anna Ly, Associate and Theresa Au, Lawyer.

NOTE – Mills Oakley Lawyers acted for the Second Respondent instructing Yvonne Truong of Counsel. 

On 17 November 2023, Commissioner McKinnon handed down a decision dismissing a former contractor‘s general protections application involving dismissal. The case reaffirms the legal position that where contractors have a clear agreement outlining their arrangement they cannot be dismissed from employment as they are not employees. Further, where an application is made out of time and the reasons for the delay are not provided, the application will likely be dismissed.

Background

The Applicant was engaged by the First Respondent, FinXL Professional Services Pty Ltd (FinXL) to work for IP Australia, a Commonwealth Government agency.

The Applicant’s engagement commenced on 5 June 2023, and she was engaged in the role of SAP Business Analyst, earning a daily “contract rate” of $880 per day plus GST.

On 17 July 2023, FinXL advised the Applicant that her last day of work for IP Australia was 19 July 2023.

On 16 August 2023, Ms Huggett filed an incomplete application under s 365 of the Fair Work Act 2009 (Cth) (FW Act) for the Commission to deal with a general protections dispute involving her alleged dismissal. In her application, the Applicant contended the date of her alleged dismissal was 26 July 2023.

Both FinXL and IP Australia objected to the application on the basis that the Applicant was not dismissed (she was not an employee) and because the application was filed out of time.

When did the alleged dismissal occur/Was the Applicant employed?

In order to consider whether additional time should be allowed for the Applicant to make her application – the Commission had to decide when the alleged date of dismissal occurred.

The Commission clarified that at common law,

an employment contract is terminated with effect from the date the termination is communicated to the employee and when “clear on its terms”.

On the evidence, the Commission found that the alleged dismissal occurred on 19 July 2023 as the Applicant was clearly advised by FinXL that her engagement would cease then.

Further, the terms of the contract for the Applicant’s services had clear terms including a fee for service arrangement, a disclaimer of any employment relationship or related entitlements, provision for tax, costs and insurance, and recovery of costs in relation to defective work.

It was clear there was no employee/employer relationship.

Should the Applicant be granted additional time?

As any dismissal occurred on 19 July 2023, the Applicant had filed her application out of time and 7 days over the prescribed time limit of 21 days after the alleged dismissal as per s 366(1)(a) of the FW Act.

Section 366(2) of the FW Act provides that the Commission may grant an extension of time to file an application if there are exceptional circumstances. The Commission will consider:

• the reason for the delay; and
• any action taken by the person to dispute the dismissal; and
• prejudice to the employer (including prejudice caused by the delay); and
• the merits of the application; and
• fairness as between the person and other persons in a like

The Commission considered no reason was provided for the delay in making the application, that the Applicant did not dispute the dismissal until 16 August 2023 when she filed her incomplete application. However, there was no prejudice to FinXL or IP Australia as a 7-day delay is short and each party was on notice of the alleged dismissal dispute.

Further, the Commission found the merits of the application were not strong as it was unlikely there was any employment relationship between the parties. This meant the Applicant was unable to make a claim under s 365 of the FW Act and it was likely the application would be dismissed on jurisdictional grounds. Fairness was not relevant to this case.

The Commission determined there were no exceptional circumstances for additional time be granted for the Applicant to file her application. As such the case was dismissed.

What to take away?

This decision affirms the High Court’s¹ emphasis on the contractual relationship in characterising whether there is an employee-employer relationship or contractor relationship. In particular, it is most helpful where the terms of the contract are clear, and the terms are not disputed.

This is a good reminder for organisations that engage in labour hire arrangements to ensure they have clear and documented contractual arrangements in place. Where a resource is no longer needed to ensure that there are clear processes documented.