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December 2020

Dentist found to be simultaneously an independent contractor and employee

Dentist found to be simultaneously an independent contractor and employee

The Case

Dental Corporation Pty Ltd v Moffet (2020)

Between 1987 and 2007, Mr Moffet, a dentist, owned and operated a dental practice. Mr Moffet sold the practice in 2007 to Dental Corporation Pty Ltd. Mr Moffet continued to work in the practice after the sale, pursuant to a services agreement.

In 2014, Mr Moffet resigned and then commenced proceedings in the Federal Circuit Court against Dental Corporation. Mr Moffet alleged he was an employee and therefore entitled to annual leave, long service leave and superannuation. Dental Corporation denied the claims, alleging Mr Moffet was an independent contractor.

At first instance, the Federal Circuit Court found Mr Moffet was an independent contractor for the purposes of annual leave and long service leave entitlements. However, the Court found Mr Moffet was an employee under the extended definition of ‘employee’ found in the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGA Act), and was therefore entitled to receive his superannuation entitlements.

Dental Corporation and Mr Moffet appealed the decision to the Full Court of the Federal Court.

The Verdict

The Full Court of the Federal Court dismissed Mr Moffet’s appeal. The Court found that Mr Moffet had generated goodwill for Dental Corporation rather than his own business, but overall, in applying the multifactorial test, Mr Moffet was an independent contractor. As such, Mr Moffet was not entitled to annual leave and long service leave entitlements.

The Court also found that Mr Moffet was an employee under the extended definition of ‘employee’ in the SGA Act. That definition includes a person who “works under a contract that is wholly or principally for the labour of the person”.

The Lessons

A court will apply the multifactorial test when deciding if a worker is an employee or an independent contractor. While the below criteria is not an exhaustive list, considerations include:

  • the terms of the contract and included entitlements;
  • the level of control over the work;
  • whether the contract is for a given result or the ongoing provision of labour on a prescribed basis, such as an hourly rate;
  • the level of discretion and flexibility of how the work is performed;
  • who bears the commercial risks of liability, profit or loss;
  • who pays for insurance;
  • who sets the hours and days of work;
  • who provides the equipment;
  • the entity engaging in the work, e.g. sole trader, partnership or company;
  • whether the worker provides an invoice and has an ABN;
  • the worker’s tax arrangements;
  • who pays for the expenses;
  • how the work is obtained;
  • the ability to delegate or subcontract the work;
  • whether the worker accrues the goodwill in their own business or for someone else;
  • who provides the uniforms; and
  • the manner in which the parties interact during the working relationship.

Even if a worker is deemed an independent contractor, and therefore not entitled to some employee entitlements, they still may be considered an employee for other entitlements, such as superannuation and workers’ compensation.

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