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August 2021

Tax invoices don’t define a worker

Tax invoices don’t define a worker

The Case

Erin Shay v Christopher Shannon (2021)

Christopher Shannon engaged Erin Shay from July 2018 to 23 November 2020 to host games at different venues for patrons. Ms Shay worked 2-hour shifts. She had an Australian Business Number (ABN) and provided tax invoices to Mr Shannon for the work performed. There was no written contract between Ms Shay and Mr Shannon.

Ms Shay was advised by text message on 23 November 2020 that her services were no longer required. Ms Shay filed an application for general protections with the Fair Work Commission (FWC).

Mr Shannon filed a jurisdictional objection claiming that Ms Shay had not been dismissed as she was an independent contractor and not an employee.

The Verdict

In considering whether Ms Shay was an independent contractor or an employee, the FWC indicated that this required:

  • “an examination beyond the mere consensual label attached to the relationship by the parties;
  • “one to look at the relationship the parties have actually brought into existence”; and
  • an examination beyond “mere labels coloured by perfunctory devices such as invoices for services rendered”.

The FWC, in finding Ms Shay was an employee, indicated that:

  • Ms Shay did not have effective control over the work she performed, and Mr Shannon controlled when, where and how the work was performed;
  • Mr Shannon supplied all equipment necessary for the work;
  • Ms Shay could not delegate the work;
  • Ms Shay was required to wear a shirt branded with ‘Shannon Entertainment’;
  • the use of an ABN and a tax invoice by Ms Shay was not determinative, as this was how Mr Shannon required the process to be done;
  • Ms Shay invoiced and was paid on an hourly rate, and not on completion of the job;
  • Ms Shay’s engagement was casual in nature and hence the payment of annual leave was not required;
  • the work performed by Ms Shay was not skilled in nature; and
  • Ms Shay did not operate her own business. Mr Shannon paid for advertising, equipment and uniforms.

The Lessons

It is important to engage employees and independent contractors correctly so as not to fall foul of the sham contracting laws. There are a range of factors that courts, commissions and tribunals examine in determining whether an employment or independent contracting relationship exists. The totality of the relationship must be examined. A single criterion will not be determinative.

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