Workplace Law

Workplace Law News and Articles

Mar 192019
 

The issue of whether a worker is an employee or independent contractor is relevant for many business risks.  These include the risk of employee-type claims for unfair dismissal or award wages, of the obligation to remit PAYG withholding tax amounts to the ATO, and of claims by revenue collectors in the states and territories for payroll tax.

In a recent Queensland case, the Supreme Court ruled on whether private dancers at a Queensland club were independent contractors or employees. The Queensland revenue office believed they were employees and that therefore payroll tax should be paid by their employer on the payments made to them.

Universal Supermodels Pty Ltd v Commissioner of State Revenue [2018] QSC 257

Facts

The Office of State Revenue of Queensland issued reassessments for the 2009 to 2014 tax years as well as $164,510.32 in penalty tax and $237,001.74 in unpaid tax interest. Universal Supermodels Pty Ltd opposed these reassessments, claiming that monies paid to dancers calculated as wages by the Office of State Revenue were in fact payments made to contractors and thus not taxable. The issue considered by this case was whether the dancers at the appellant’s adult entertainment venues were independent contractors or employees of the appellant.

The multi-factorial approach

The court applied the multi factorial approach summarised in our prior case note as follows:

  • Control: The appellant controlled the dancers’ working hours, outfit, payrate, tips, the performance;
  • Equipment and uniform: Dancers did not provide their own uniform or equipment, therefore they were found to be primarily providing labour services;
  • Taxation: Dancers had an ABN and operated on a cash only basis however the tax invoices had details consistent with those of a pay slip;
  • Charging of fares: There was a fixed pay rate for lap dancingi

Another factor was that the court found that the “employer” was not an agent for the “employees”.  The Club considered itself an agent for each dancer, and described the dancers as franchisees.  However, the ATO did not agree with this characterisation of the relationship. The ATO was also auditing the Club, and the Club director, Peter Croke, told the ATO that dancers were paid a percentage of the money earned on their shift. The dancers collected the money and paid the Club its share. The Club said it did not have to collect GST, that was the dancer’s responsibility.  But the ATO disagreed and concluded that the Club was not acting as agent for the dancer, and the customer’s payment was for the supply of services by the Club. 

Decision

Assessment of these factors and the “totality of the relationship” [139] led the court to decide that there was an employer/employee relationship between the dancers and Universal Supermodels Pty Ltd.

What does this mean?

When evaluating whether your worker is an employee or a contractor, you should not rely on just a few select factors that indicate that the worker is a contractor rather than an employee. Instead, consider the relationship as a whole to understand how a court would approach and determine the relationship.

Contact Peter McNamara today if you are concerned about the correct classification of your workers.

Read the full decision of Universal Supermodels Pty Ltd v Commissioner of State Revenue [2018] QSC 257  click here

iAn infamous definition of lap dancing is given in the opening line of Lord Justice Ward’s Judgment in Sutton v Hutchinson [2005] EWCA Civ 1773 click here

The appellant is a lap dancer. I would not, of course, begin to know exactly what that involves. One can guess at it, but could not faithfully describe it. The Judge tantalisingly tells us, at paragraph 21 of his judgment, that the purpose is "to tease but not to satisfy".

 

Jan 092019
 

Sham Contracting Update – Class Actions A new class of class actions is hitting the Australian courts and creating headaches for putative employers.  The Federal Court has four class actions now where employee entitlements are being claimed for contracted workers using the sham contracting and general protections provisions of the Fair Work Act. It was […]

Oct 192018
 

Poaching staff from competitors is not uncommon, but can be risky.  Employers must be sure that new employees are not acting in breach of obligations to their former employers.  In a recent High Court case, the new employer was ordered to disgorge the whole of its business, taken from the old employer, and to pay […]

Sep 242018
 

Casuals can get permanent entitlements.  In a recent case an employer was ordered to pay annual leave for a casual employee.  If the worker looks permanent, the worker probably is.  If you have casual employees, you may be at risk – read on: The Federal Court has ordered that a casual employee be paid annual […]

Jul 012018
 

Employers should be alert to current worker entitlements:  Unfair Dismissal High Income Threshold; Compensation Cap for Unfair Dismissal; Redundancy Tax Free Amount; Employment Termination Payments (ETP) Lower Tax Rate Cap; Superannuation Maximum Contribution Base; and Civil Penalties for Breaches of the Fair Work Act. Unfair Dismissal High Income Threshold From 1 July 2018, the High […]

Jun 202018
 

In this interesting case an oppressor shareholder was ordered to buy out the oppressed shareholder. Equal shareholders were deadlocked. One Shareholder, the plaintiff, asked the court that the other be required to sell its interest or buy the plaintiff’s interest. The defendant had the daily management of the company. The court found oppression and ordered […]

Jun 202018
 

Munstermann v Rayward; Rayward v Munstermann [2017] NSWSC 133 In this case, the Supreme Court of NSW exercised its broad powers to make any orders it considers appropriate where a shareholder suffers oppressive and unfairly prejudicial conduct. The Court ordered that Mr Rayward, a director that caused a deadlock, should sell his shares to the […]

Jun 202018
 

Deadlocks commonly arise in companies with equal shareholders who are also directors. An aggrieved shareholder can ask the Supreme Court to resolve the deadlock if the shareholder suffers oppressive and unfairly prejudicial conduct. When can the Court Intervene? The Court may intervene if: The conduct of a company’s affairs; or An actual or proposed act […]

Apr 092018
 

The Fair Work Commission recently held that an Uber Driver was an independent contractor and not an employee for the purposes of an unfair dismissal claim. This decision will affect all those involved in the emerging “gig economy”, where workers engage in job for-hire tasks through forums such as apps.   Kaseris v Rasier Pacific […]