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


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. 


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".



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