Case Study: HRM220 - Devine Fashions - Employee vs. Contractor

This case study analyzes a scenario involving Devine Fashions, a fashion design and manufacturing company located in Noosa, Queensland, Australia. The core issue revolves around determining whether an individual named Omar, who worked as a night security officer, is classified as an employee or an independent contractor. The analysis involves applying both the economic dependency test and the multi-factor test, considering factors such as control, right to delegate, and mutual obligations. Furthermore, the case delves into the question of unfair dismissal, examining whether Omar's termination was justified, considering the principles outlined in the Fair Work Act 2009. The study explores relevant legal precedents, including Stevens v. Brodibb Sawmilling Co. Pty Ltd (1986), ACE Insurance Limited v. Trifunovski (2013), Mr. Norman Turner v. Australian Postal Corporation (2016), and Deutz Pty Ltd v. Skilled Engineering (2001), to support the arguments. The conclusion determines Omar's employment status and evaluates the fairness of his dismissal based on the provided facts and legal framework.

Running Head: CASE STUDY
CASE STUDY
Name of the Student
Name of the University
Author’s Note

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Introduction:
Fair Work Act 2009 (Cth) was brought into effect in Australia to regulate the industrial
relations between the corporations and that of the managers and the members of the corporation.
The provisions of the Act states the safety net for the establishment of the industrial relations.
According to Macdonald and Charlesworth 2013, it has been explained that the provisions of
Act extends its help to the people working in the corporation to ensure the anti-discriminatory
laws have been complied in the corporation policies so that every employee or member of the
corporation is entitled to equal pay and equal opportunities.
Issue:
The issue in the case is whether Omar is an employee or an independent contractor.
Rules:
An independent contractor is any person or corporation engaged in performance of work through
agreement and contractual obligation without establishing the relationship of an employer and an
employee.
The economic dependence test means that the relationship between the employer and
the employee is determined on the basis of the economic activity as a whole which includes the
financial dependence of the worker upon the decisions of the employer. In other words, the
employee and an employer relationship is established only on the basis of the determination of
following issues:
 Whether the worker is being hired by the employer

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 Whether the worker is working for his or her own enterprise
This means that the reliance of the worker upon the other party for hiring him or her for the
opportunities is the determining factor for the economic test for the establishment of the
relationship between the employer and employer. The basic difference between an employer-
employee relationship and that of an independent contractor is that in the former, the worker is
dependent upon the employer for the opportunities to use his or her managerial skills and in the
later, the works for his own enterprise based on his own terms and conditions. Therefore, in an
independent contractor relationship, the worker creates his own opportunities and is not
dependent on anyone else for such opportunities or hiring purposes.
The multi factor test involves the totality of the control test over the worker. It means that
the test determines whether the employer controls the work of the employee upon what to do and
how to do and establishes the relationship of an employer and an employee. The multi factor test
takes various factors into consideration. Majority of them are discussed below:
 Personal relations which determines that the employee owes duties towards the
employer with that of loyalty and fidelity.
 Mutual obligations which determines that the employment contract between the
employer and the employee involves consideration value to be paid against such
contractual obligation. Such contractual obligation includes all the future
performances of the employee with respect to his capacity as that of an employee to
the employer within the course of his or her employment.
 Degree of control determines the existence of control of employer over the work
performed by the employee including the terms as to what to do and how to do.

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 Right to delegate or subcontract means that the employment contract shall cease to
exist if such work is delegated or subcontracted to someone else because the
employment contract is established to ensure that the work shall be done by the
employee in accordance with the terms of the employer.
 Representations like work logos, uniforms, badges and so on express the employer
employee relationship between the person holding such representation and the
corporation whose logo has been represented in such product.
Therefore, it can be explained that the multi factor test is more of a control test to determine
the control of the employer over the works performed by the employee and the economic
dependency test is more of the determination of whether the employer has hired the worker and
who pays the remuneration to the worker.
In Stevens vs. Brodibb Sawmilling Co. Pty Ltd (1986) it was held by the court that the
multi factor test is applied step by step to ensure no stone is left unturned for the determination of
employee and employer relationship between the parties.
In ACE Insurance Limited vs. Trifunovski (2013), it was held by the court that Fair Work
Act 2009 (Cth) regulates the determination of the corporation relationship with the workers as
that of independent contractor or that of employer and employee relationship. If the relationship
of the person with the corporation is found that of employer and the employee and the
corporation has been shaming it as that of the independent contractor, or vice versa, then the
maximum penalty imposed for the breach of the provisions of the Fair Work Act 2009 (Cth)
shall amount to AUD 33,000 (per breach of provision).

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In Mr. Norman Turner vs. Australian Postal Corporation (2016), it was held by the court
that employers should draft their employment contract or contract for independent contracting
with the workers very carefully to explicitly state the position of the parties in order to avoid any
discrepancies at the time of disputes.
Application:
Noosa is a place in Queensland and the Fair Work Act 2009 is applicable in Queensland
for all the private sector employment. In the given scenario, applying the economic dependency
test, the Devine Fashions paid Omar in his account for the other company established by him.
However, applying the multiple factor test, it can be said that in spite of providing him with the
logo, uniform and a t-shirt with the representation, the work performed by Omar was
unsupervised, hence, as per the control test, his work was not supervised by Devine Fashions as
to what to do and how to do. The right to delegate or subcontract the task establishes that the
employment relationship does not exist and hence, in this scenario, in absence of Omar, his
duties are delegated or subcontracted to someone else. The third factor relating to the
consideration payment and the establishment of mutual obligations state that future
performances with respect to the company and as imbibed in his capacity as an employee shall
be discharged by him. In this scenario, the consideration is paid to the new company established
by Omar and the mutual obligations to be discharged is on the basis of the number of hours being
worked by Omar. Hence, it can be inferred that he is not an employee to the company.

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Arguments:
Omar can contend that he is an employee of the company because the company is paying
him the remuneration and he is provided with the representations of the money. his job was
related to the security of the company premises and hence, he can contend to be an employee to
the company.
Applying Stevens vs. Brodibb Sawmilling Co. Pty Ltd (1986), it can be explained that
the multi factor test has been established step by step so that no factor is left unanalyzed.
Applying Mr. Norman Turner vs. Australian Postal Corporation (2016), it can be explained
that the employment contract or the contract for independent contractor should be drafted
carefully to ensure the position of the parties is clear. But in the given scenario, the position of
the party is unclear because no contract was drafted. It can only be analyzed that Omar was hired
on the basis of number of hours to be worked by him and hence, he was an independent
contractor and not an employee.
Conclusion:
It can be concluded that Omar is an independent contractor.
Issue:
The issue in the case whether Omar has been unfairly dismissed.
Rules:
According to section 9 (1) of the Commonwealth Conciliation and Arbitration Act
1904, it has been laid down that no employee can be dismissed on the prohibited grounds.

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However, the employee himself cannot challenge the dismissal of his ownself but has to be
approached by the union or a group organizations who can back such dismissed employee with
more support without any biasness towards the dismissal. The landmark case in this aspect in
Australia is the Termination, Change and Redundancy case (1984), wherein it was held by the
court that the dismissal of an employee shall not be harsh, unfair and unreasonable. Such
decision was upheld by the High Court of Australia in Re Ranger Uranium Mines Pty Ltd
(1987).
As laid down in section 385 of the Fair Work Act 2009, it can be explained that following
are the grounds for the determination of unfair dismissal:
 Dismissal of the person has taken place (Section 386).
 The dismissal of such person was harsh, unfair and unreasonable (section 387).
 The grounds for dismissal did not comply with the provisions of the Small Business
Fair Dismissal Code (Section 388).
 The case of dismissal should not be that of genuine redundancy (Section 389).
In Deutz Pty Ltd vs. Skilled Engineering (2001), it was held by the court that if labor is
hired, the control test is essential to be established to expose the claim in tort. In other words, in
case the labour has been hired by the company or the other party, the control test is the
determining factor for the establishment of the employer and employee relationship. Once the
relationship of an employer and an employee is established, the claim for compensation under
vicarious liability can be instituted.
Remedies under the Fair Work Act 2009:

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As laid down in section 390 of the Act, the remedies against the unfair dismissal shall
either be the order for reinstatement or the order for compensation. However according to
Regional Express Holdings Limited Trading as REX Airlines (2010), it has been held by the
court that the order of reinstatement can be made only after determining the appropriation of
such an order otherwise the order for compensation shall be made which shall be payable for an
amount maximum of the payable remuneration of 6 months. The order for compensation shall be
made only if the order for reinstatement cannot be justified.
It must be notified that the States where the Fair Work Act 2009 is not applicable, there
the State laws with appropriate provisions relating to the unfair dismissal shall be applicable like
Western Australia where the course of action is admissible under section 23 A of the Western
Australian Industrial relations Commission (Clayton 2015).
Application:
Noosa is a place in Queensland and the Fair Work Act 2009 is applicable in Queensland
for all the private sector employment. In the given scenario, Omar was entrusted with the work
of the night security guard meaning that his job was to look after the people coming in and going
out of the premises of the building. Hence, he owed the duty of care towards the building. He
was on his external patrol when the theft occurred and hence, it cannot be established that he was
negligent in his duty.
However, concerning the matter for the unfair dismissal, the grounds for determination
under section 385 of Fair Work Act 2009 are as follows:
 Omar has been dismissed.

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 Dismissal can be said unreasonable and unfair because as a reasonable human being, he
had been working for the company as a night security for a period of 12 months and the
theft occurred while he was on an external patrol which was also the part of the duty.
Since, there was no control or supervision over his duty with respect to what to do and
how to do, he considered external patrolling at that time as fit to the circumstances.
 The corporation of Devine Fashions was a Small Business or not is not explicit in the
facts of the case and hence, we can assume the enterprise was not a Small Business.
 It is not a genuine redundancy because he is being dismissed on the ground of negligence
and not for non-requirement of his duty at the premises.
Arguments:
Applying Deutz Pty Ltd vs. Skilled Engineering (2001), it can be explained that the
relationship between Omar and that of Devine Fashions was not of the employer and an
employee relationship and hence, the claim under tort cannot be established. Applying Regional
Express Holdings Limited Trading as REX Airlines (2010), it can be explained that the
remedy for Omar can either be reinstatement of work or compensation.
Conclusion:
It can be concluded that Omar was unfairly dismissed.

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REFERENCES:
ACE Insurance Limited vs. Trifunovski [2013] FCAFC 3
Clayton Utz. 2015 "Termination of Employment: National Guidelines for Managers and
Supervisors in Australia".
Deutz Pty Ltd vs. Skilled Engineering [2001] VSC 194
Macdonald, F. and Charlesworth, S., 2013. Equal pay under the Fair Work Act 2009 (Cth):
mainstreamed or marginalised. UNSWLJ, 36, p.563.
Mr. Norman Turner vs. Australian Postal Corporation [2016] FWC 801
Re Ranger Uranium Mines Pty Ltd [1987] HCA 63
Regional Express Holdings Limited Trading as REX Airlines [2010] FWAFB 8753
Stevens vs. Brodibb Sawmilling Co. Pty Ltd [1986] 160 CLR 16
Termination, Change and Redundancy case [1984] 8 IR 34