The Federal Court has ordered a Tasmanian resort owner to pay compensation to six casual staff who were dismissed after they refused to become independent contractors.
The Fair Work Ombudsman confirmed the ruling this morning but declined to comment before a penalty is handed down at a second hearing on February 2.
The decision comes as the issue of contractors’ rights continues to be debated among politicians and business leaders. While the Government has identified a number of instances of “sham contracting”, there is also confusion among SMEs about what exactly constitutes a contractor relationship versus a traditional employee relationship.
The new ruling also comes after the FWO said it would begin cracking down on dodgy contracting.
Wendy Wells, who owns the Diamond Island resort in Tasmania, was heard to have pressured staff to become contractors because she didn’t “want to have to pay superannuation… I want it all on contracts so that I don’t have these other extra worries, I just have one payment”.
The court also heard accounts where the six staff were told they would not be working at the resort any longer.
The contracts drawn up to make the staff work as contractors also contained elements of an employer-employee relationship, including rules on rosters, uniforms and equipment.
Wells and her husband, Jamie, became directors of Maclean Bay in October 2007. They were judged to have reached the Workplace Relations Act when it dismissed the staff and only agreed to hire them back if they would work as contractors.
Those six staff included a gardener and a receptionist, who was told that her personality was not right for the job. However, Marshall found the real reason was due to her refusal to become a contractor.
With regard to one particular staff member, Mrs Williams, Marshall found that “I am satisfied Mrs Wells, and Mrs Wells alone, decided to dismiss Mrs Williams because… Mrs Williams was not happy about becoming an independent contractor”.
“In the termination conversation, Mrs Wells asked Mrs Williams if she would be happy to change to a contractor. The negative response sealed Mrs Williams’ fate and secured her dismissal.”
Justice Marshall also said Mrs Wells’ evidence and refusal to appear as a witness ”did nothing … to enhance her standing to be readmitted as a legal practitioner in Queensland”.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
