Mr Mark Feldschuh v Strong Room Technology Pty Ltd [2024] FWC 216 (25 January 2024)

Facts

A former director of an AI company sought to bring an adverse action claim.

His former company objected on the basis that he did not have the standing to bring the case.

The applicant joined the company’s board of directors in December 2019 and a year later, entered into a formal non-executive director agreement. His appointment was extended for a year before he was terminated in September 2023.

The company argued that the applicant was an independent contractor and not an employee. The company argued that the terms of the agreement expressly provided for an “appointment” as opposed to an “employment” or “engagement”, that the director’s sole obligation was to devote “such time and attention as is necessary” to discharge his duties and use his “best endeavours” to attend meetings.

The applicant argued that there was an employment relationship. The applicant argued that the agreement did not reflect the entirety of the relationship, that he performed duties well beyond the range of that performed by an executive director and he was provided with payslips referring to wages and salary and a business card stating him as an executive director.

Findings

The Commissioner stated that the crucial question was the nature of the relationship and whether the applicant was an employee at ‘common law’, the relevant authorities of which are High Court decisions in Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) & Anor v Personnel Contracting Pty [2022] HCA 1 and ZG Operations & Anor v Jamsek & Ors [2022] HCA 2.

The Commissioner found that there was no convincing evidence from the applicant that he was required or expected to perform work other than what was stated in the written agreement.

Even though the applicant was given payslips and business cards which referred to him as an “employee”, “Co-Founder” and “Executive Director”, the FWC found that the applicant did not provide evidence which supported a conclusion other than that these were mere labels used inaccurately from the lack of experience. There was nothing on the payslips which indicated an accrual of annual leave as an example.

This left the Commissioner to decide that the nature of the relationship between the parties was that recorded in the written agreement which expressly provided for the director’s “appointment” as opposed to the director’s “employment”.  The Commissioner found that the applicant was an independent contractor and did not have the standing to bring an adverse action claim.

Lessons for Employers:

• In determining whether there was an employment relationship, the Fair Work Commission firstly examines the written contract between the parties.
• Ensure that the written agreement with an independent contractor expressly states that the contractor is appointed by the company to perform services as an independent contractor.
• The written contract should expressly set out the rights and duties of the parties.
• The FWC also considers any evidence outside of the written contract as to whether the contractor was required or expected to perform work other than what was stated in the written agreement

If you would like to discuss these or other workplace issues please contact Andrew Bland or call 02 9412 3077.