Employee or independent contractor? Court throws out adverse action claim from Tupperware demonstrator

An independent contractor who demonstrated Tupperware products in Queensland has had her claims of unlawful adverse action rejected following the Federal Circuit Court’s finding that she was a true independent contractor and not an employee as alleged.

Background

Within Australia, Tupperware operates largely through a network of franchises that engage independent contractors to hold events and demonstrate products. The demonstrators enter into independent contractor agreements with franchisees at the commencement of their engagement and are expected to grow their own business by deciding how, when and where they will demonstrate products for the purposes of making sales.

In this case, a demonstrator engaged by a franchisee claimed she was in fact an employee and was subjected to unlawful adverse action by the franchisee including when it terminated its agreement with her.

The demonstrator attempted to argue there were a range of factors in her engagement that were indicative of an employment relationship, including that:

• she was promoted to the position of manager;
• the franchisee exercised control over her in the performance of her work by:
  • telling her when and where to work when it operated kiosks in shopping centres; and
  • requiring her to work long and demanding hours;
• the franchisee presented the demonstrator to the world as an emanation of its business by requiring her to wear a polo shirt; and
• the demonstrator was required to assist in the management of other demonstrators.

Federal Circuit Court decision

The Federal Circuit Court of Australia summarised the relevant authorities on determining the employment/contractor status of an individual, highlighting that the question is determined according to the multiple indicia test.

The test requires the court to consider a range of factors that are relevant to the determination of the relationship between the parties. Such factors include the degree of control exercised by the hirer; the nature of the work performed; the contractual arrangements between the parties; and the way in which the individual is presented to the world in relation to the hirer’s business. The court noted these factors should not be treated a checklist and, in each case, different factors will be relevant and will carry varying weight.

In assessing the evidence before it in this particular case, the court commented,

“It is important to note that the mere assertion by the [demonstrator] that certain things did or did not occur is not of itself proof that those things did or did not occur … I formed the view that the [demonstrator] displayed, at times, a belligerent attitude to relevant questions and was in the main argumentative with Counsel cross-examining her. Her belief that she was an employee marred her ability to make reasonable concessions based upon the evidence presented to her.”

In relation to the demonstrator’s specific assertions, that court found:

• Under the terms of the “Tupperware Demonstrator terms and conditions agreement” between the parties, the demonstrator explicitly acknowledged that:
  • the relationship was that of independent hirer to contractor;
  • the demonstrator was not an employee; and
  • she would set her own hours and was responsible for running her own business.
• Payments made to the demonstrator deducted GST but not income tax or superannuation, indicating the arrangement was commercial rather than that of employment.
• The franchisee did operate shopping centre kiosks, though attendance at the kiosks was neither mandatory nor expected. In particular, the demonstrator was not required to work at those kiosks and, in fact did not because she submitted her availability too late.
• The demonstrator did, on occasion, work long hours. However, she was not required to do so by the franchisee. Rather, she worked long hours to earn income and bonuses for her own business.
• The demonstrator did wear a polo shirt with the franchisee’s business name on it. However, the demonstrator was not required to wear this shirt. It was made available to her for purchase and she chose to purchase it and wear it. Further, other items used by the demonstrator in her business had her name on them and so it was not reasonable to infer that polo shirt had the effect of presenting her to the world at large as and emanation of the franchisee’s business.
• The demonstrator was asked to assist with the management of others. However, she was not obliged to do so by the franchisee and there was no evidence before the court that had the demonstrator refuse to provide additional training, her agreement would have been terminated.

In short, the court found, despite the demonstrator’s assertions and belief that she was an employee, it was simply not borne out on the evidence before it.

Ultimately, the court found the result of the multiple indicia test was the demonstrator was an independent contractor and not an employee.

The court, therefore, rejected four of the five claims of adverse action from the demonstrator on the basis that she was not an employee. The court rejected the demonstrator’s final claim of adverse action on the basis that it similarly could not be made out on the evidence before the court.

What can your business learn from this decision?

Businesses engaging independent contractors should ensure their arrangements are clear to all parties concerned from the outset and throughout the period of the engagement. Hirers in particular should ensure they maintain a true arm’s length from their contractors and permit those contractors to conduct their own business according to their own methods.

This decision is a good example of a business that maintained an appropriate arm’s length from its contractor, despite the contractor’s belief to the contrary.

This article was first published by Workplace Law.

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