Australia: Physiotherapist recognised as an employee – free to pursue unfair dismissal claim

Last Updated: 31 August 2017
Article by Michael Bishop and Ben Drysdale

A physiotherapist who lodged an unfair dismissal application with the Fair Work Commission (FWC) has passed the first hurdle after the FWC found that he was an employee, not an independent contractor. The FWC's judgment in Mark Mitchell v Uraidla Physio (U2017/625) [2017] FWC 2476 could have far-reaching implications for healthcare providers, including those who divide their time between several separate practices.

Background

Between July 2014 and December 2016, Mark Mitchell (the Applicant) worked as a physiotherapist at Uraidla Physio (the Respondent). Uraidla Physio was owned by Nadine Schultz and was a small practice, with just one treatment room.

Throughout the course of his relationship with Uraidla Physio, Mr Mitchell also provided services through his own physiotherapy business, as well as at another established practice.

At the commencement of his relationship with Uraidla Physio, Mr Mitchell was asked by Ms Schultz whether he would prefer to be an 'employee' in which case he would receive a set hourly rate, or a 'contractor' being paid a percentage of his billings. Mr Mitchell opted to work as a contractor.

After Ms Schultz wrote to Mr Mitchell in December 2016 advising him that his services were no longer required, Mr Mitchell contended that at the time of his dismissal he was actually an employee for the purposes of the Fair Work Act 2009 (FWA).

Employee or contractor?

Mr Mitchell made the following arguments in support of his contention that he was an employee:

  • There was no written contract in relation to his engagement, the only conditions discussed with Uraidla Physio were in relation to hours of work and the method used to calculate his payment;
  • Uraidla Physio exercised both discretion and control over the nature of work that he performed;
  • He believed that he was working in the business of Uraidla Physio rather than conducting his own business alongside that of the Respondent;
  • Uraidla Physio exerted control over the hours that he worked and he had an ongoing expectation that these hours would continue;
  • Uraidla Physio bore the risk in relation to the work that he performed;
  • He wasn't able to nominate another physiotherapist to perform his hours of work;
  • Uraidla Physio provided all the stationery, software and equipment he needed; and
  • There was a general arrangement that he was paid fortnightly, as he provided invoices sporadically at best.

Uraidla Physio maintained that the nature of the relationship was that Mr Mitchell was at all times an independent contractor, based on the following contentions:

  • Mr Mitchell indicated that his preference was to be engaged as a contractor;
  • Mr Mitchell was responsible for attracting and maintaining his own client list;
  • Throughout his engagement with Uraidla Physio, Mr Mitchell also provided services at other establishments;
  • Uraidla Physio did not determine Mr Mitchell's hours of work, as they were agreed between the parties;
  • Uraidla Physio did not deduct income tax or make superannuation contributions on behalf of the Applicant. Mr Mitchell was also not treated as an employee for the purposes of WorkCover insurance;
  • Mr Mitchell maintained his own income protection insurance;
  • Uraidla Physio never paid Mr Mitchell for periods of leave that he took in relation to both illness and recreation; and
  • The personal nature of the services provided would not tend to create goodwill for the Respondent's business, but rather for Mr Mitchell as an individual whom clients would, and did, follow to another practice at the termination of his engagement with Uraidla Physio.

The ruling and general law on employees v contractors

The question to ask when determining whether a worker is an employee or contractor is ultimately whether the worker is a servant of another in that other's business, or whether the worker carries on a business of his or her own account. The answer to this question comes from an examination of the relationship as a whole, in this case by reference to the factors noted above.

In the circumstances, the parties' own discussions about the nature of the relationship were superficial, with no detailed arrangements having been agreed. Fundamentally, the FWC held that Mr Mitchell was working within the workplace, operational systems and business of Uraidla Physio.

Further, the FWC noted that some of the types of transactions (such as the reliance upon invoicing and payments with consideration given to GST) that typify an independent contractual relationship were conspicuously absent in this case.

When viewing the relationship as a whole, and weighing up the conflicting indicia set out above, the FWC was satisfied that Mr Mitchell was an employee within the meaning of the FWA.

The nature of employment was likened to that of a casual employee, where there was an expectation of ongoing work, with payment being linked to performance of such work, without any additional entitlements. As such, Mr Mitchell was free to pursue his claim for unfair dismissal.

Lessons for healthcare providers at small practices

In Australia, large healthcare practices generally employ additional healthcare providers to manage client loads, whereas smaller practices commonly operate within a framework of informal and loosely categorised contractual arrangements.

Following the FWC's decision to characterise Mr Mitchell as an employee of Uraidla Physio, there appears to be scope for the same result to be reached in relation to healthcare providers in similar fields, such as podiatry and osteopathy.

Healthcare providers who bring on an extra pair of hands to assist in their practice should be mindful of the consequences of failing to adequately classify and codify such a relationship from the outset.

Even when both parties expressly agree that the relationship is not one of employment, the principal's liability in respect of unpaid employee entitlements and unfair dismissal remedies may arise.

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Authors
Michael Bishop
Ben Drysdale
 
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