Luke Livingston SC and Courtney Ensor successfully appeared for the Commissioner of Taxation in JMC Pty Limited v Commissioner of Taxation [2022] FCA 750. The case is an important decision on the employee / independent contractor distinction both for the higher education sector and, more generally, for its application of the recent High Court decisions of Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 96 ALJR 89; [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek (2022) 96 ALJR 144; [2022] HCA 2.
JMC is a higher education provider registered by the Tertiary Education Quality and Standards Agency (TEQSA) which provides TEQSA accredited higher education programmes specifically within the creative industries sector. Pursuant to wholly written contracts, JMC retained Mr Harrison, a qualified sound engineer, to provide it with “teaching services”, namely, the delivery of lectures to JMC’s students and the marking of student examinations or assignments.
On the understanding that Mr Harrison was an independent contractor rather than its employee, JMC did not make superannuation contributions in respect of Mr Harrison. These proceedings arose following the Commissioner assessing JMC to superannuation guarantee charges in respect of Mr Harrison.
In dismissing JMC’s appeal, Justice Wigney held that JMC had failed to discharge its burden of proving that Mr Harrison was not its employee, both in respect of the ordinary, or common law, meaning of “employee” as adopted in s 12(1) of the Superannuation Guarantee (Administration) Act 1992 (Cth), and pursuant to the extended meaning of “employee” in s 12(3).
His Honour held that the totality of the legal rights and obligations provided for in the contracts indicated that the relationship was that of employment, with Mr Harrison engaged to work in JMC’s business of providing accredited higher education programmes to its students.
The most significant consideration militating towards that characterisation was the right which JMC had under the contracts to effectively control Mr Harrison’s provision of the teaching services.
Justice Wigney held that, properly construed in the context of the contracts as a whole, Mr Harrison’s contractual right to sub-contract or assign the teaching services was limited, narrow in scope and, in reality, a chimera unlikely to ever be exercisable. Mr Harrison could not unilaterally exercise that right because it was subject to JMC’s effectively unfettered discretion to refuse to consent to any sub-contract or assignment. That limited right was not capable of outweighing all of the other considerations, which weighed in favour of the characterisation of the contracts as one of employment.
His Honour also found Mr Harrison to be an employee pursuant to s 12(3) as, properly construed, the contracts were principally for the labour of Mr Harrison, rather than for the provision of any “result”.
A copy of the Court’s reasons can be found here.
