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FWC unearths illicit employment practices at drug rehab clinic

A Fair Work Commission (FWC) hearing has revealed that a Melbourne addiction treatment clinic appears to have its own abuse problem, as an employer.

DayHab made a jurisdictional objection to a counsellor’s unfair dismissal claim, arguing that she was not entitled to unfair dismissal protection as she was engaged as an independent contractor, not an employee.

The business claimed that because the worker had an ABN, submitted monthly invoices and was “calling the shots” as to when she worked, it had no obligation to her as an employer.

FWC Commissioner Tim Lee rejected this.

DayHab’s engagement with the counsellor was a “clear case of sham contracting” he found.

So clear in fact that he said “it would be hard to find a clearer case where the indicia were so strong as suggesting this to be an employment relationship and not a contractor relationship”.

Evasive, unreliable, self-serving and inconsistent

Commissioner Lee described DayHab’s director as an “evasive” and “most unreliable witness” and found the evidence he and his business manager provided “somewhat self-serving and inconsistent”.

Any arguments the employer had to support its claim the counsellor was an independent contractor were ultimately destroyed when Commissioner Lee discovered that the worker:

  • was unable to choose her hours and was given a roster;
  • had worked unpaid overtime which DayHab did not allow her to invoice for;
  • was required to wear a uniform with the company logo;
  • was required to sign an agreement not to work for competitors; and
  • was not allowed to delegate or subcontract her work.

As an alternative proposition, the employer submitted that it was a small business. This would mean that if the counsellor was found to be an employee, she would not have served the minimum 12-month employment period to qualify for unfair dismissal protection.

However, the employer was unable to provide evidence that it was a small business and Commissioner Lee noted that the employer itself conceded this was the case

Jurisdictional objection a gateway to stronger penalties

What started as a jurisdictional objection to one unfair dismissal claim has now led to a potential investigation by the Fair Work Ombudsman (FWO).

While referring the worker’s case to the Unfair Dismissal Case Management Team (UDCMT), Commissioner Lee expressed concerns that the employer may have a number of other sham contracting arrangements with other support workers.

“I confirm that this decision will be referred to the FWO General Manager with a recommendation from me to make the FWO aware of this decision and to undertake any investigation of [the employer] they consider appropriate,” Commissioner Lee said.

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