The Federal Court has ruled that a lecturer engaged by a company to provide higher education courses was an “employee” for Super Guarantee purposes, and not an independent contractor, as his right to sub-contract the teaching services was limited and required consent. This case considers the ordinary meaning of ’employee’ issues recently decided by the High Court the CFMEU [2022] HCA 1 and ZG Operations cases [2022] HCA 2 but went on to apply this also in the s12(3) extended meaning of ’employee’ in the Superannuation Guarantee (Administration) Act 1992 (SGAA).
The taxpayer, JMC Pty Limited, offers higher education courses in the creative technologies sector. JMC engaged a qualified sound engineer (Mr Harrison) to provide teaching services comprising the delivery of lectures and marking exams. The services were provided under a series of written contracts which required Mr Harrison to submit invoices, time sheets and lesson plans. He was paid by reference to hourly rates for lectures and marking exams but JMC did not make any superannuation contributions.
The Court upheld superannuation guarantee charge (SGC) assessments issued to JMC in relation to the lecturer after ruling that the totality of the rights and obligations under the relevant contracts indicated that he was an “employee”, under it’s ordinary meaning, in 12(1) of the Superannuation Guarantee (Administration) Act 1992 (SGAA). In reaching that conclusion, the Court noted that JMC had significant rights of supervision and control so it could meet legislative standards in relation to academic accreditation and oversight of the courses.
While the lecturer had a contractual right to sub-contract or assign the teaching services, the Court said that right was “very limited” as it required the written consent of JMC, and he could not unilaterally delegate the teaching services. In addition, the Court ruled that the lecturer was an “employee” under the extended meaning of that term in s 12(3) of the SGAA as Mr Harrison was working under a series of contracts that were principally for his labour.
(JMC Pty Limited v CofT [2022] FCA 750, Federal Court, Wigney J, 29 June 2022.) [LTN 125, 5/7/22]
Catchwords
TAXATION – applicant provides accredited higher education creative industries courses – Mr Harrison engaged by applicant as lecturer – respondent deemed Mr Harrison an employee of applicant under the Superannuation Guarantee (Administration) Act 1992 (Cth) – applicant issued notices of assessment of superannuation guarantee charges – applicant lodged objection to notices of assessment – respondent disallowed applicant’s objection – applicant appealed respondent’s objection decision under s 14ZZ(1) of the Taxation Administration Act 1953 (Cth)
CONTRACTS – whether Mr Harrison was an “employee” per its ordinary meaning in s 12(1) of the Superannuation Guarantee (Administration) Act 1992 (Cth) – common law principles inform ordinary meaning of “employee” – issue of whether contract between applicant and Mr Harrison was one of employment or independent contractor – consideration of recent statement of test in 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 – consideration of totality of parties’ contractual rights and obligations – parties’ contracts contained in memoranda of agreement and email correspondence – right to sub-contract or assign required applicant’s written consent – not an “unlimited power of delegation” – Mr Harrison remunerated referable to hourly rate for “teaching services” provided – provision of teaching services under the contracts could not reasonably be considered delivery of a “product or result” – balance of the terms of the contracts favoured characterisation as one of employment – Mr Harrison held to be an “employee” on ordinary meaning in s 12(1)
CONTRACTS – whether contracts were wholly or principally “for” Mr Harrison’s labour per extended meaning of “employee” in s 12(3) of the Superannuation Guarantee (Administration) Act 1992 (Cth) – application of Dental Corporation Pty Ltd v Moffet (2020) 278 FCR 502; [2020] FCAFC 118 – contracts were at least “principally” for Mr Harrison’s labour – applicant contracted for the benefit of teaching services by Mr Harrison that complied with its accreditation obligations – right to sub-contract or assign work was limited given the need for applicant’s consent and compliance with accreditation obligations – Mr Harrison held to be an “employee” on extended meaning in s 12(3)
[Tax Month – July 2022 – Previous Month, 5.7.22]