Contractual certainty tested for trainee

A recent case of interest to employers who engage interns, student trainees and the like, saw the FWC determine that a trainee was not an employee, so lacked jurisdiction to deal with his grievance. The decision focussed on the primacy of the written contract to determine the relationship.

The Trainee was paid a stipend of $30,000 p.a., taxed as PAYG. He had annual and personal leave entitlements. Superficially, these features looked a lot like an employment relationship. More importantly from the Trainee’s perspective, the contract did not refer to some elements of the relationship, particularly rostering details for the activities necessary to complete the course.

The Trainee argued the omissions from the contract meant “the rights and obligations of the parties are only partly committed to the contracts and the contract is therefore vague. …..the Commission is justified .. in also analysing the conduct of the relationship after the contract was formed”.

In other words, even though there was a written contract, because it was silent on some matters, the FWC was entitled to look at post-contractual performance – the ‘old’ way of establishing the truth of the relationship.

The university said the Trainee was not an employee and the High Court’s decisions about the primacy of the written contract between parties made the nature of the relationship plain. The contracts were very clear and the Trainee had not argued the contract was a sham arrangement. He was fully aware he had entered into a student training program, not an employment contract.

The FWC agreed, dismissing any suggestion that the contract was not comprehensive on the fundamentals of the relationship. The FWC went on to itemise a useful check-list of principles in determining these matters, summarised as follows:

– when describing a relationship regulated by a comprehensive contract which is not a sham, the question is to be determined solely by reference to the rights and obligations under that contract. It is not permissible to examine or review the performance of the contract or the course of dealings between the parties;

– the subsequent conduct of the parties may be relevant to establish the existence of any variation of contractual terms;

– the multifactorial approach only has relevance in respect of the required assessment of the terms of the contract (e.g. level of control);

– it is necessary to focus on whether, by the terms of the contract, the person is contracted to work in the businessof the purported employer;

– if is there a contractual right to control the activities of the person (including how, where and when the work is done) that is a major signifier of an employment relationship;

– labels placed on the relationship by the contract are not relevant even as a “tie breaker”, or at least it is not decisive.

These principles primarily relate to the contractor-v-employee debate but as this decision shows, apply just as usefully to training positions such as in this case.

Tracey v Murdoch University [2022] FWC 2094 (11 August 2022)