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Are actors independent contractors or employees?

15 April 2020

#Workplace Relations & Safety

Louise Rumble

Published by Louise Rumble, Georgie Richardson

Are actors independent contractors or employees?

In the recent case of Jensen v Cultural Infusion (Int) Pty Ltd [2020] FCA 358, the Federal Court rejected the appeal by three actors to be deemed casual employees rather than independent contractors – a decision that will have wide-ranging implications for the live performance industry.

The facts

The actors were engaged by the production company Cultural Infusion to participate in a government-commissioned theatre production that subsequently performed at more than 100 venues over 100 days between July 2014 and June 2015.

During negotiations for contract renewal, the actors argued their roles were more similar to that of employees than independent contractors and engaged the Media, Entertainment and Arts Alliance (MEAA) to represent them in the Federal Circuit Court small claims procedures brought under the Fair Work Act 2009 (Cth) (FW Act).  

The actors maintained they fell within the classification of casual employees under the Live Performance Award 2010 (Award) and were therefore entitled to compensation from Cultural Infusion for lost entitlements including wages, loading, rehearsal hours and cancellation of performances. The actors also raised other claims in written submissions filed in the Federal Circuit Court, which were dependent on a finding that they were employees, including that Cultural Infusion:

  • contravened the sham contracting provision in section 357 of the FW Act, which prohibits an employer from misrepresenting to an employee that the employee performs work as an independent contractor
  • contravened section 536 of the FW Act, which requires an employer to give a pay slip to each of its employees within one working day of paying wages to the employee.

However, the above two claims were not substantiated or pressed any further by the actors and the hearing was confined to the preliminary issue of determining whether the actors were casual employees.

The Federal Circuit Court found that their 12-month contracts with Cultural Infusion contained an express declaration that the parties' relationship was that of independent contractor and principal. The primary judge stated that the indicia used to assess the independent contractor-employee distinction are not to be deployed as a checklist and that there is no determinative criterion to the exclusion of any other. The primary judge considered various indicia of the parties’ relationship and attributed weight to each of those indicia as either ‘neutral’, or as supporting a characterisation of independent contractor and principal, or of employee and employer. However, the Court found in the first instance that the actors’ work was "inherently freelance in nature" whereby the actors promoted their services and performed other work for other entities during the period of engagement with Cultural Infusion, which was indicative of a contractor relationship.[1]

Backed by the MEAA, the actors appealed the decision of the Federal Circuit Court at first instance.

Primary judge’s decision appealed

The actors submitted that the primary judge erred in a number of ways in applying the multi-factorial approach, including by having insufficient regard to the features of casual employment in considering their submission that they were casual employees of Cultural Infusion.

However, on appeal, the Court found that while there were some specific errors made by the primary judge in the approach taken in assessing the indicium of control and delegation, based on a review of the evidence, the actors were, at all material times, independent contractors and not employees.

Applicable principles in determining a contractor relationship

The Court found that the determination of whether a person is engaged as an independent contractor or an employee requires the application of the multi-factorial approach. The Court must have regard to the totality of the relationship between the parties, including their actual work practices, and not merely the terms of their contracts. No single indicium is likely to be determinative and certain indicia will attract more weight in a particular case than in another case. The evaluation is a matter of fact and degree, and turns on the particular circumstances of the case.

In making an assessment as to the status of the employment relationship, the Court considered the actors’ proposed most important indicia, and other indicia that informed the evaluation of the parties’ relationship, including:

  • personal service – the actors were required to personally perform their work for Cultural Infusion. The Court found that while the actors were required to provide personal service and could not delegate their work, which is indicative of an employment relationship, little weight could be placed on this point in the circumstances of this case. This was because the actors had been chosen for the engagement because of their own artistic skills and on the basis of their particular acting skills and experience. It was unsurprising that Cultural Infusion did not grant the actors the right to delegate the performance of their roles, given that such delegation could have been to actors that had not been vetted, approved or auditioned to perform the role.
  • representation – the actors worked as representatives of Cultural Infusion. The actors were the public face of Cultural Infusion and identified with it. Their contracts required them to make themselves available for promotional performances at no cost, to acknowledge verbally the respondent at the conclusion of all performances, to display the respondent’s signage at all performances (when supplied), and to carry the respondent’s business cards. However, the actors also represented themselves as actors. During each performance, the actors demonstrated their own acting skills and they could be identified as actors possessing those skills. In that respect, they may have obtained some goodwill or reputational benefit from their involvement in the production, which they could seek to leverage in future auditions for acting work. However, on balance the Court found that the indicium of representation was indicative of an employment relationship.
  • control – a high level of control over what, when, where, and how the actors performed the work was exerted by Cultural Infusion. The respondent controlled nearly every aspect of the manner in which the actors rehearsed and performed the production over the duration of the engagement. However, the weight to be placed on the indicium of ‘control’ must be reduced in circumstances where control is inherent in the nature of the work. The actors were performing together in a theatrical production. They could not choose their own times at which to start work. Actors in scripted performances are, generally, required to stick to the script, whether those actors are independent contractors or employees. The Court placed little weight on the fact that Cultural Infusion had final say over the content of the script for the show, or that the actors were required to stick to the script in performing the show. However, on balance the indicium of control was found to favour an employment relationship.
  • mode of remuneration – the actors were paid for each rehearsal or performance on a monthly basis, and that the actors were not exposed to any prospect of profit or risk of loss from their engagement with Cultural Infusion. The actors were paid their prescribed rates irrespective of any potential cost overruns or revenue shortfalls, and irrespective of the number of attendees at their performances. The actors’ non-exposure to profit or loss was indicative of an employment relationship. However, the Court found that the actors took on the prospect of profit and risk of loss in pursuing their acting careers by running their own businesses as freelance actors. It was found that elements of the nature of the remuneration of the actors favoured characterisation of an employment relationship, and other elements were deemed to be neutral factors in this characterisation.

The Court also gave consideration to the following factors in making an assessment of whether the relationship was that of an independent contractor or a casual employee:

  • running their own businesses – as freelance actors, they were running their own acting businesses. For that purpose, two of the three actors engaged agents, and their work for Cultural Infusion formed part of those businesses, which was indicative of an independent contracting relationship. The actors were able to use their experience performing the show, and any goodwill that it generated for their freelance acting businesses, in seeking out their next acting engagements. That is how their freelance acting businesses operated, moving from one acting engagement to the next.
  • casual employment indicia – the fact that the actors were not contractually obliged to, and did not in fact exclusively serve Cultural Infusion gave some support to an independent contracting relationship. To the extent that the actors were performing other work as actors, the Court considered that this supported the finding of an independent contracting relationship because it suggested the actors were in the market as freelance actors, including in their engagement with the respondent. Further, the fact that the respondent did not have a contractual right to terminate the actors’ engagement on short notice, or for misconduct, was found to be a neutral factor in determining the independent contractor-casual employee distinction. The Court further found that neither the respondent nor the actors had an obligation to provide or perform work, respectively, to be a neutral factor in determining the independent contractor-casual employee distinction.

The Court further stated that it did not regard the consequential indicia of the actors submitting for payment by invoice, the respondent making payment to the actors without deducting income tax, and the actor not receiving paid leave entitlements as carrying much weight that was additional to the parties’ own characterisation of the legal nature of their relationship. Rather, those matters emphasised that the parties understood and agreed to their relationship being as independent contractors and principal, and to that limited degree, it found consequential indicia to be supportive of an independent contracting relationship.

While the Court found that this case was one in which the proper characterisation of the parties’ relationship was open to different views, and there were a number of indicia which pointed towards an employment characterisation, the overall appraisal of the totality of the parties’ relationship was that the actors were independent contractors of Cultural Infusion. The appeal was consequently dismissed.

Lessons

In the engagement of actors where there is a fine line between the relationship being considered one of contractor-principal or employee-employer and the nature of the work that performers undertake, this case highlights the importance of looking at the totality of the relationship. 

Practical tips for engaging contractors include:

  • ensuring contractor agreements contain clear terms of engagement and emphasise the contractor-principal relationship. Although this in and of itself will not be determinative of the legal characterisation of the relationship, it will assist to demonstrate the intention and understanding between the parties
  • acting in a manner consistent with a contractor relationship, such as, in this instance, by encouraging performers, where possible, to perform work outside the engagement while still engaged to perform for the principal.

A copy of the decision referred to in this article can be accessed here.

Authors: Louise Rumble & Georgie Richardson

[1] Jensen v Cultural Infusion (Int) Pty Ltd [2018] FCCA 2137

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Louise Rumble

Published by Louise Rumble, Georgie Richardson

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