Nicole Elizabeth Prince v Seven Network (Operations) Limited [2019] NSWWCC 313 (25 September 2019)

Summary

The New South Wales Workers Compensation Commission recently found that a contestant on the reality TV show “House Rules” was a worker in the employ of Channel Seven for the purposes of the Workers Compensation Act 1987 (NSW), despite a signed Agreement and Release expressly excluding an employment relationship and right to claim for loss and damage.

This is a topical reminder that the substance or reality of the relationship between parties is key, and the terms of any contract do not solely determine the nature of an arrangement.

Background

In 2016 Ms Prince and her friend applied to be contestants for “House Rules”, which the arbitrator described as a home renovation reality show that pitches pairs of contestants against others in order to win a prize at the end of the show. After a selection process including filming, promotional photography and medical and psychiatric assessment, the pair were selected. Each signed an Agreement and Release created by Channel Seven, which they could not negotiate, and in addition there was an extensive set of written Rules which strictly governed the contestants’ behaviours on and off the show.

Some of the relevant conditions of the Agreement, Release and Rules included:

• Allowance of $500 per week and $500 for meal and incidental expenses per week during filming, until voted off the show;
• Channel Seven retained:
  • The sole and exclusive rights to determine content and design, and their final decisions could not be disputed;
  • Full editing discretion;
  • 24 hour filming access, being informed of all plans, movements and whereabouts.
• No claim could be brought for any costs, loss or damage including for loss of opportunity;
• Restrictions on clothing, and requirement to wear clothes when supplied by Channel Seven;
• Private socialising with contestants, crew or outsiders was prohibited, as well as photography or audio visual recordings of any facet of production;
• Removal of microphone or turning off audio transmitter was not allowed, and if a contestant wished to go to the toilet they had to inform a sound recordist;
• Sunglasses, smoking and playing of music required prior approval;
• Contestants must only use tools, vehicles, and communications devices provided to them;
• The renovation budget must be balanced at the end of each renovation;
• No talking to tradespeople or entering the building site without permission; and
• “You acknowledge that your participation in the program is not employment, does not create an employer/employee relationship between Seven and you and is not subject to any award or collective bargaining or workplace agreement and does not entitle you to any wages, salary, corporate benefits, superannuation, workers compensation benefits or any other compensation.”

The applicant and her friend were eliminated from the competition in March 2017, and in May 2017 she made allegations of bullying and harassment causing psychiatric injury arising from systemic isolation, bullying by competitors (condoned and encouraged of the producers), and negative portrayal as bullies. As a result, Ms Prince said she was subject to online abuse, including threats to her physical safety, and has been unable to obtain work since.

Relevant Principles

Worker is defined in section 4 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) as:

Worker means a person who has entered into or works under a contract of service of a training contract with an employer (whether by way of manual labour, clerical work or otherwise, and whether the contract is expressed or implied, and whether the contract is oral or in writing)…

Common law principles govern whether an arrangement is a contract.

The Commission considered that it should decide if Ms Prince provided a service to Channel Seven, and if she did, determine whether that service provided under a contract of service (employee) as opposed to a contract for service (independent contractor). Fundamental to the distinction is the fact that when personal services are provided to another business, an independent contractor provides those services whilst working in and for his or her own business, whereas an employee provides personal services whilst working in the employer’s business.

Control of the person engaged remains the principal criterion for a contract to be one of employment, however there are extensive indicia including:

• Mode of remuneration;
• Provision and maintenance of equipment;
• Obligation to work;
• Timetable of work and provision for holidays;
• Deduction of income tax;
• Right to delegate work;
• Right to dismiss the person;
• Dictating hours and place of work, and
• Right to exclusive services of the person.

Not all of the indicia must be present to establish employment, rather they are individual factors as part of the consideration of the total relationship.

Conversely, a contract for services will show in practice that a person operates a business and in performing their work is a representative of their business and not of the entity receiving the work.

Submissions and findings

Counsel for the applicant forcefully submitted that all of the indicia favouring a contract of employment, save for the deduction of income tax, were present and it could not seriously be argued that Ms Prince was engaged for profit in her own business of home renovation (as all contestants were amateur and unskilled novice builders) nor was she an actress. The service was a reality TV business for profit and the applicant provided labour and represented a public face of the show.

Channel Seven confined its argument to the concept of contestant being nowhere near a worker. There was no service provided by the applicant, but rather the hope of winning $200,000 if and only if they were successful in the competition, and there was no direct benefit to Channel Seven from the value of the renovated homes.

Accordingly, there was neither a contract of service nor a contract of services, simply a payment for allowances for participating in the competition.

The Commission found the relevant indicia were “overwhelmingly in favour” of the relationship being one of employer and employee, such that Ms Prince was a worker. In addition to satisfying the indicia set out above (save taxation), the Commission noted the applicant:

• had to relinquish her vocation and relocate;
• was an integral part of and essential to the product and business of the show;
• took no risk in the running of the show;
• took no benefit from any goodwill from the renovations; and
• did not bear the cost of any tradespeople engaged (with permission).

Implications

The very clear wording of the contract did not overcome the reality of the situation.

Whilst the Commission and the parties described the factual background as unusual, the gig economy and modern working styles mean that more and more contracts for personal services for reward are purported to be contracts for services but may in reality expose insureds and insurers to unexpected employer’s liabilities.

The potential impact of the decision is not limited to workers compensation cases in New South Wales, as the classification of a contract as one of services relies on common law principles applicable in most jurisdictions.