Recently, the High Court of Australia delivered rulings for two cases that certainly refined the test for determining whether a worker is an employee or an independent contractor.
Previously, the Courts did not have a standard test for determining a worker’s legal status, but instead relied on a ‘multi-factorial’ approach that considered and weighed many factors such as who supplied the equipment, how the work was controlled, and generally what the relationship between parties was like.
The decisions recently delivered in the two cases clarified some of the ambiguity that lingered in the multi-factorial approach and provided new guidance. In the situation where the parties’ relationship is comprehensively elucidated within a written contract, the High Court rules that in differentiating between employee and contractor the Courts must first and foremost focus exclusively on the legal rights and obligations that are agreed upon in the contract. This line of reasoning can be seen in the recent cases:
- ZG Operations Australia Pty Ltd v Jamsek
In this case, two men engaged as truck drivers for the same company began proceedings to seek entitlements alleged to be owed to them as employees of the company. The High Court held that while some factors may indicate an employment relationship, such as evidence of an ongoing regular relationship between parties, the written terms of the contracts agreed upon by the parties determined the relationship to be contractual.
- Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd
Here, a young worker began proceedings in court against a construction company, seeking orders for compensation and penalties after being unable to work on a second project for a client who provided by the same construction company. The claims were made on the basis that the worker was an employee of the company. The High Court ruled that he was indeed an employee on the basis that the contract did not allow for the worker to disobey the client that the company assigned to him.
In summary, the recent judgements made by the High Court place an emphasis on the significance of the wording of the terms and conditions set out in the contract and renounces the earlier multi-factorial approach that looked at the relationship as a whole.
If you or someone you know wish to discuss this matter, then please contact our experienced solicitors at 02 8999 9809 for assistance.