Independent Contractor vs Employee, 2 Recent High Court Decisions

independent contractor and employee

In both Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] (Personnel) and ZG Operations Australia Pty Ltd v Jamsek [2022] (Jamsek), the High Court has re-visited the legal position of independent contractors and employees.

In Personnel, the contract stated that the former employee had been a ‘self-employed contractor’. However, it was the finding of the majority, that rights and entitlements under the contract characterised the relationship as one of an employee, rather than contractor. 

Ultimately, the Court found that it was ‘impossible’ to argue that the employee’s work was anything other than an employee, based on factors such as being dependent upon the employer for work and the degree of control that Personnel had over the employee.

By contrast, in Jamsek, Mr Jamsek and Mr Whitby had originally been employees of the company, tasked with driving trucks provided by the company. 

In the mid-1980s, the company was no longer able to employ Mr Jamsek and Mr Whitby, so they instead set up partnerships with their wives and executed agreements for the provision of delivery services with their own trucks.

The High Court found that the manner of conduct over the decade and the disparity in bargaining power were not sufficient to classify the relationship as one between employer and employee. Whereas in Personnel, the employee was working under a contract of service, the contract in Jamsek was instead a contract for the provision of services by a partnership for a company. 

It is essential when drafting contracts for employees or independent contractors, that the rights and obligations are clearly laid out in a written contract to ensure that employers are complicit with statutory and contractual obligations and to avoid ambiguity regarding the characterisation of the relationship.

See the below links for the full decisions:

http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/2022/1.html

http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/2022/2.html

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