On 9 February 2022, the High Court handed down two separate and unanimous decisions that have fanned the flames on the age-old quandary of defining contractors vs employees.
Differentiating between employees and contractors is a constant issue in workplace law which, in recent times, has been given a shake-up amidst evolving workplace practices and environments – not to mention, a global pandemic.
The distinction is a highly contentious issue for many companies that rely on contractor arrangements, such as Uber, Deliveroo, construction, and labour-hire companies.
First decision: Contractors, not employees
In ZG Operations Australia Pty Ltd & Anor v Jamsek & Ors [2022] HCA 2, the High Court found that two truck drivers who worked for the same company for almost 40 years were not employees.
The truck drivers were originally employees of the company but ended their employment in the 1980’s and become independent contractors – purchasing their own trucks and establishing a partnership with their wives that was then engaged by the same company to provide delivery services.
The pair displayed the company logo on their trucks, wore clothing bearing the company’s insignia and worked exclusively for the company for an extended period –factors that are generally indicative of an employment relationship.
While the Full Court of the Federal Court had found that the truck drivers were employees, on appeal, the High Court found that there was no employment relationship.
It looked at the “substance and reality” of the relationship and held that those facts did not alter the contractual rights and obligations between the partnership and the company. It noted that “the willingness of the [drivers] to display the company’s branding on their trucks is quite consistent with a sensible, self-interested response of an independent contractor to legitimate commercial pressure from its best customer.”
Second decision: Employees, not contractors
In Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1, the High Court found that a backpacker engaged via a labour-hire company to work as a labourer on building sites was in fact an employee.
A significant factor was the high level of control the labour-hire company had over the labourer’s working arrangements such as location, start and finish times, and its overall “ability to supply a compliant workforce”.
These two decisions underscore the importance of considering both the contractual and practical elements of the relationship when determining whether a person is or should be considered to be a contractor or an employee.
If you have any concerns about your employment contracts or want to chat about employment law more generally, Heather Richardson or Isabella Royce in our Employment Law & Dispute Resolution teams are here to help.
