The High Court provides further guidance on correctly classifying employees v independent contractors

The High Court has recently delivered two judgments relating to independent contracting which will substantially influence how workers are characterised in future:

• ZG Operations & Anor v Jamsek & Ors [2022] HCA 2
• CFMEU & Anor v Personnel Contracting Pty Ltd [2022] HCA 1

Both decisions centred on the question of employee v contractor status and, despite the different outcomes based on the specific facts of each case, it appears the Court (following last year’s decision in Rossato) continues to signal a departure from the usual approaches used to characterise an employee/contractor relationship.

Both decisions give primacy to the written agreement to determine the true relationship between the parties, instead of an assessment based on the substance and totality of the relationship in practice. In short – they did not apply the more commonly used ‘multifactorial approach’ and instead examined the terms of the contract.

The CFMEU matter concerned whether a labourer was engaged by a labour-hire company as an employee or an independent contractor, with the Court finding an employment relationship. As the summary notes, the Court held that:

Under the ASA, Construct had the right to determine for whom Mr McCourt would work, and Mr McCourt promised Construct that he would co-operate in all respects in the supply of his labour to Hanssen. In return, Mr McCourt was entitled to be paid by Construct for the work he performed. This right of control, and the ability to supply a compliant workforce, was the key asset of Construct’s business as a labour-hire agency. These rights and obligations constituted a relationship between Construct and Mr McCourt of employer and employee. That the parties chose the label “contractor” to describe Mr McCourt did not change the character of that relationship.

The ZG Operations matter considered whether two truck drivers were engaged by a company as employees or independent contractors, finding they were independent contractors.

After 1985 or 1986, the contracting parties were the partnerships and the company. The contracts between the partnerships and the company involved the provision by the partnerships of both the use of the trucks owned by the partnerships and the services of a driver to drive those trucks. The context in which the first contract was entered into involved the company’s refusal to continue to employ the drivers and the company’s insistence that the only relationship between the drivers and the company be a contract for the carriage of goods. This relationship was not a relationship of employment.