When a duck is not a duck: Differentiating contractors from employees

Photo by Ravi Singh on Unsplash

From Lexology, Michael Selinger and Jamie Kim discuss a recent case in which the High Court said that the employment contract was what courts should focus on instead of he “real substance, practical reality and true nature of that relationship” which was the prior standard. While the case involved a question of whether a worker was a casual worker or permanent employee entitled to benefits, Michael and Jamie speculate as to whether this case might have an effect on the employee/independent contractor classification.

Up until WorkPac v Rossato, the courts have looked at the substance and true nature of the relationship rather than focusing on the form and categorisation of the relationship when determining the relationship of an employee, such as a casual. This approach is similar to that taken historically by the courts when assessing whether a person is an employee or an independent contractor at law.

It is well established in many authorities, including Hollis v Vabu Pty Ltd (2001) 207 CLR 21 (Hollis v Vabu), that the “totality of the relationship” between the parties must be considered when determining whether a relationship is one of employment or independent contracting. In following the leading decision in Hollis v Vabu, subsequent courts have adopted a multi-factor test when determining the relationship. A written agreement stating the nature of the relationship has always been just one relevant consideration but not conclusive in itself. Unlike WorkPac v Rossato, the contract was not the primary factor.

The High Court in WorkPac v Rossato did not deal directly with Hollis v Vabu but distinguished the case. This approach was taken because the High Court considered that distinguishing employee and contractor relationships has consequences for third parties, whereas the character of an employment relationship is limited to the right of individuals within the relationship. Nevertheless, the High Court’s narrow approach in WorkPac v Rossato gives rise to a question of whether this judgment will have any impact on the longstanding test for distinguishing a contractor from an employee.

Despite the High Court stating that it would be a different matter to consider, it will be interesting to see (in the appeals of Jamsek and Personnel Contracting) whether the High Court will take the opportunity to revisit and reconsider Hollis v Vabu and take an approach consistent with the decision in WorkPac v Rossato in placing the primacy of the contract ahead of other factors.

Read the full story at: When a duck is not a duck: Differentiating contractors from employees

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