In two recent cases on 9 February 2022, the High Court has held that the characterisation of a relationship as that of an independent contractor, is resolved by considering the obligations and rights as set out in the written contract, unless the contract terms have been varied or displaced by conduct or the contract is a sham contract.
In Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd  HCA 1 the Court held that any assessment of the totality of the relationship between the parties by reference to the various indicia of employment, must focus on the rights and obligations established by the contract itself, to bear on the ultimate characterisation of a relationship. It does not involve consideration of how the party’s relationship is in practice, with no connection to contractual obligations.
In ZG Operations Australia Pty Ltd v Jamsek  HCA 2 the Court Held that the drivers were not employees of the company and relied on the fact that the contracts between the parties involved the provision of a partnership the use of trucks owned by the partnerships and the service of a driver to drive those trucks. The Court also noted the context in which the contracts were entered into and only engaging with the drivers as contractors.
The High Court decision means that regard to the history of the parties’ dealings or post-contractual conduct, where the written contract represents the totality of the party’s agreement should not be regarded.
The effect of the decision affirms the primacy of contractual terms in determining worker classifications when considering whether a relationship is one of employment or an independent contract.
- Your current organisation should ensure:
- That it has a comprehensive written contract in place with each contractor whom it engages to perform services.
- That it has a procedure for clearly documenting any variations to contractual arrangements with contractors.
- Review the terms of independent contractor agreements to ensure that the obligations are consistent with their characterisation.
- Review circumstances when an employee’s employment ceases, and the worker is re-engaged as a contractor performing substantially the same work.
- Prepare for applications for remedies under statutory contract review scheme.
This article was published on 20/09/22 and the information is valid only to the date of publishing. This article should be considered merely general and non-specific on the subject matter and is not and should not be considered or relied on as legal, advice. Meehans Solicitors is not responsible in the event this information is relied upon by the reader in the absence of specific legal advice.