The High Court has handed down two decisions which together indicate that the Court will look to the rights and obligations of the parties under any written contract when considering whether a person is an employee or an independent contractor.
CFMMEU & Anor v Personnel Contracting Pty Ltd  HCA 1 involved a 22 year old backpacker, Mr McCourt who contracted with a labour hire company (“Construct”) to work on a Hanssen building site. The contract identified Mr McCourt as a “self-employed contractor”. Mr McCourt and his union commenced proceedings against Construct arguing that he had not received his proper entitlements in accordance with the relevant award as an employee.
Both the primary judge and the Full Court of the Federal Court applied a “multifactorial approach” which required an assessment of the “totality of the relationship”. A majority of the High Court said that where there is a comprehensive written contract the validity of which is not in dispute, the characterisation of the relationship proceeds by reference to the rights and obligations of the parties under the contract. In circumstances where there was no suggestion that the written contract was a “sham” or that the contract had been varied by the conduct of the parties, a review of the how the parties performed their obligations was “unwarranted” and there was no need to undertake a “wide-ranging review of the entire history of the parties’ dealings”.
The Court stated that the “label” the parties used to describe their relationship was not determinative. Despite the contract describing Mr McCourt as a contractor, the rights and obligations under the contract constituted a relationship of employment. Of importance, was Construct’s right to determine where Mr McCourt would work and Mr McCourt’s obligation to co-operate with Construct and the builder in performing the work.
ZG Operations & Anor v Jamsek & Ors  HCA 2 involved two truck drivers
(Mr Jamsek and Mr Whitby) who were originally employees of a company and drove trucks provided by it. Mr Jamsek and Mr Whitby agreed to a new arrangement where they set up partnerships with their spouses, purchased trucks from the company and executed a written agreement for the provision of delivery services. The partnerships invoiced the company for the delivery services. The agreement was subsequently terminated. Jamsek and Whitby commenced proceedings seeking declarations in respect of entitlements allegedly owed to them as employees of the company.
Again, there was no suggestion that the contract was a “sham” or that the day-to-day performance of the contract altered the rights and duties established by the contract. The Court referred to the fact the contract came into existence because of the company’s refusal to continue to employ the drivers and its insistence that the relationship between the parties was to be a contract for the carriage of goods. The Court found that there was no relationship of employment between the parties.