CFMMEU and Jamsek Recent HCA Decisions

The High Court recently clarified the law on how the Court will determine who does and who does not qualify as an independent contractor as compared to an employee. The Court will look to the terms of the contract to decide the nature of the relationship, while confirming mere labels are not determinative.

In Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1, a construction worker, Mr McCourt, signed a contract with Constructs, a labour hire company. The contract (titled Administrative Services Agreement) labelled the worker as a self-employed independent contractor who provided services to Constructs. Constructs assigned the worker jobs at construction sites run by Hanssen Pty Ltd, a building company.

The main issue in this case was whether McCourt was an employee of Constructs or an independent contractor. If McCourt was an employee for the purposes of the Fair Work Act 2009 (Cth) he would be entitled to benefits such as paid personal leave and annual leave.

The High Court, by majority, found that where parties have primarily recorded the terms of their relationship in written form, the determination of whether that contract is one of employment or contractor must come from an analysis of the rights and obligations of the parties under that contract. Assuming the contract itself is in no way defunct, these rights and obligations are determined according to established principles of contractual law.

In this instance, the ASA dictated to McCourt who he was to work for – Hanssen – and that he was to follow the directions of Hanssen in return for payment by Constructs. The fact that the terms of the contract were that Constructs had control over who McCourt worked for and had the responsibility for providing a compliant workforce to Hanssen revealed the core of the relationship between the two parties. Mr McCourt was held to be an employee of Constructs. This was despite the label of independent contractor being used to describe McCourt.

While in ZG Operations Australia Pty Ltd  v Jamsek [2022] HCA 2, the High Court unanimously held that two truck drivers were not employees of ZG Operations Australia Pty Ltd (ZG).

From 1977 to 1985 it was agreed the truck drivers were employees of ZG. However, in around 1985 they accepted ZG’s proposal to ‘become contractors’ and own their own trucks. Both drivers formed partnerships with their respective wives and signed written agreements with the company where they essentially took over the role of maintaining and operating their trucks. After singing these agreements, the primary contracting parties became the partnerships and the company, ZG.

The contracts between the partnerships and the company purely concerned the ability of the partnerships to operate the trucks owned by the company and the provision of a driver to drive those trucks. This relationship was not one of employer-employee but of independent parties contracting with each other, aware they were moving away from an employee employer relationship and into an independent contracting relationship.

The truck drivers were held to be independent contractors and not employees.