Contractor or employee? Details of a recent High Court ruling and its significance

Last week The High Court of Australia handed down two landmark decisions regarding the common law distinction between an employee and a contractor. This detailed summary looks at the first of these decisions in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1, along with JHEL principal Trent Hancock’s thoughts on its significance for employees and employers alike.

 

The Facts

Personnel Contracting Pty Ltd, which trades as “Construct”, is a labour-hire company based in Perth. From 27 July 2016 to 6 November 2016 and from 14 March 2017 to 30 June 2017, it engaged Mr McCourt to perform labouring work for its major client, Hanssen Pty Ltd, pursuant to an “Administrative Services Agreement” (the ASA). The ASA described Mr McCourt as a “self-employed contractor”.

The relationship between Construct and Hanssen was governed by a “Labour Hire Agreement” (the LHA). The LHA provided, among other things, that workers engaged via Construct were under Hanssen’s direction and supervision for the duration of each day of work. As is common in these tripartite relationships, there was no contractual arrangement between Mr McCourt and Hanssen.

While on site, Mr McCourt worked under the supervision and direction of Hanssen supervisors. He completed basic labouring tasks and was paid by the hour.

Following the cessation of his second engagement, Mr McCourt and the Construction, Forestry, Maritime, Mining and Energy Union commenced proceedings in the Federal Court of Australia (FCA) against Construct (as the primary respondent) and Hanssen (as a party involved in the contraventions) for the payment of employment entitlements under the Fair Work Act 2009 (Cth) and the Building and Construction General On-site Award 2010. The central question to be determined in the proceedings was whether Mr McCourt was a contractor or an employee.

O’Callaghan J at first instance determined that Mr McCourt was a contractor. On appeal, the Full Court of the Federal Court of Australia (FCAFC) felt compelled to agree but made clear that had it not been for an earlier decision in the Western Australian Industrial Appeal Court involving essentially the same dispute between the same parties [1], which it could not conclude was plainly wrong, it would have held that Mr McCourt was an employee of Construct. Mr McCourt and the CFMMEU appealed this decision to the High Court of Australia (HCA), which ultimately found that Mr McCourt was in fact an employee of Construct. However, in doing so, the HCA clarified the correct approach when making the distinction between an employee and a contractor at common law.

 

The FCA Decision

At first instance, O’Callaghan J applied the oft-cited “multifactorial approach” to determine whether Mr McCourt was an employee or an independent contractor. This involved a consideration of both the terms of the ASA and how the relationship operated in practice.

In doing so, O’Callaghan J held that Construct did not actually exercise control over Mr McCourt, as this responsibility was assigned to Hanssen. At the same time, his Honour considered it “obvious that Mr McCourt did not operate a business on his own account” however, contrary to earlier decisions of the FCA, found this was not determinative of his status.

Ultimately O’Callaghan J determined that because relevant factors pointed “in opposite directions” and were “reasonably evenly balanced”, it was “important to pay close regard to the way in which the parties have characterised their relationship”. Upon examining the terms of the ASA, which included an express declaration that Mr McCourt was not an employee, O’Callaghan J determined that the clear intent of the parties was to create a relationship of principal and independent contractor and as a result, Mr McCourt was not an employee of Construct.

 

The FCAFC Decision

On appeal, Lee J in the FCAFC also applied a multifactorial approach. In doing so, his Honour downplayed the significance of control in multilateral arrangements and placed a greater amount of weight on the fact that Mr McCourt was clearly not operating his own business. His Honour also rejected O’Callaghan J’s approach in adopting the characterisation of the relationship by the parties themselves as a “tie breaker”, finding that there was a logical difficulty in assigning decisive weight to one factor.

Notwithstanding this assessment, Lee J determined that Mr McCourt was a contractor, however noted that the opposite conclusion may have been reached had he heard the evidence first-hand and not been bound by the earlier decision in the Western Australian Industrial Appeal Court.

Allsop CJ agreed that were it not for this earlier decision, he would have concluded that Mr McCourt was an employee, particularly given that Mr McCourt was not carrying on a business of his own and was working solely as a builder’s labourer. However, Allsop CJ agreed with Lee J that the earlier decision in the Western Australian Industrial Appeal Court did not disclose clear error and that he was therefore bound to find that Mr McCourt was a contractor. Naturally, this made the issue ripe for appeal.

 

The HCA Decision

There were four separate decisions handed down by the HCA.

The first was a joint decision from Kiefel CJ, Keane and Edelman JJ which found that Mr McCourt was an employee and that the assessment of whether a worker is an employee or contractor should be focused exclusively on the terms of the contract between the parties.

The second was a joint decision of Gageler and Gleeson JJ, which also found that Mr McCourt was an employee however that the assessment of whether a worker is an employee or contractor can and should include consideration of how the parties conducted themselves during the relationship.

The third was a decision of Gordon J, who largely agreed with the joint decision of Kiefel CJ, Keane and Edelman JJ, including in its assessment that Mr McCourt was an employee.

The fourth was a decision of Steward J, who held that Mr McCourt was not an employee, however largely agreed with the principles expounded by Gordon J, whilst also expressing a general reluctance to overturn earlier decisions, particularly those arising from Building Workers Industrial Union of Australia v Odco Pty Ltd (1991) 29 FCR 104 (Odco), in which triangular labour-hire arrangements have been held not to create employment relationships.

 

Kiefel CJ, Keane and Edelman JJ

Kiefel CJ, Keane and Edelman JJ (the Majority) stated at the outset that the way in which the multifactorial test was applied by the FCA and FCAFC was problematic, including because of the lack of guidance available as to the significance of the various factors, which in turn could lead to uncertainty and inconsistency for parties and courts. [2]

Citing a long line of authority, the Majority downplayed the efficacy of the multifactorial test and agreed that there was force in the submission that whether a labourer is conducting his or her own independent business, as distinct from serving in the business of the employer, provides a more meaningful framework to guide the characterisation of the parties’ relationship. [3]

While the Majority accepted that conduct of the parties could affect a variation to the terms of the original contract, or give rise to estoppel or waiver, [4] in cases such as the present, where the terms of the relationship were comprehensively committed to a written contract and no suggestion of variation, waiver or estoppel was made, there was “no reason why the legal rights and obligations so established should not be decisive of the character of the relationship”.[5] Again citing a long line of authority [6], the Majority explained that the terms of a written contract should not be relegated to just one “factor” to be considered in an overall assessment, as they were in the FCA and FCAFC decisions. [7]

The Majority went on to explain why this view was not inconsistent with the earlier decisions in Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 (Stevens) or Hollis v Vabu Pty Ltd (2001) 207 CLR 21 (Hollis). In relation to Stevens, the Majority noted that the reference by Mason J to consideration of the “totality of the relationship”, in the particular context it was made, was not “an invitation to broaden the inquiry beyond the contractual rights and duties of the parties”. They also noted that Stevens was not a case where the terms of the relationship were contained in a written contract. In relation to Hollis, the Majority similarly noted that the terms of the relationship had not been committed comprehensively to a written agreement, as was the case here. [8]

The core of the Majority’s reasoning can be found at [59], in which their Honours stated (citations omitted):

Where the parties have comprehensively committed the terms of their relationship to a written contract the validity of which is not in dispute, the characterisation of their relationship as one of employment or otherwise proceeds by reference to the rights and obligations of the parties under that contract. Where no party seeks to challenge the efficacy of the contract as the charter of the parties’ rights and duties, on the basis that it is either a sham or otherwise ineffective under the general law or statute, there is no occasion to seek to determine the character of the parties’ relationship by a wide-ranging review of the entire history of the parties’ dealings. Such a review is neither necessary nor appropriate because the task of the court is to enforce the parties’ rights and obligations, not to form a view as to what a fair adjustment of the parties’ rights might require.

The Majority qualified this statement by confirming that it is still appropriate to consider the totality of the relationship between the parties by reference to the various indicia of employment, however this consideration is only relevant to the extent it concerns the rights and duties established by the contract. [9]

Expectedly, the Majority highlighted that the HCA had already rejected the argument in WorkPac Pty Ltd v Rossato (2021) 95 ALJR 681 (WorkPac) that the question of casual or permanent employment was to be determined by reference to all the circumstances of the employment, including disparities in the bargaining power of the parties. In noting that Hollis was raised but not relevant in WorkPac, the Majority found that “there is no reason in principle why the approach taken in [WorkPac] should not be applied where the issue is whether the relationship in question is one of employment”. [10]

The Majority also re-affirmed the long-standing proposition that the “label” the parties assign to the relationship is not determinative of, or even relevant to, the correct characterisation, especially where the label is inconsistent with the actual terms of the contract. [11]

Applying these principles to the case at hand, the Majority considered the terms of the ASA in detail. Among other things, they noted that under the ASA, Construct was entitled to fix and pay Mr McCourt’s remuneration, Mr McCourt was required to cooperate in all respects with Construct and Hanssen in the supply of labour, including attending the site at the nominated time, and Construct could terminate Mr McCourt’s engagement if he failed to comply with the directions of Construct or Hanssen.

The Majority accepted, apparently without contest, that Mr McCourt was not operating his own business. [12] As to control, they highlighted that it was the right of a person to control the work of the other, rather than the detail of the actual exercise of control, which served to indicate that a relationship was one of employer and employee. [13] In this instance, the Majority concluded that Mr McCourt had no right to exercise any control over what work he was to do and how that work was to be carried out under the terms of the ASA. [14]

The Majority rejected the notion that Mr McCourt’s ability to accept or reject work was indicative of a contractor relationship, noting this was a common feature of casual employment. The Majority also found that the terms of the ASA suggested this right to accept or reject work was exercisable only at the level of an overall engagement with Hanssen, rather than on the basis of a new engagement each day. [15]

Importantly, the Majority determined that Personnel No 1 and Odco were wrongly decided insofar as they stood for any proposition that triangular labour-hire arrangements could not create relationships of employment. [16]

Based on this analysis the Majority ultimately found that:

Under the ASA, Mr McCourt promised Construct to work as directed by Construct and by Construct’s customer, Hanssen. Mr McCourt was entitled to be paid by Construct in return for the work he performed pursuant to that promise. That promise to work for Construct’s customer, and his entitlement to be paid for that work, were at the core of Construct’s business of providing labour to its customers. The right to control the provision of Mr McCourt’s labour was an essential asset of that business. Mr McCourt’s performance of work for, and at the direction of, Hanssen was a direct result of the deployment by Construct of this asset in the course of its ongoing relationship with its customer.

In these circumstances, it is impossible to conclude other than that Mr McCourt’s work was dependent upon, and subservient to, Construct’s business. That being so, Mr McCourt’s relationship with Construct is rightly characterised as a contract of service rather than a contract for services. Mr McCourt was Construct’s employee. [17]

Therefore, the Majority allowed the appeal, declared that Mr McCourt was in fact employed by Construct between 27 July 2016 and 6 November 2016 and 14 March 2017 and 30 June 2017 and remitted the matter to the primary judge for determination according to law.

 

Gageler and Gleeson JJ

While Gageler and Gleeson JJ arrived at the same conclusion as the Majority, they arrived there in a very different way. The Majority determined that the terms of the ASA conclusively answered the central question in dispute, whereas Gageler and Gleeson JJ summarised their views as follows:

…whilst Mr McCourt was not employed by Construct merely by reason of having entered into the ASA, Mr McCourt was employed by Construct during each of those periods by reason of what then occurred in the performance of the ASA. [18]

In other words, Gageler and Gleeson JJ were prepared to look beyond the terms of the ASA to the actual conduct of the parties when examining the totality of the relationship that existed. At [103] they explained that their reasoning in this regard proceeded in three stages:

…The first stage involves examining the nature of a relationship of employment at common law – the critical point being that it is a relationship which exists in fact. The second stage involves identifying the scope of the inquiry to be undertaken to determine whether a relationship that exists in fact is a relationship of that nature – the critical point being that it involves looking beyond contractual terms to contractual performance. The final stage involves examining the relationship that existed in fact between Mr McCourt and Construct during the periods during which Construct made the labour of Mr McCourt available to Hanssen. That examination illuminates points of distinction between their relationship and some other “triangular” labour hire relationships which have been found in the past not to be relationships of employment. [emphasis added]

Gageler and Gleeson JJ then went on to examine, in depth, the distinction between an employment contract and an employment relationship. In the case at hand, they determined that Mr McCourt entered into two consecutive relationships of casual employment with Construct in the performance of a single overarching contract, being the ASA. [19]

Their Honours found that the distinction between an employee and a contractor has primarily rested on two main overlapping considerations. The first being the extent of control that the putative employer can be seen to have over how, where and when the putative employee does the work and the second being the extent to which the putative employee can be seen to work in his or her own business, the latter of which gives rise to the various indicia cited in earlier decisions. [20]

Gageler and Gleeson JJ disagreed with the remarks made by the Majority about the inconsistency and uncertainty created by the “multi-factor”, “multi-factorial” or multiple “indicia” approach and instead commented that any such inconsistency or uncertainty was “a tolerable incident of the common law’s sensitivity to the diversity and vagaries of lived experience.” [21] As such, they held that it is the totality of the relationship between the parties which must be considered, including the conduct of the parties in the performance of the contract. [22]

Gageler and Gleeson JJ also held that the Privy Council in Narich was incorrect in stating that where there is a written contract between the parties whose relationship is in issue, a court is confined, in determining the nature of that relationship, to a consideration of the terms, express or implied, of that contract in the light of the circumstances surrounding the making of it; and is not entitled to consider the manner in which the parties subsequently acted in pursuance of such contract. [23] Importantly, their Honours noted at [132] that:

…there will be cases where, without any variation to the terms of a written contract, the true character of a relationship in fact established and maintained under the contract will be revealed through the manner of the performance of the contract. That will be so where the terms of the written contract are sufficiently opaque or obscure to admit of different manners of performance. And it will be especially so where such a contract is a standard form written contract couched in language that might arguably have been chosen by the putative employer to dress up the relationship to be established and maintained as something somewhat different from what it might turn out to be.

Gageler and Gleeson JJ also noted that the detailed factual analysis engaged in by the HCA in Stevens and Hollis is inconsistent with the suggestion that its consideration was confined to contractual terms only. [24] They noted that contractual terms had always been examined in past cases, but never to the exclusion of contractual performance. In support of this view, they cited the following passage from Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ in Hollis:

“It should be added that the relationship between the parties, for the purposes of this litigation, is to be found not merely from these contractual terms. The system which was operated thereunder and the work practices imposed by Vabu go to establishing ‘the totality of the relationship’ between the parties; it is this which is to be considered.” [25]

Gageler and Gleeson JJ explained that in attempting to limit their analysis to contractual terms only in order to comply with Narich, courts in Australia had been “driven to engage in the rather artificial exercise of treating conduct engaged in by the parties in the performance of the contract as a “course of dealing” from which then to infer a mutual intention to supplement the written contract with further contractual terms making more specific provision for the conduct found in fact to have occurred”. [26] They noted however that most had taken their cue from Stevens and Hollis in examining the totality of the relationship, including contractual performance [27].

Gageler and Gleeson JJ sought to downplay the relevance of WorkPac to the present case, noting that WorkPac held only that the distinction between a casual employee and another employee was to be found in the terms of the contract and did not stand for any principle directed to the distinction between an employee and an independent contractor. [28]

At [143] Gageler and Gleeson JJ ultimately determined that:

The true principle, in accordance with what we understand to have been the consistent doctrine of this Court until now, is that a court is not limited to considering the terms of a contract and any subsequent variation in determining whether a relationship established and maintained under that contract is a relationship of employment. The court can also consider the manner of performance of the contract. That has been and should remain true for a relationship established and maintained under a contract that is wholly in writing, just as it has been and should remain true for a relationship established and maintained under a contract expressed or implied in some other form or in multiple forms.

In the present case, Gageler and Gleeson JJ held that the most significant indication of an employment relationship was the degree of control that Construct ultimately had over how Mr McCourt physically performed his labour through both the ASA and the LHA. In particular, they highlighted that Mr McCourt worked from Hanssen’s building site each day, was told what to do by Hanssen’s employees, received an hourly rate of pay from Construct and supplied nothing but his labour for the benefit of both Hanssen and Construct, all of which were aspects of the relationship that rendered it a relationship of employment. [29]

In allowing the appeal and endorsing the orders proposed by Kiefel CJ, Keane and Edelman JJ, Gageler and Gleeson JJ recognised the difficult position of the FCAFC in feeling compelled to determine that Mr McCourt was not an employee by reason of Personnel No 1, notwithstanding its obvious view that this may not have been the case. [30]

 

Gordon J

Gordon J largely agreed with the reasoning of the Majority, finding that the examination of the totality of the relationship was confined to an examination of the terms of the contract and not any subsequent performance. At [162] her Honour summarised her position as follows:

The resolution of the central question requires consideration of the totality of the relationship between Construct and Mr McCourt, which must be determined by reference to the legal rights and obligations that constitute that relationship. Where the parties have entered a wholly written employment contract, as in this case, the totality of the relationship which must be considered is the totality of the legal rights and obligations provided for in the contract, construed according to the established principles of contractual interpretation. In such a case, the central question neither permits nor requires consideration of subsequent conduct and is not assisted by seeing the question as involving a binary choice between employment and own business. The totality of the relationship between Construct and Mr McCourt was that of employer and employee.

Gordon J held that in the case of a wholly written employment contract, confining the examination of the “totality of the relationship” to the legal rights and obligations provided for in the contract was consistent with the majority in WorkPac. [31] Her Honour also explained, consistent with the decision in WorkPac, that the contract is to be considered at the time it was entered into and that the way in which the contract deals with the remuneration, equipment, the obligation to work, the hours of work, holidays, delegation, direction and control, will inform the assessment of whether the relationship is one of contractor or employee. [32]

Her Honour was also careful to summarise the situations in which evidence of subsequent conduct may be relevant for purposes unrelated to construction. These were said to include the following:

(1) formation – to establish whether a contract was actually formed and when it was formed; (2) contractual terms – where a contract is not wholly in writing, to establish the existence of a contractual term or terms; (3) discharge or variation – to demonstrate that a subsequent agreement has been made varying one or more terms of the original contract; (4) sham – to show that the contract was a “sham” in that it was brought into existence as “a mere piece of machinery” to serve some purpose other than that of constituting the whole of the arrangement; and (5) other – to reveal “probative evidence of facts relevant to rectification, estoppel or any other legal, equitable or statutory rights or remedies that may impinge on an otherwise concluded, construed and interpreted contract. [33]

Gordon J cautioned against placing undue reliance on the question of whether a person was working in their own business, given this was not always a suitable inquiry for “modern working relationships” (including in the gig economy) and directed attention to matters not recorded in the contract. [34] Her Honour held that the better question to ask was whether the person was contracted to work in the business or enterprise of the purported employer, being a question that can be answered solely by reference to the contract and not by subsequent conduct. [35]

Her Honour, like the Majority, rejected the notion that a label assigned by the parties could be determinative [36] and was similarly critical of the multifactorial test as creating uncertainty [37]. In her Honour’s view, the multifactorial approach allowed an inappropriate “roaming inquiry” that extended beyond the terms of the contract, a difficulty that in her view, was overcome by WorkPac.[38] Gordon J also sought to distinguish the decisions in Hollis and Stevens on the basis that they did not concern contracts that were wholly in writing. [39]

With this analysis, Gordon J examined the ASA and noted that the terms of the ASA permitted Construct to direct Mr McCourt as to the duration, place, and daily hours of work, along with other conditions. Her Honour also noted that payment was made by Construct and that the personal performance of work and the mode of remuneration (hourly rates) was consistent with an employment relationship. [40]

For these reasons, Gordon J ultimately found that the totality of the relationship between Construct and Mr McCourt, as provided for by the ASA, was that of employer and employee and on this basis, agreed with the orders proposed by Kiefel CJ, Keane and Edelman JJ. [41]

 

Steward J

Steward J agreed with Gordon J’s expression of the test to determine whether a person is an employee (with three observations) but ultimately decided to dismiss the appeal. [42]

His Honour’s observations were that a person performing “very unskilled or simple activities” could still be operating a business, that the ASA did not, in his view, confer significant control over Mr McCourt and that Construct arguably had no right to terminate the ASA if Mr McCourt breached same. [43]

Steward J went on to examine the common law and statutory history of Odco style arrangements [44] before labouring the principle that longstanding authorities that have had important legislative or commercial impact should not be overruled unless it is clear that they are plainly wrong. [45]

While acknowledging that his Honour agreed largely with the decision of Gordon J, the substance of his decision appears to be his concern around the commercial ramifications of a decision that Mr McCourt was an employee, rather than the reasons for it. In dismissing the appeal, his Honour stated at [222] (citations omitted):

Whilst this is not a criminal law case, overturning the Full Court’s decision in Odco would expose the respondent to significant penalties on a retrospective basis. That is unfair. It will also, as Lee J observed, greatly damage the respondent’s business and the businesses of many others. That is undesirable. It will also potentially deny to workers a choice they may wish to make to supply their labour as independent contractors, thus possibly undermining one of the objects of the Independent Contractors Act. Given the severity of these potential consequences, which will apply retrospectively, the fate of the Full Court’s decision in Odco should be a matter left for the legislative branch of government to consider. The decision, and those that have followed it, are not plainly wrong. The cogency of the reasons of the learned primary judge in this case is a sufficient basis for that conclusion.

 

The Significance

The decision of the Majority is unfortunate but not surprising. It continues what has now become a trend of the HCA, starting with WorkPac, to prefer form over substance. That is, the Majority held (with support from Gordon and Steward JJ), that where the parties have comprehensively committed the terms of the relationship to a written contract, the rights and obligations contained therein should be decisive of the character of the relationship, to the exclusion of the conduct of the parties in its performance.

While the Majority has not overturned the long-standing proposition that the totality of the relationship should be examined, it has confined that examination only to matters that arise directly from the terms of the contract. As highlighted by Gageler and Gleeson JJ, the Majority’s reasoning in this regard is difficult to reconcile with Stevens and Hollis, where detailed factual analysis was undertaken and where the HCA in Hollis expressly held that the relationship between the parties could not be solely determined by reference to the contract and that the system that was implemented thereunder, and the work practices actually imposed needed to be considered.

It is important to keep in mind however that the Majority did reaffirm that the label assigned by the parties is not determinative and arguably not relevant at all. The Majority, along with Gordon J, also re-affirmed those situations where a court will still need to look beyond the terms of the contract, including in cases where the terms of the relationship are not comprehensively committed to a written contract or in cases involving a sham, a variation by a course of conduct, discharge, estoppel or waiver.

In this author’s view, the decision of Gageler and Gleeson JJ should be preferred. Unlike the decision of the Majority, the decision of Gageler and Gleeson JJ expressly recognised that consideration of contractual performance allows a court to account for the often changing and varied nature of employment relationships, or as their Honours described it, the “diversity and vagaries of lived experience”. The Majority’s push towards form over substance, consistent with the problematic approach adopted in WorkPac, allows the parties and the court to entirely ignore the reality of the relationship that actually unfolds.

For example, a worker applies for a position advertised online. The advertisement is deliberately or inadvertently silent on whether the position is offered on an employment or contract basis. The worker is successful in their application for the position, perhaps on the mistaken belief that the position is as an employee. Prior to commencing, the worker is told they will need to obtain an ABN and sign a comprehensive independent contractor agreement. The worker, having potentially already left their former position, not fully understanding the consequences of the agreement or otherwise not being in a financial position to reject the offer, signs the contract.

While the independent contractor agreement might create the impression of a true contractor relationship, when the worker commences work, they are told they will now have fixed hours and days of work, will need to represent themselves as an employee to third parties, will not be entitled to delegate the performance of their work without consent, will not be entitled to provide their services elsewhere without consent and will be subject to close direction and supervision in the performance of their work.

Although the worker will likely have the ability to pursue a breach of the independent contractor agreement, or might otherwise be able to establish that the contract was a sham or later varied by a course of conduct, the decision of the Majority means the assessment of whether this worker is an employee or contractor starts and ends with the terms of the contract, and that almost everything thereafter, including how the relationship actually operated in practice, is ignored. The same problem now arises in respect of casual employees as a result of WorkPac and the recent amendments to the Fair Work Act 2009 (Cth). The decision of Gageler and Gleeson JJ recognises the types of farcical outcomes that can arise when one eye of the decision maker is forcibly shut.

Concerningly, the issue of bargaining power does not appear to have been given much if any weight. The Majority did recognise that allowing the parties to dictate the nature of the relationship by assigning a particular label to it would likely “suit the interests of the party with the greater bargaining power” and was, therefore, problematic [46], it did not then seem to recognise or address this same problem when it comes to the ordinary way in which contractor agreements are executed by individuals in Australia [47]. That is, the worker is presented with an agreement by the principal and is expected to sign it without amendment, failing which the offer of work is withdrawn.

The decision of the Majority, while well-reasoned and consistent with WorkPac, is out of touch with the realities of work. Limiting what a court can examine will inevitably limit the meaningfulness and accuracy of the determination that it makes. Instead of arming a court with the ability to define a relationship by what it actually is, as a matter of fact, the decision of the Majority empowers the party with the greater bargaining power to dictate the nature of the relationship in the terms of the written agreement.

Although the outcome here was favourable for Mr McCourt, businesses will no doubt learn from the decision and draft their independent contractor agreements accordingly. The unfortunate outcome of this may be that more employment relationships are inappropriately and successfully disguised as contractor agreements, with a resulting loss in employment entitlements for workers.

 

[1] Personnel Contracting Pty Ltd v Construction, Forestry, Mining and Energy Union of Workers (2004) 141 IR 31 (Personnel No 1).

[2] At [33] and [34].

[3] At [35] – [39].

[4] At [42].

[5] At [43].

[6] In particular, the cases of Narich Pty Ltd v Commissioner of Pay-roll Tax [1983] 2 NSWLR 597 at 600-601 (Narich) and Australian Mutual Provident Society v Chaplin (1978) 52 ALJR 407 at 409-410; 18 ALR 385 at 389-390.

[7] At [47].

[8] At [55] – [57].

[9] At [61].

[10] At [62].

[11] At [63] and [79].

[12] At [68] – [72].

[13] At [74]. 

[14] At [77].

[15] At [84].

[16] At [85] – [86].

[17] At [89] – [90].

[18] At [102].

[19] At [109].

[20] At [113].

[21] At [120].

[22] At [121].

[23] At [126], [129] and [130].

[24] At [136].

[25] (2001) 207 CLR 21 at 33 [24], quoting from Stevens.

[26] At [138].

[27] At [139].

[28] At [141]. 

[29] At [150] and [158].

[30] At [159] and [160].

[31] At [172] and [173].

[32] At [174].

[33] At [177].

[34] At [181] and [182].

[35] At [183].

[36] At [184].

[37] At [186] and [187].

[38] At [188].

[39] At [190].

[40] At [193] – [198].

[41] At [200] – [202].

[42] At [203].

[43] At [204].

[44] At [205] – [214].

[45] At [218].

[46] At [58].

[47] Save for perhaps citing at [81] that Mr McCourt’s invocation of the disparity in bargaining power could not alter the effect of the ASA in his favour.