‘Independence’ key aspect of Independent Contracting arrangement
Posted on August 25, 2020
In a recent decision, Jamsek v ZG Operations Australia Pty Ltd [2020] FCAFC 1934, the Full Federal Court found that two drivers engaged as independent contractors for 35 years were in fact employees, thus entitled to 35 years’ worth of permanent employee entitlements, such as annual leave and long service leave.
The drivers were held to be employees despite key factors weighing in favour of an independent contracting arrangement, including:
- The drivers were engaged as partnerships, remitted GST and split income with their wives;
- They were engaged by several written contracts over the years describing them as ‘contract carriers’;
- They personally made significant investments in their trucks;
- They had some control over their work; and
- They could arrange for substitute drivers.
Despite this, the Court found that the drivers actually had no real independence. That is, for approximately 35 years they were required to work from 6 am to 3 pm, Monday to Friday and had no time to work for another business.
The Court also found that the drivers had no real control in respect of the key aspects of their work. The business effectively dictated their hours, how they would perform the work, the remuneration they received, when they could take annual leave as well as other key rights and obligations. The drivers also never worked for another business, meaning they could not generate goodwill.
This case indicates that a substantial degree of independence and control may be required in order to establish an independent contracting arrangement. Further, the existence of an entity, such as a partnership, does not preclude the employment relationship.
Employers should be aware that each case is unique and needs to be assessed in its own right. Employers should regularly review their independent contracting arrangements and seek advice accordingly.
If you require assistance in reviewing your current independent contractor arrangements please contact the Workplace Relations team at Lynch Meyer Lawyers.