The High Court of Australia has overturned a Full Court of the Federal Court of Australia judgement which found two truck drivers who were employed in the 1970s but became contractors in 1986 were in fact contractors, and not employees, and therefore not entitled to superannuation and long service leave provisions.
The ZG Operations v Jamsek Ors case involved claims by two drivers who after being employed as truck drivers in 1977 transitioned to become contractors in 1986. This transition involved them purchasing their own trucks, paying the maintenance, providing the delivery services and then invoicing the company.
In 2017 the drivers’ contracts with ZG Operations were terminated and the drivers launched action in the Federal Court of Australia seeking entitlements under the Fair Work Act 2009, as well as long service leave and superannuation.
The Federal Court initially determined the truck drivers were independent contractors but upon appeal to the Full Court of the Federal Court of Australia it was decided that they were employees. The High Court of Australia has now overturned that decision.
Charles Watson, The Real Media Collective’s General Manager of IR, Policy and Governance, said the ruling emphasises the importance of clarity when it comes to contracts.
“Clarity in contracts is really important for employers and employees and the principal and the contractor. The contract, whatever the relationship, needs to really reflect the actual nature of what was intended. If someone is meant to be a casual than it should be clearly stated in the contractual terms – you are a casual – and then elaborate on that,” Watson told Sprinter.
“The (Jamesk) relationship went back to the 1970s so it was probably going to be a handshake deal at the time and not very clear what the relationship was. The contractual terms about the relationship are so important in any employment or contracting relationship. That is the first thing the court will look at, ‘what does the contract say’, and if it doesn’t really clarify it then the court is going to have to make a decision on other factors.”
In a separate case, Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd, the High Court also unanimously held that a backpacker engaged by a labour hire business to work as a labourer on a construction site was not a genuine independent contractor.
Ai Group CEO Innes Willox said the decision in both cases will provide certainty for businesses which have been faced with an increase in arguments that people engaged as independent contractors have been misclassified and are entitled to the benefits of those employed as employees.
“The High Court’s decision is sensible, practical and fair. The outcome will increase business certainty and investment and will consequently be good for jobs,” Willox said.
“Applying the same principle, the High Court in a separate decision determined that a young backpacker engaged by a labour hire business to work as a labourer on construction sites was not a genuine independent contractor. The Court held that the business exerted a very high degree of control over the work of the labourer and therefore the labourer was not a genuine independent contractor.
“The High Court’s decisions highlight the ongoing workability and appropriateness of the common law tests that distinguish between an employee and an independent contractor.”
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