Making sure you have engaged people in your business within the right structure and framework is a crucial part of meeting your legal obligations in running your business.

There are various ways to engage workers, depending on the needs of the business, including as permanent employees, fixed term/project employees, casual employees, contractors and labour hire personnel.

How you engage people in your business is dependant on clearly understanding how the work needs to be performed.   Your business may require workers to perform work on a regular (or semi-regular) basis, on an “as needs” basis or perform one specific task.  The type of engagement determines a worker’s ability to access or preclusion of certain entitlements, including paid leave entitlements.  It’s crucial to get this right first time so that you can meet your legal obligations under employment legislation. Businesses need to be careful they are not improperly categorising employees as independent contractors. It is important to consider the needs of the business in determining whether engagement of a worker should be characterised as an independent contractor or an employee.  At times it may be difficult to distinguish between the two types of engagements and if we look to the Courts to understand the various factors they have considered fators to assist in determining the true characterisation of a worker, we can begin to see the important elements we need to be aware and take these into consideration when setting workers up in your business.

A leading case in this matter heard by the High Court was Hollis v Vabu Pty Ltd (2001) 181 ALR 263. When determining whether a worker is properly characterised as an employee or independent contractor, the Court examined the “totality of the relationship” in question and a multi-factor assessment. This means the factors are to be viewed holistically with no single factor being determinative and include the following:

You will need to carefully consider the entirety of your relationship with workers within your business and ensure that any workers engaged as independent contractors are correctly characterised as independent contractors.  Mischaracterisation of employees as independent contractors may result in your business contravening the Fair Work Act 2009 and being subject to pecuniary penalties.

It is important to note an appeal of the Full Federal Court decision in Jamsek v ZG Operations Australia Pty Ltd [2020] FCAFC 119 was heard by the High Court on 1 September 2021 and is expected to be handed down in or around early 2022. It will deal with the employee and independent contractor landscape and may alter it as we know it, resulting in many workers who are currently treated as independent contractors held to be employees. Keep an eye out for our article on this once the decision has been handed down.

It can be difficult to navigate the complex landscape of employee versus contractor.  We can provide assistance to help you in determining whether a worker is correctly characterised as a contractor, or any other employment law related advice.  Please contact our Workplace Relations team today to make an appointment to discuss your individual circumstances and how we can assist.

[1] Hollis v Vabu Pty Ltd (2001) 181 ALR 263.