Fair Work Ombudsman fails in appeal to deem workers in employee relationship

Fair Work Ombudsman fails in appeal to deem workers in employee relationship

The Federal Court has rejected an appeal claim from the Fair Work Ombudsman that an earlier court ruling affirming that four workers were legitimately engaged as independent contractors.

The appeal, before Justice John Logan, reaffirms the principles espoused in two recent High Court decisions in ZG Operations Pty Ltd v Jamsek and Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd.

As noted by Justice Logan, in referring to those cases:

For the present, it is sufficient to note that each of those cases instructs that where the terms of a party’s relationship have been committed comprehensively to a written contract, the validity of which is not challenged as a sham, and where the terms of that contract have not been varied, waived or the subject of an estoppel, the legal rights and obligations established by that contract are decisive of the character of their relationship. Further, those cases confirm that a description in a written contract by the parties, of the nature  of their relationship, is not decisive as to the nature of that relationship if, properly construed, the terms of the contract tell otherwise.”

The initial decision involved a determination that four delivery drivers engaged by Avert Logistics Pty Ltd (Avert) were engaged correctly by the company as independent contractors.

In his decision, Justice Logan reviewed all elements of the contractual arrangements between the drivers, referred to by the term ‘Contractor/Supplier’ and Avert ‘The Principal’, and deemed them independent contractors rather than employees.

The Honourable Justices’ determination was based on the following key points:

  • There was no suggestion that the contract was considered a sham by either party;

  • The contract contemplated the four were either corporations themselves or willing to be incorporated and provide an Australian Company Number (ACN);

  • The freedom to provide replacements drivers to perform the deliveries;

  • The requirement to maintain vehicle registration and full comprehensive insurance;

  • The ability to undertake work for other parties; and

  • The requirement to indemnify Avert against losses, liabilities, claims and expenses.

Further, Justice Logan also noted critically that, “if one steps back and looks at the terms of the contract, the four individuals concerned are rendering driving services via vehicles for which they pay registration to Avert”.

The appeal was dismissed.

Fair Work Ombudsman v Avert Logistics Pty Ltd [2022] FCA 841 (4 July 2022)

For queries about employees, independent contractors, legal relationships, or other employment questions, please contact Dean Cameron at Workforce Advisory Lawyers – We Know Employment Law on 1300 925 529, 0417 622 178 or via email to dean.cameron@workforceadvisory.com.au

Disclaimer: This information is provided as general advice on workplace relations and employment law. It does not constitute legal advice, and it is always advisable to seek further information regarding specific workplace issues. Liability limited by a scheme approved under professional standards legislation.

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