High Court to hear employer’s appeal on independent truckies as employees
Shaping up to be another significant test case in determining the factors to consider when classifying workers as employees versus independent contractors, the High Court has recently granted an employer special leave to appeal an earlier full Federal Court ruling that two truck drivers should be classified as employees, therefore giving them entitlements to both unpaid leave and superannuation. The employer had initially convinced a single judge that their classification as independent contractors was valid; however, this was overturned on appeal to the full Federal Court.
The High Court intends to hear the appeal concurrently with the Personnel Contracting case involving a British backpacker working as a labourer on Perth building sites, who had been deemed to be an independent contractor.
The two truck drivers owned and operated their own work vehicles and undertook the delivery of goods on behalf of ZG Operations Australia (ZG) and several earlier entities. For the majority of their engagements, the operators worked regular 9-hour shifts Monday to Friday, for which they charged flat rates. Their vehicles displayed ZG logos, as did their workwear; they supplied their own insurances and charged GST on goods and services delivered.
The operators from the beginning had operated as separate Partnerships with their wives and only provided services to ZG for a continuous period of nearly 40 years. In overturning the Primary Judgement that upheld their status as independent contractors, the Federal Court Full Bench were persuaded by several key factors:
The provision of services by the Partnerships, rather than the individual, did not reflect the arrangements as it was held that the purpose was effectively to enable splitting and for the spouse to gain tax advantages. Further; the Partners did not actively contribute to the arrangements as payments were primarily made for the delivery services (drivers);
ZG was held to exercise control over the operators, based on the regularity of the hours and the length of the ongoing relationship between the parties;
The requirement to wear company logos and, at various times, ensure company logos were present on their vehicles;
The ability to subcontract or delegate their work, or undertake work for others, was theoretical only, at best. It would be practically impossible for them after working their standard 9 hours, plus the factual issue of ZG being their only source of income for nearly 40 years;
If the operators sold their trucks, `goodwill’ would not have been seen as part of the sale (diminishing the notion of them operating as separate businesses); and
In the event of a sale, there was no guarantee of continuing to contract with ZG.
The High Court is likely to hear the appeal later in 2021. We will provide a summary of the ultimate decision at that time.
For queries about employees and independent contractors, or other employment questions, please contact Dean Cameron at Workforce Advisory Lawyers – We Know Employment Law on 1300 WAL LAW, 0417 622 178 or via email to firstname.lastname@example.org
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.