High Court to hear union’s appeal on independent contractor

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High Court to hear union’s appeal on independent contractor

In what may prove a significant test case for the building industry, the High Court has recently granted the CFMMEU special leave to appeal an earlier full Federal Court ruling that a builder engaged through a labour-hire company was an independent contractor. The union has previously failed to convince both a single judge and the full bench on appeal that a British backpacker should be considered an employee.

The worker had performed general labouring duties on several sites in Perth during 2016 and 2017. He was hired by a company, Construct, whose activities were described in the initial decision as “a company which organises for workers to work at the sites of its clients, under the supervision of the client”. At any one time, Construct has about 1,000 workers on its books and between 300 and 350 of its workers working at clients’ sites. Hanssen is a client of Construct, and in the relevant year (2017) accounted for approximately 75 percent of all workers supplied to clients by Construct.

At the heart of the relationship was a written agreement signed by the worker and Construct called an “Administrative Services Agreement” (ASA). Some of the key terms of the ASA include describing him as an independent contractor, requiring him to provide tools, allowing him to refuse work, and paying a flat hourly rate in lieu of any leave or statutory entitlements that would exist in a traditional employer-employee relationship.

The union unsuccessfully claimed before Justice O’Callaghan that the arrangement was a sham that failed to reflect the true nature of the relationship. Central to the decision was the nature of control, with Justice O’Callaghan essentially accepting Construct’s argument that Hanssen, not it, controlled all aspects of work at site, and that it was the leading hand and others working for Hanssen who directed the worker what work he was to do, and when and how he was to do it. Construct says that it had no control over the way that he carried out his work and that the worker was free to work when he pleased, both being key indicators that he is not its employee.

Also significant to Justice O’Callaghan was the nature of the relationship as initially contemplated by the parties themselves. As he commented,

“it is always important to pay close regard to the way in which the parties have characterised their relationship. … The parties cannot deem the character of their relationship to be something it is not … However, when the competing indicia are reasonably evenly balanced, the parties’ own understanding of their relationship may be decisive.”

The Full Bench comprising Justices Allsop, Jagot, and Lee reviewed much of the common law relevant to this case but collectively dismissed the appeal as they could not find that the decision was plainly wrong and that it should not be followed.

With leave granted, the decision about the worker’s true employment status will be determined by the High Court. We will provide further details of that decision as it occurs.

Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2019] FCA 1806 (6 November 2019)

Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2020] FCAFC 122 (17 July 2020)

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 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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