Australian High Court Emphasizes Written Contracts when Determining Employment Relationships

In recent weeks, two separate High Court decisions in Australia have established a focus on the content of the contractual arrangement, rather than adopting a multifactorial view of the contract and the day-to-day reality of the relationship. Employers should understand the implication of the two cases as their outcomes may have far-reaching impacts on the gig economy sector.  

In the case of ZG Operations Australia Pty Ltd & Anor v Jamsek & Ors [2022] HCA 2, the High Court found that two truck drivers who serviced the same company for almost 40 years were not employees. By contrast, in the case of Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1, the High Court found that a backpacker engaged via a labour-hire company to labour on building sites was in fact an employee. In both instances, the High Court overturned decisions to the contrary. 

The decisions reorient the complex debate on employee vs non-employee back to the nature of the written contract, as opposed to more recent decisions which have taken an expansive view of the contract and the way in which the individuals and companies behave over the life the engagement.   

In lay terms:  

1. Primacy is given to the duties and obligations of the written contract (…if you quack and waddle then you are a duck…)
   
   
2. How the relationship operates on a daily basis does not change the obligations of the written contract (…you can honk like a goose, but you are still a duck…)
   
   
3. However, the duties and obligations in the written contract must accurately reflect the nature of the relationship (… let’s be sure you’re really a duck in the first instance) 

In the case of Personnel Contracting, the duties and obligations within the written contract were reflective of an employment relationship – despite labelling the agreement as an ‘independent contractor agreement’. In the case of ZG Operations, the duties and obligation within the written contract were reflective of a contract relationship, despite many decades of the individuals behaving like employees. Review a summary of the decision and insights for employers here. 

Outlook: The distinctions made in the two cases are important, as they will potentially be relevant in a Deliveroo driver’s dismissal appeal case to be heard later in 2022. The outcome of that case may have far reaching impacts on the gig-economy sector. Companies should take the opportunity to review independent contractor agreements to ensure that they reflect the true relationship in both substance and name.