In a much-awaited judgment handed down on Wednesday, the High Court of Australia has allowed an appeal and overturned a decision from the Full Federal Court of Australia, ruling in favour of employers in determining that two truck drivers were independent contractors, as opposed to employees.
The High Court has upheld the primacy of, and illustrated a shift towards an emphasis on, a written agreement to establish the legal character of the work relationship. This has highlighted a shift away from the well-established multi-factorial test.
This decision could not have come at a more crucial and controversial time, where the gig economy is in crucial need for new regulation. This ruling will undoubtedly have profound impacts on a magnitude of companies today, such as Uber and Deliveroo, who have grappled with the employee v independent contractor title to date.
The issue of whether a worker is an employee or independent contractor has presented as a complex determination. Previously, the courts have placed emphasis on looking to the ‘totality’ of the relationship to determine the employment relationship, rather than to the written terms of the agreement itself. Mischaracterising an employee as an independent contractor can have numerous consequences that impact the worker’s entitlements and rights.
In this week’s decision, emphasis has been placed on the terms of a written agreement. Mr Jamsek and Mr Whitby worked as truck drivers for ZG Operations for around 40 years. From 1977 to 1985, the truck drivers worked as employees for the company. In 1986, they entered into independent contractor agreements. Under this agreement, the men would purchase their own trucks and invoice the company for their delivery services provided.
In 2017, the agreement between the men and the Company was terminated. Thereafter, the Respondents initiated proceedings in the Federal Court seeking their statutory entitlements owed to them as employees of the company under the Fair Work Act 2009 (Cth).
Mr Jamsek and Mr Whitby were required to be available to ZG Operations for work five days per week, nine hours per day. The men drove trucks with the company logo, and also wore branded clothing. The Full Federal Court found that the two truck drivers were employees.
Despite these circumstances, Chief Justice Kiefel, Justice Keane and Justice Edelman jointly found that, “The respondents were not employed by the company. They were members of partnerships which carried on the business of providing delivery services to the company.”
The decision strengthens the ability for employers to defend written agreements to determine an employment relationship. It can be inferred that the courts will adopt the orthodox approach to contract interpretation. The ramifications of this decision on the gig economy will undoubtedly ensue.
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