Peter Punch, Partner at Carroll & O’Dea Lawyers, explores the ongoing complexity of the “independent contractor v employee” issue and argues that time (and plenty of case law) has not necessarily clarified this vexed issue.
I don’t know whether it is just coincidence or a real trend that over the last 12 months or so the number of times that I have had to visit the old “independent contractor v employee” issue (in various contexts) has been very noticeable.
The issue has been around since forever — the High Court dealt with it in the Zuijs Brothers case during the height of the Great Depression 80 years ago. But despite the enormous volume of case law, the dead weight of erudite and learned articles and special legislative provisions trying to clarify (but usually only complicating) the issue, the High Court was still called on to decide the issue with another form of “performer” — the “Crisis Couriers” bicycle riders in 2001. And still the dialogue goes on and on…
In this context I have to recommend to everyone that they read the very interesting contribution by Justice Bromberg in his judgment in the On Call Translators and Linguists case  FCA 366 at paragraphs 188 to 220, where he reviews the case law and reminds us of the various attempts by judges from the lowest to the highest courts to find a formula or even a form of words that will define the almost undefinable – cases that talk about something quaking like a duck and thus being a duck even if you call it something else; cases that say that employment is like an elephant, hard to define but you know it when you see it; and cases that apply what his Honour called “the smell test” (and which the High Court a little more elegantly labelled “the intuition” or “totality” test).
I believe this is a problem for Government to solve and that indeed the resolution of it would be a real micro economic reform – over the years Governments have tried to solve it but it has always been merely “tinkering” – and at the national level usually to extend the definition to protect the Commonwealth’s tax revenue (or more recently to ensure that superannuation gets to all the “workers” it needs to).
Justice Bromberg has proposed a new form of the test (see para 208 of the judgment) which focuses on whether the worker, as a practical matter, is operating as an entrepreneur with his/her own business and is the work being performed as a representative of that business rather than the business being worked for?
That test is, with respect, a good attempt at dealing with the issue, but it probably would not be well received in many quarters (including among the very many people who are “sole traders“ who like operating as a contractor for a variety of reasons – eg flexibility, independence, life style). These days, there is a great deal of interest in contracting, and I note that Federal Magistrate Driver has put the view (in Vella v Integral Energy  FMCA 6) that if an arrangement is not a sham and not an exploitation of a person’s labour, then if the contract could be either employment or independent contract, the courts ought to respect the parties agreement that it be independent contract (see para 9).
This issue has also attracted the attention of the new Building and Construction Industry Commissioner, Lee Johns, who has conducted an enquiry into sham contracting in the building and construction industry. My hope is that his report might be an opportunity for real reform. But I am not sure it has any political “mileage “ in it, so we may be disappointed.