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 [2011] 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 [2011] 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.

(3 votes, average: 4.00 out of 5)

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Cormack Dunn practices as a Senior Associate in the Occupational Health and Safety team at Freehills’ Sydney office. Formerly a WorkCover Inspector, Dunn has both prosecuted and defended OHS matters. He speaks to CCH about the model Work Health and Safety Regulations (WHS Regulations) and what it means for the harmonisation process.

On 7 December 2010, Safe Work Australia released a draft form of the WHS Regulations for a four-month period of public consultation. Safe Work Australia also released a series of priority Codes of Practice and an Issues Paper which provides further details about the WHS Regulations and Codes of Practice. According to Dunn, the timing of the release will mean that most parties will not realistically review the material until late January/ early February which will leave a truncated period to provide feedback to Safe Work Australia by making a formal submission.

“The timeframe for consultation makes it imperative that people don’t delay in appraising themselves of the content of the WHS Regulations and Codes of Practice and considering how these changes will impact on their operations. Very likely this period will be the only the time people have to be heard before the legislation and regulations are enacted.”

The timing of the release of the WHS Regulations and Codes of Practice also presents a challenge for their implementation. According to statements released by Safe Work Australia, the final version of the WHS Regulations will be considered by the Workplace Relations Ministers’ Council meeting in June 2011, which leaves only six months for the Commonwealth, states and territories to implement the Work Health and Safety Act (WHS Act) and WHS Regulations. Dunn points out that while this “ambitious timeframe” is tight, the political will of the participants will ultimately determine whether this deadline is met.

Dunn goes on to state that, “no one should doubt the political will of the federal government to see the OHS harmonisation process proceed according to plan. The speed and resoluteness with which [Julia] Gillard responded to [New South Wales Premier] Keneally’s announcement that NSW would retain key features of its existing OHS regime clearly demonstrates how serious the federal government is about harmonisation.”

Despite the some of the difficulties, Dunn remains a firm supporter of OHS harmonisation, describing the outcomes as a “win-win for everyone.”

“While much has been made of the fact that this new legislation will reduce compliance costs, its real benefit will be a reduction in workplace accidents. This is because the expansion of people who have a duty under the legislation will cause everyone to take a greater interest in safety matters. For this reason alone, it is in the interest of employers and workers alike that this new legislation is passed into law”.

When asked for his views about the content of the WHS Regulations, Dunn describes it as a “watershed moment” for OHS regulation in Australia.

“The WHS Regulations and Codes of Practice reflect an evolution in OHS regulation in Australia. The broader duties contained in the WHS Act are given practical and modern day application in the WHS Regulations and Codes of Practice. This is because the WHS Regulations outline what risks parties need to consider and the Codes of Practice outline what actions parties should take to address these risks.”

Dunn praises the considered approach taken by the drafters of the WHS Regulations and states that “it is clear they have been driven by a vision to make Australian workplaces safer.”

“Over the last 30 years we have gained a much deeper understanding of how safety regulation needs to be structured to produce safer workplaces. History has taught us that detailed and prescriptive legislation often doesn’t work. Instead, every workplace needs to consider what is the most effective way it can protect workers’ safety. It is clear that Safe Work Australia understands the limitations of prescriptive legislation and, via the Regulation and Codes of Practice, is encouraging every workplace to take a risk management approach.”

This is not to say that there isn’t room for improvement. Dunn thinks there are some notable Codes of Practice missing, none more obvious than a Code of Practice which provides further guidance on the new officer’s duty under the WHS Act. Dunn also sees a gap in terms of Code of Practice providing further details about the role and obligations of principal contractors.

Dunn also questions the lack of detail about transitional arrangements. The WHS Regulations do not comprehensively cover all the areas which are regulated at the moment by statute in the various states and territories. Dunn poses the question “does this mean that states and territories will only repeal only part of their existing legislation, leaving a confusing patchwork of OHS legislation behind?”

According to Dunn, these deficiencies highlight the importance of the consultation process.

“I would caution employers against being sceptical of harmonisation. Despite the noises we have heard about particular states reneging on their promise to harmonise their OHS laws, these changes are overwhelmingly supported by the wider community. Accordingly everyone should be proceeding on the basis that the new laws will become operational in January 2012. Scepticism at this stage is dangerous because it will leave you ill-prepared for these changes.”

Perhaps the lasting message for our readers is to take action now so that a watershed moment in OHS regulation doesn’t become a tsunami.

CCH Australia is working with a renowned team of experts including Cormack Dunn (Freehills), Professor Richard Johnstone (Griffith University), Professor Ron McCallum (Sydney University) and Wendy Thompson (Denham Chambers) to release a new version of the Australian Occupational Health and Safety Law service in July 2011.