MARCH
Understanding the differences between employees and contractors: High Court says look no further than the contract
The High Court has recently handed down two significant decisions concerning the test to be applied when distinguishing between employees vs contractors.
In ZG Operations Australia Pty Ltd v Jamsek (Jamsek) and CFMMEU & Anor v Personnel Contracting Pty Ltd (Personnel Contracting) the High Court attached particular significance to the rights and duties of the parties as set out in the contracts between the parties. This represents a change from the courts previous approach of giving consideration to the terms of a contract a somewhat equal weighting to other factors such as the conduct between the parties in practice and the relationship as a whole.
In Jamsek, a trucking company appealed a decision of the full Federal Court that found that two truck drivers who had been engaged by the company for more than 20 years as independent contractors were in fact employees.
In Personnel Contracting, a labour-hire company engaged a labourer for one of its clients. The relationship was entered into under an ‘Administrative Services Agreement’ which described the labourer as a ‘self-employed contractor’.
Having reviewed the respective contracts each case was decided as follows:
- In Jamsek it was found that the drivers entering into the contracts to become independent contractors, when they had previously been employees, and entering into the contract through partnerships set up for that specific purpose demonstrated an intention by the parties for this to be an independent contracting arrangement.
- In Personnel Contracting it was found that despite being labelled a ‘contractor’ in the contract the level of control and power to direct the labourer under that contract led to a conclusion that the labourer would be more appropriately characterised as an employee.
For employers, these cases serve as a timely reminder of the importance of having your contracts carefully reviewed to ensure that they reflect the employment or contractor relationship as the case may be. It is important to remember that the employee/contractor distinction has significant implications for compliance with Fair Work Act obligations, workers compensation legislation and for payroll tax liability.
Excessive texter sacked after sending ‘unacceptable’ amount of personal texts on work time
The Fair Work Commission (Commission) has upheld the procedurally flawed sacking of a health and safety manager, after phone records revealed she sent an ‘extraordinary and unacceptable’ amount of text messages while at work. The manager had been attempting to grow her side business. However, the manager accused her employer, Clear Day Pty Ltd (Clear Day) of unfairly dismissing her, arguing that the business had ‘unfairly determined’ that her personal texting was excessive.
However, Commissioner Hunt ordered the production of the employee’s phone records, which revealed that the employee had sent upwards of 73 personal text messages in just over four hours on one day, with similar excessive use over most days. Finding that the amount of text messages the employee sent, ‘let alone received and read, was extraordinary and unacceptable’, Commissioner Hunt determined that Clear Day even had ‘numerous valid reasons’ to dismiss the employee, including her apparent failure to dedicate the whole of her working time to performing her duties. However, there were some procedural deficiencies in the dismissal, including that Clear Day did not provide a written warning, or offer the employee a chance to respond to the reasons for her dismissal.
The Commission found that there was ‘no doubt’ a written warning should have been issued, however, the procedural deficiencies in the termination process did not outweigh the ‘serious’ reasons for dismissal. The Commission therefore found the dismissal was not ‘unfair’ in the circumstances.
Proposed Victorian legislation will require employers to implement ‘prevention plans’ for psycho-social hazards
Proposed legislation in Victoria will, if implemented, require employers to take further steps to prevent against psychological health and safety risks within their workplaces. The legislation will seek to require employers who identify psycho-social hazards (with specific examples including aggressive behaviour, bullying, high job demands etc) to compile a written plan detailing how the business intends to deal with the risks associated with each hazard, identifies control measures, and outlines an implementation plan for each control measure, in addition to detailing the workforce consultation undertaken.
Additional changes proposed within the draft legislation will require employers to:
- produce the plan to WorkSafe Victoria on request; and
- report all ‘reportable psychosocial complaints’ to WorkSafe every 6 months (such as aggressive behavior or bullying complaints).
WorkSafe Victoria says the proposed changes are aimed at putting ‘psychosocial hazards on equal footing with physical hazards and recognise that they can be just as harmful to employees' safety and wellbeing.’ However, there is no denying that the proposed changes place a significantly higher burden on employers to manage difficult psycho-social hazards within the workplace, despite the general duty for employers to provide and maintain a safe working environment, so far as is reasonably practicable, already extending to protect psychological health. Given this, employers should be minded to watch this space, and stay up to date with their obligations in relation to psycho-social risk management. The proposed legislation is open for public consultation until 31 March 2022.
Parliamentary Committee recommends for Legislature to reject the NSW Workers Compensation Amendment Bill 2021
Earlier this year, the New South Wales Government introduced the Workers Compensation Amendment Bill 2021 (the Bill), seeking to remove the rebuttable presumption under s 19B of the Workers Compensation Act 1987 (NSW) that, when making compensation claims, workers in prescribed industries who are diagnosed with COVID-19 are presumed to have contracted the disease in the course of employment. The Parliamentary Committee conducting an inquiry into the Bill has now tabled its report to the Legislative Council, recommending that the Bill be rejected.
The Committee found that the Government’s ‘financial case’ for the Bill had not been made out. The Government had told Parliament that s 19B would cost the workers compensation scheme of $638 million and increase average premiums for small businesses of $950. After assessing evidence from SIRA and iCare regarding current modelling, the Committee commented that the evidence before it ‘does not support these figures.’
The Committee argued that the timing is inappropriate to withdraw support from workers in frontline industries and occupations. It commented that the measures ‘would shift the financial burden’ of COVID-19 ‘entirely from government and employers onto workers’, which would affect workers especially in ‘casual positions and precarious employment.’ The Committee chastised the Government for proposing to repeal s 19B without exploring alternatives to support affected workers.
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