Independent Contractors

The difference between an independent contractor and employee is not as straightforward as people may believe. The provision of services and issuing of an invoice for payment for work performed does not exclusively mean that the individual is considered an independent contractor. Contractors often negotiate their own fees and working arrangements and they have the freedom of working for multiple employers simultaneously. They generally provide their ABN to the business, decide on when and how they perform  their work and use their own equipment.  This will likely lead to a number of different contracts and workplace relationships developing between companies and workers and it may become difficult to stay on top of it all. Independent contractors are afforded narrow workplace rights, but are still protected against adverse action in the workplace.   General Protections are provided by the Independent Contractors Act 2006 in conjunction with the Fair Work Act 2009.

 

There have recently been a number of important court decisions outlining whether a person is a contractor, casual or employee.

Eddie Kaplan v Unique Nutrition Kitchen Pty Ltd T/A Badman Fitness [2019] FWC 8344

  • The Fair Work Commission ordered a remedy to the Applicant after it was determined he engaged in work as an employee rather than independent contractor and was subsequently dismissed.
  • The Applicant brought an unfair dismissal application against the Respondent under s 394 of the Fair Work Act 2009.
  • The Applicant worked as a personal trainer for five years but was made redundant because of customer complaints and business slowing.
  • Despite the business informing the Applicant that he was an independent contractor, the surrounding circumstances of his employment suggested he was an employee.
  • The business supplied equipment, uniform, hours of work and software and other perks.
  • As a result, the business did not go to sufficient lengths to engage in a genuine consultation process with the Applicant with respect to his redundancy, nor any performance issues or allegations of misconduct against the Applicant.
  • Termination was found to be unfair and four weeks of remuneration and 9.5% of superannuation was granted to the Applicant.
  • Employers must know the difference between independent contractors and employees.

 

 

 


 

 

 

 


Tomer Rabba v PeleGuy Pty Ltd T/A PeleGuy [2013] FWC 70

  • The Applicant claimed that he was unfairly dismissed on the basis that the termination of his employment was harsh, unjust or unreasonable under s 394 of the Fair Work Act 2009.
  • The Respondent (PeleGuy Pty Ltd) raised a jurisdictional objection to this application.
  • The Respondent alleged the Applicant was engaged as an independent contractor and not an employee of the company.
  • The Respondent sold products to convenience stores and petrol stations and engaged the Applicant to work for almost four years.
  • Applicant was paid solely on commission and there was no written contract, nor did he receive holiday pay, personal leave or superannuation.
  • The Applicant worked exclusively for the Respondent and was subject to supervision.
  • Although there was substantial reason to believe the Applicant was an independent contractor, he was not conducting his own business.
  • The Applicant was an integral part of the Respondent’s business and was subjected to control of the Respondent.
  • The determining factor of an employment relationship is whether the employer exercises, or has the right to exercise, control over the manner in which the employee/contractor work is performed, place of work, hours of work and the like.
  • It was held the Applicant was an employee of the Respondent, and the objection was dismissed.

Areas such as superannuation, method of payment, and the degree of control over work vary for regular employees and independent contractors, however there is no single indicator and each case turns on its own merits.

PH Solicitor can provide advice to employers who are utilising an independent contractor in their workplace, and can also provide advice to contractors who are working for several employers.