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Issue

Whether according to the given factual circumstances of the case and the existing contract between Chris and Precision, Chris is an employee of the company or is an independent contractor?

Rule

It is significant and depends on a number of variables whether someone is an employee of a company or a contractor. These considerations range from whether the employee has access to leave time or access to regular, systematic work to whether they have control over how their job is carried out.

If a worker is an employee, both parties are obligated to perform all customary obligations associated with the employer/employee relationship. The employee will always have access to benefits including superannuation and leave entitlements. Additionally, the employer is vicariously accountable for the employee's carelessness and is required to withhold tax. However, there is no contractual relationship if the two parties are acting as a principal and an independent contractor, respectively. In that case, the law relating to independent contractors will apply.

1. A services contract that specifies the task to be done is used to hire an independent contractor. A services contract is one where at least one party is an Australian and the firm conducts business in Australia, according to the Act. A contract of this type does not resemble an employment contract at all. It is devoid of the benefits due to employees, such as annual salaries and paid time off. Instead, it is a contract between two businesses.

2. The Act2 applies (section 5) to service agreements between a principal and an independent contractor with "the requisite constitutional connection" in a manner similar to how the Fair Work Act applies to employment relationships between constitutional corporations and their employees in order to satisfy the legal requirement for the legislation.

3 .This has the effect of excluding the Act from service agreements that are related to the principal's personal or domestic affairs. As a result, the Court cannot review a lawn-mowing contract between a homeowner and a contractor, but it can review agreements between a principal that is a business and an independent contractor who works for themselves in most circumstances.

A natural (individual) person is not required to be an independent contractor, under the Independent Contractors Act 2006 (Cth). Therefore, for legal reasons, corporations, partnerships, and trusts may also be regarded as contractors. Only individuals who are engaged under a service agreement (employee) are protected by the Act; independent contractors who are engaged on an agreement to provide services are not. Due to this distinction, it is crucial to comprehend the test that separates the two groups. The multi-factor test is the type of test that Australian courts use. Courts use the multi-factor test to assess whether an individual is an independent contractor or an employee by considering all aspects of the employment relationship. Although not all of these requirements must be met, by considering all of them, the court hopes to "create a picture" that determines if the worker is an independent contractor or an employee.

Whereas Section 7 (1)(a) of the Act3 specifies that “ the rights, entitlements, obligations and liabilities of a party to a services contract are not affected by a law of a State or Territory to the extent that the law would otherwise  take or deem a party to a services contract to be an employer or employee, or otherwise treat a party to a services contract as if the party were an employer or employee, for the purposes of a law that relates to one or more workplace relations matters (or provide a means for a party to the contract to be so taken, deemed or treated).”

1. Workpac v. Rossato 4, the case that the High Court recently decided, is significant in this body of law. The High Court ruled that the written agreement constitutes the entire contract and that implied terms are not typically used. This case took an unorthodox stance and gave the written contract a lot more weight than it had in other decisions. It will be fascinating to observe how this matter is handled in subsequent rulings. The case of Workpac v. Rossato seems to show the High Court's departure from considering the nature of the client/independent contractor relationship. The court instead concentrated on the written agreements the parties made.

2. The question of whether a person was an employee or a contractor was at issue in Hollis v. Vabu 5 . Even though the contract stated that the bicycle courier driver was an independent contractor, it was determined in that case that he was actually an employee. The key factor in deciding whether a person is an employee or a contractor is the nature of the agreement (rather than the form of the contract). Surprisingly, situations that raise the issue of whether someone is an employee or a contractor usually have to do with taxes.

In the instant case, Chris’s contract with the Precision has stated that he was allowed to work for other organizations and the perks of the employment were nowhere indicative of an employment of permanent nature. The contract also states specifically that Chris was engaged on a contract for service, that he is not entitled to any form of paid leave mentioned in the National Employment Standards, and that Precision is not entitled to cover Chris for workers’ compensation or superannuation.

1. Two plaintiffs had been hired as lorry drivers by ZG Operations since the late 1970s in the case ZG Operations Australia Pty Ltd v. Jamsek 6 . They agreed to a proposal to work as contractors in 1985. In addition to having some authority over their cars, schedules, and routes, the drivers had signed contracts with ZG to perform delivery services. The drivers contended in court after their contracts were discontinued in 2017 that they were actually workers and were entitled to the perks that employees would have gotten. Their initial strategy was unsuccessful, but they prevailed on appeal. The High Court reversed that decision, concluding that the drivers were independent contractors since they had both engaged into the contractor arrangement knowing exactly what was involved.

2. The court outlined some crucial factors to take into account when deciding whether to treat someone as an employer or an independent contractor in Jiang Shen Cai trading as French Accent v. Michael Anthony Do Rozario 7 . These factors include whether they wore uniforms, furnished their own tools for the job, decided how long they worked, and received pay or billed the business instead of receiving it.

In the instant case, according to the contract, Chris was not actually entitled to the benefits that an employee would have gotten. Further, he was also not subjected to the strictures and regulations that a regular employee would have been subjected to as seen in the case of French Accent v. Michael Anthony Do Rozario 8 .

1. However, in the case of Personnel Contracting Pty Ltd v. Construction, Forestry, Maritime, Mining and Energy Union 9 , a young British backpacker was hired by a labour hire business that referred to him as a self-employed contractor. He was assigned to a building company. The construction company and the labour hire company had a formal agreement, but not the backpacker. The backpackers' union filed a lawsuit when the construction company claimed he was a contractor and refused to give him benefits as an employee. The backpacker lost at the Federal Court, but the High Court overturned that judgement and determined that the guy was an employee since he was paid to work for the construction company even though he had not signed a contract with them.

2. The Kaseris v. Rasier Pacific 10 Case was heard by the Fair Work Commission in 2017. In it, Mr. Michail Kaseris claimed that Rasier Pacific (doing business as "Uber") had fired him unfairly as a driver and brought an application for an unfair dismissal remedy under section 394 of the Fair Work Act 2009 (Cth). Uber maintained that Kaseris wasn't covered by the wrongful dismissal clause since he was an independent contractor rather than an employee. The relevant signs of an employment connection were not there, according to the Fair Work Commission, who agreed with Uber on this point.

Hence, one can clearly observe that the court of law looks for signs of an employment connection and the nature of relationship between the employer and the employee, which can be determined with the help of the written contract between the two parties. In the instant case too, the nature of employment of Chris can be determined with the help of the clauses of the contract.

Analysis

In the instant case, Chris was free to work for other businesses in the same industry, according to the contract he signed with Precision, but he was required to always be ready to fulfil the deadlines that Precision conveyed to him. Chris was employed to give training materials to Precision as needed.

1. According to the contract, Precision would not tolerate Chris missing deadlines due to other work. Chris has a permanent workstation assigned to him at Precision, along with his name, and he has adorned it with statues of owls, one of his favourite animals.

2. Laws and how they are applied change throughout time, but few areas of the law change as swiftly as those governing the terms and circumstances under which someone agrees to perform services for another person or business. It may be quite confusing to determine if someone is a "employee" or a "independent contractor"11. The solution may have significant effects on benefits, employment stability, and entitlements.

3. The Zuijs case 12 held that although the circus might instruct an acrobat on what to perform, it could not instruct the acrobat on how to accomplish it because the task needed specialised knowledge. The acrobat was identified as a contractor because the company was not in charge. In contrast, under the outdated "control test," the employer directs the employee's every action. That evolved over time into a "multifactorial test" that made use of a variety of different indications. Which include whether the employee provided their own tools, was wearing a uniform, and was given specific instructions on how and when to work.

The terms of Chris's agreement with the Precision specified that he was free to work for other businesses, and the benefits of the job were in no way consistent with a long-term one. Additionally, the contract makes it clear that Chris was hired on a contract for services that he is not eligible for any type of paid leave covered by the National Employment Standards, and that Precision is not obligated to provide workers’ compensation or retirement benefits for Chris.

In the present case, Chris has sought legal advice from an industrial attorney to determine whether he can file a claim for unfair dismissal and, concurrently, seek reimbursement under the Fair Work Act for a number of entitlements Precision Education has not honoured for the past 12 years, including annual leave, sick leave, caregiving time while his mother was dying, long service leave, and superannuation. Chris gave a copy of his contract with Precision to his attorney. Chris was free to work for other businesses in the same industry, according to the contract he signed with Precision, but he was required to always be ready to fulfil the deadlines that Precision conveyed to him. Chris was employed to give training materials to Precision as needed.

1. We could see in the aforementioned case laws that the emphasis had switched away from the contract's terms and toward closer examination of what really transpired in the relationships between the parties after the contract was signed.

2. Now, the High Court has made it plain in abovementioned rulings of case ZG Operations Australia Pty Ltd v. Jamsek 13 and Personnel Contracting Pty Ltd v. Construction, Forestry, Maritime, Mining and Energy Union 14 , that the employee/contractor dispute should be resolved by considering what the parties meant at the time the contract was formed.

3. This does not imply that when engaging into contracts of this nature, there aren't longer any intricacies that must be understood. A company should always seek reliable legal counsel in these matters.

It is however pertinent to note that according to the terms of his contract with Precision, Chris receives payment for each training "project" he completes on behalf of Precision's clients. Chris must use his ABN* to invoice Precision for the finished "project" in order to get paid. Chris refers to himself as The Training Owl on his bills. Chris lists The Training Owl and Precision Education as two of the writers on his training materials for Precision. Precision Education is the lone owner of the training programmes' copyright. Additionally, the contract makes it clear that Chris was hired on a contract for services, that he is not eligible for any type of paid leave covered by the National Employment Standards, and that Precision is not obligated to provide workers' compensation or retirement benefits for Chris.

Conclusion

Numerous variables determine whether you are an employee or an independent contractor. Independent contractors typically work for themselves and are self-employed. Employees labour for an employer who decides how, where, and when they do their tasks and who also gives them a salary. However, determining whether someone is an employee or contractor requires taking into account a number of different aspects. In exchange for abiding by the company's rules and showing loyalty, an employee is placed on the payroll and receives pay and benefits. An independent worker with autonomy and flexibility who does not get benefits like health insurance and paid time off is referred to as a contractor. Few areas of the law change as quickly as those controlling the conditions and circumstances under which someone undertakes to do services for another person or corporation15. Laws and how they are implemented vary throughout time. Determining whether someone is a "employee" or a "independent contractor" can be quite difficult. The answer may have a big impact on entitlements, work stability, and benefits.

In the instant case, according to the terms of the contract, Chris was engaged on a contract for service, and was not entitled to any benefits of the regular employee. Thus, going by the terms of contract, he was an independent contractor, and not an employee.

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