Contractor drivers deemed employees

Rosa Raco, Principal & Katherine Taylor, Law Student

Last week, in Jamsek v ZG Operations Australia Pty Ltd [2020] FCAFC 119, a Full Federal Court upheld an appeal by two contracted truck drivers who had pursued unpaid leave and unpaid superannuation entitlements after 40 years of exclusive work under the guise of contractors for a multinational company.

In the leading judgment by Justice Stewart Anderson, he explained that an employment relationship is not solely characterised by the terms of a written contract, but by the substance of the relationship. He reasoned, “An evaluation of the totality of the relationship between the parties in the present case requires the court to assess what the parties in fact did over the nearly 40 years of their relationship.”

Courts use the ‘multifactorial test’ to determine, on the totality of the relationship between the parties, whether a worker is in fact an employee and therefore entitled to employee conditions such as paid leave, and superannuation. The factors considered include the degree of control over the operation and hours of work, a workers’ freedom to work for others, whether the workers use and provide their own tools, and whether workers wear the logo the business for whom they are performing the work. This last factor can go towards the generating “good will” – is the worker generating good will for their own business or for the principal contractor? These factors, and others, are weighed by the Court against written contracts and intentions of the parties, to determine the nature of the relationship in its “totality”. Where factors that meet the conditions of employment outweigh others, regardless of whether a written contract states otherwise, the relationship may well be considered an employment relationship.

The Court in this case observed that, significantly, the drivers:

• Worked exclusively for the multinational company for 40 years;
• Worked full time and “more or less regular hours with a constant set of duties and working arrangements”;
• Carried the Principal Contractor’s business logo on their trucks and clothes for a substantial part of the relationship;
• Would undertake duties outside of their contractual agreements at the request by management, which included assisting warehouse employees with clean up during stocktake; and
• Did not possess good will. The absence of which “is a potential indicator that the good will is possessed by the employer and hence that the business being conducted is the employer’s business.” [Justice Nye Perram].

Justice Anderson stated that these factors “cannot be characterised as engaging in entrepreneurial or profit motivated activity, which is a hallmark of an independent business.”

This article has been prepared for information purposes only and is not legal advice. Please contact WR Law directly for legal advice regarding your specific circumstances

The drivers were found by the Court to be ‘employees’ under the Fair Work Act 2009 and the Superannuation Guarantee [Administration] Act 1992,and ‘workers’ within the meaning of the NSW Long Service Leave Act 1955.

Determining the legal status of independent contractors – particularly with the rise of the gig economy – is an important and difficult task for workers and businesses alike. The legal status of workers will identity, obligations, rights and protections under Australian work laws.

If you are unsure about the legal status of your workers, or as a contractor, WR Law can assist you to identify or ensure your obligations and rights. As we like to say, Get the right advice, and get it early!

This article has been prepared by WR Law for information purposes only and is not legal advice. Please contact WR Law directly for legal advice regarding your specific circumstances

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