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High Court ruling on workplace contracts

In February, the High Court made two important decisions about workplace contracts that will have big implications for workers.

The two rulings by the High Court in the cases of ZG Operations Australia Pty Ltd v Jamsek and Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd are significant because they emphasise the importance of written contracts.

University of Adelaide law professor Andrew Stewart said the reasoning in the two cases was especially important as they put a big emphasis on the wording of the contracts themselves.

“If you’ve undertaken to do some work on the basis of a comprehensive set of written terms, it’s those terms which will be the basis for determining whether or not you’re an employee or an independent contractor, not the reality of your working arrangements,” he said.

“That is a big shift.”

Why it is a big shift? Because the last time the High Court looked at this issue was in 2001, in Hollis v Vabu Pty Ltd and, since then, the practice has grown up of courts emphasising the need to look beyond the contract and to look at the way in which a working arrangement actually operates.

Professor Stewart said the High Court was saying that was wrong. If you have a written contract, the contract is what matters.

This had become a contested area of common law and the High Court has cleaned it up.

“It’s basically giving a green light to businesses to source work from contractors, rather than employees, with a much lower level of risk than existed before [these rulings],” he said.

“It’s taking a very formalist view. It’s taking a view [that] is very much pro-business in its general implications.”

Innes Willox, Ai Group chief executive said it means common law tests that distinguish between an employee and independent contractor remain appropriate in Australia and that the rulings provided more certainty for businesses.

Regarding the case of the two truck drivers, he said the decision would especially provide more certainty to businesses that have been faced with an increase in arguments that people who have been engaged as independent contractors have been misclassified and are entitled to the benefits of those employed as employees.

“The High Court’s decision is sensible, practical and fair,” he said.

“Applying the same principle, the High Court — in a separate decision — determined that a young backpacker engaged by a labour hire business to work as a labourer on construction sites was not a genuine independent contractor.

“The Court held that the business exerted a very high degree of control over the work of the labourer and, therefore, the labourer was not a genuine independent contractor.

“The High Court’s decisions highlight the ongoing workability and appropriateness of the common law tests that distinguish between an employee and an independent contractor,” Mr Willox said.

You can read more on the rulings here:


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