DRAFT FOR EMPLOYMENT LAW QUESTIONS

It is to be decided whether George is an employee or an independent contractor (IC).

When determining whether a worker is an employee, engaged under a contract of service or

an IC, under a contract for service, a control test known as the multi-factor indica test is
applied, as seen in Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 63 ALR 513 (Stevens v
Brodribb).

The multi-factor test involves examining the degree of control as one factor in determining
an overall impression of the relationship as seen in Hollis v Vabu (2001) 207 CLR 21 (Hollis
v Vabu). If the hirer does not have much control over the worker there is an assumption that
the relationship may be one of IC (Building Workers Industrial Union of Australia v Odco
Pty Ltd (Trouble-shooter case).

It could be argued that George could be seen as employee under the indica test, where the
worker does not have control over subcontracting work or delegating performance to another
worker as they unable to do so without permission of PPP (Hollis v Vabu). Additionally,
representing PPP’s control, George is required to wear uniform and display material that
associates them with the hirer’s business, such as the PPP uniform and logo (Hollis v Vabu).

However, factors laid in the indica test point to George being an IC on the basis that the
driver is to provide and maintain their own equipment to complete the task, moreover, is paid
according to task completion, at a fixed rate of $15 per delivery notwithstanding hours
worked, additionally no reception of paid holidays and sick leave (Hollis v Vabu). George is
free to operate on his own account, therefore does not have any set hours reinforced by PPP,
hence demonstrating an IC relationship. Furthermore, George can be seen as an IC as the
contract of hiring specifically describes the worker as being an IC ( ZG Operations Australia
Pty Ltd v Jamsek [2022] HCA 2).

In conclusion, the relevant factors point towards George having an IC relationship with PPP.

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Question 2 (a) Advise Hans whether there is anything he can do about this situation (5
marks).

Francesca is faced with disappointed customers, she tells them to come and see her the
following week at Cars R Us and she’ll be able to find them a suitable second hand car.

had told the customer about her new job at Cars R Us while she was working at LMW

2) a)

It is to be determined whether Francesca had breached the duty of fidelity.

Notwithstanding whether it is written into one’s contract, every employee has a duty to serve
their employer ‘faithfully’ as set in Blyth Chemicals v Bushnell (1933) 81-2. This includes an
obligation to one’s employer to not use or disclose confidential information in a way that
would be detrimental to their employer (Del Casale v Artedomus (2007) at [32]. Furthermore,
despite notice of termination of the employment relationship, the obligation remains in force
as seen in Mason Gray Strange (MGS) v Eisdell (1989).

It can therefore be argued that Francesca had breached duty of fidelity through the factor of
soliciting Han’s clients to switch the new business, (MGS v Eidsell). If the fiduciary duty was
breached by Francesca, Hans would be able to seek remedies that go beyond breach of
contract, where he would be able to obtain compensation for any loss personally suffered in
addition to the ability to seek orders that enable Francesca and any third party knowingly
associated with the wrongdoing to account for any profits made from such conduct.

But the conduct of the employee must itself involve the incompatibility, conflict, or
impediment, or be destructive of confidence.

An employee has an implied duty of fidelity to the employer not to engage in conduct which
impedes the faithful performance of his obligations, or is destructive of the necessary
confidence between employer and employee (Commonwealth Bank of Australia v Barker
(2014) 253 CLR 169)- can be grounds for dismissal -Blythe.

However whilst control is the most important factor it is the totality of the relationship between the
parties that will determine the nature of the relationship. 4

In Hollis v Vabu Pty Ltd,5

In determining whether a person is an employee or a contractor the courts consider the totality of the
relationship between the parties and not just the labels and definitions given to the relationship by the
parties. In Re Porter: Ex Parte TWU, 8 Justice Gray in determining whether truck drivers who supplied
their own vehicles were contractors or employees eloquently stated:

The parties cannot create something which has every feature of a rooster but call it a duck and insist
that everybody else recognise it as a duck

The Fair Work Commission’s (FWC) website outlines the difference between an employee and
an independent contractor, and says: “In an employment relationship, labour (being a
combination of time, skill and effort) is traded for remuneration. There is a provider, a purchaser,
an exchange and a contract containing terms and conditions that regulate the exchange.”
Although the label expressly given in a contract to the legal relationship between the parties is
important, these express contractual terms cannot take effect if such terms contradict the terms
of the contract as a whole, or as the FWC says, “the parties cannot deem the relationship
between themselves to be something it is not”.

The variance of decisions in the reported judgments serve only to show how difficult the
distinction between employee and independent contractor is to draw in practice. Whereas the
traditional control test, being just one criterion in determining employment status is
important, it is equally important also to have regard to 'the totality of the relationship'
between the parties. Close attention should be paid not only to the terms of the contract,
whetherthey be oral or in writing, but also to the systems operated by the employer.
(Muirhead & Newell, 2001).

In the world of work, contract is the legal foundation that underpins a relationship
of service or services. It is a bundle of binding rights and obligations agreed
between the parties in relation to which mutual promises of performance are made.
The law of contract is founded on consent, which is presumed to exist between
contractual parties, and enforced by the law on the basis that people who make
promises to others who rely on them ought to be held to their commitments.

First, there is no one-size-fits-all approach to the classification of employment status. When

this question arises it is unavoidable to get your hands dirty with the facts of the relationship.
Second, whenever assessing an employment relationship it must always be viewed as a
“practical matter” – care should be taken to avoid placing too high an emphasis on a single
factor that points one way or the other.

The ‘common sense’ response of the Multi Indicia Test is no longer aligned with
modern, everyday workplace contexts; therefore, more careful considerations are
required. With the advancement of technology, things have no doubt changed.
Therefore, to examine whether a worker is an employee or an independent
contractor, it is important for businesses to analyse it through the lens of a modern,
changing workplace, impacted by a new digital world.

With the notion of the traditional workplace changing with a modernising world, so too has
the employment classification test evolved. It is too simplistic to say that the classic “control
test” – that is, simply assessing what level of control an employer exercises over its workers3
– is the only consideration for the Courts. 5. For a start, the classic control test is now more
difficult to assess. Industries employing couriers, labourers, translators and technicians –
essentially, any skilled worker that is able to perform his or her services ‘off-site’ – are
examples of how (at first glance) a worker may be easily classified either way. They do not
have a boss sitting in the office next to them, capable of assessing their output by glancing
over their shoulder. These workers are moving from place to place on their own – often in
their own vehicle – and recording their own time.

This represents a move away from the ‘multi-factor’ test and a redirection to the

terms of the contract itself, and whether it gives rise to a contract for services
(forming a contractor relationship) or a contract of service (forming an
employment relationship).

An interesting aspect of the Jamsek case is that it not only departs from recent

Federal Court precedent but it also squarely distinguishes the Australian
position from that of other jurisdictions such as the United Kingdom.
(DENTON, 2015)

The ‘multi-factor’ test has made determining whether and person is a

contractor or employee complex, confusing and difficult (even for
lawyers specialising in employment law). In addition, because of the
breadth and uncertainty associated with the ‘multi-factor’ test, there
have often been inconsistent assessments of whether the same
individual should be a contractor or an employee.  

Misclassifying employees is not something any business wants to do –

especially consider the significant legal and financial penalties for
businesses who are caught out.  

The recent court decisions have provided much needed clarity for
lawyers and businesses alike (so yes to answer your question above,
businesses should be happy about the court decisions!).   In accordance
with the court’s findings and provided the terms of the relevant
contractor agreement are lawful and not a ‘sham contract’, there no
longer needs to be a broad and holistic look at the substance and reality
of the legal relationship.  Businesses may rely on the express terms and
conditions of the written contractor agreement.