Defining the Undefinable. Pursuing the illusive definitions of “independent contracting” and “employment”.

In the lead up to the 2016 federal election, the ALP committed “to work with workplace relations experts and practitioners, employers and unions to develop a definition of independent contracting that will provide certainty to workers and employers”[1]. Despite losing the election, there are still plenty of people involved in state and industry politics, who would like to do much the same thing.

So, let me explain why I think that heroic attempts to define independent contracting and employment are futile; and quite possibly counter productive, other than to reveal what the workplace relations experts already know – namely that the terms are neither defined nor definable.

If someone asked you to define a suitable candidate, you might respond by saying that there is no single definition; that it’s a matter of evaluation based on all of the circumstances – the totality of the client/job/candidate match – and that there are tests that skilled recruiters use to evaluate whether a candidate meets that description.

In short, you might say it is a matter of description and evaluation rather than of definition.

Well, I would say the same thing if you asked me to define an independent contractor – even to do so in contradistinction to an employee.

And let me just emphasise the word, “independent” here. It’s as important to the task as the word, “suitable” is to your evaluation of a suitable candidate. Employees and independent contractors are both “contractors” when you come to think about it. They’re both engaged under a contract of one sort or another. The trick is to distinguish between different types of contractors – those who are independent and those who are not (and who might therefore be employees).

When I am teaching this to my employment law students, I use the classic legal dualism, which distinguishes between a contract of service and a contract for services.

I explain that the concept of service is relational and that it evokes older ideas of master and servant – where one enters into the service of another, becoming willing to be commanded (or controlled) and to obey.

The concept of services is perhaps closer to what you would encounter in consumer law, where services, as in the expression goods and services, are rights, benefits, privileges, or facilities supplied in trade or commerce. That is, the term has more of a business connotation, which helps to explain the approach adopted by the Federal Court in On-Call Interpreters (No 3)(2011)[2] and more recently in Grouped Property Services (2016).

In the latter case, Katzman J said:

“A contract of employment is based on personal service. Shortly put, the difference between an employee and an independent contractor is ‘rooted fundamentally in the difference between a person who serves his employer in his, the employer’s, business, and a person who carries on a trade or business of his own’”[3]

In On-Call Interpreters, Bromberg J explained the importance of sticking with the descriptive approach rather than attempting to define the undefinable.

Because of the multiplicity and diversity of work arrangements and the ingenuity of those fostering disguised relationships, there is value in a multi-factorial test which recognises that one spotlight will not necessarily adequately illuminate the totality of the relationship. Such an approach also involves what may be described as a ‘smell test’, or a level of intuition. The majority in Hollis described the notion that bicycle couriers were each running their own business as “intuitively unsound”.

Lord Wedderburn referred to the use by courts of the multi-factorial test of looking at the whole picture as the “elephant-test” – an animal too difficult to define but easy to recognise when you see it: ….

elephant-10-2“The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another.”

So the courts are saying that if you want to see the elephant clearly, don’t try to get too close. You can’t define these terms. And quite frankly, you wouldn’t want to; because if ever you did, you would consign fluid, dynamic, productive and adaptable work relationships to a rigid and sterile classification that exists only for its own benefit and that of its promoters.

 

Andrew C. Wood

14 September, 2016

 

[1] Labor: Rights at Work (2016) http://www.alp.org.au/rightsatwork

[2] On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366

[3] Fair Work Ombudsman v Grouped Property Services Pty Ltd [2016] FCA 1034 per Katzman J at [41]

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