Yesterday, the High Court handed down its decision in the long-awaited case of CFMMEU v Personnel Contracting. It was a win for the Union. The worker turned out to be an employee, and not an Odco contractor. Over the next few days, the judgment will be pulled apart and more detailed lessons taken from it.  But, for now, here is a quick summary.

Trial

A young UK backpacker, who “had no aspect of a business or intended business, no expressed desire to act in any capacity other than as a builder’s labourer, and merely sought remuneration for the deployment of his labour on a building site supervised, directed and controlled by the builder” was characterised, at first instance, as an independent contractor on an application of the multi-factor test and Odco principles.

First Appeal

The Full Court of the Federal Court of Australia upheld the finding despite the absence of any business clearly having been carried on by the worker. However, in doing so, the Chief Justice expressed a preference for a different outcome though feeling constrained by intermediate appellate decisions which had previously supported Odco contracting arrangements.

High Court – A duck is still duck, call it what you will

The High Court allowed the appeal and held that the worker was an employee.

The essence of the High Court’s decision appears at paras [89] and [90] of the joint judgment of Kiefel CJ, Keane and Edelman JJ.

“[89] … Mr McCourt promised Construct to work as directed by Construct and by Construct’s customer, Hanssen. Mr McCourt was entitled to be paid by Construct in return for the work he performed pursuant to that promise. That promise to work for Construct’s customer, and his entitlement to be paid for that work, were at the core of Construct’s business of providing labour to its customers. The right to control the provision of Mr McCourt’s labour was an essential asset of that business. Mr McCourt’s performance of work for, and at the direction of, Hanssen was a direct result of the deployment by Construct of this asset in the course of its ongoing relationship with its customer.

90 In these circumstances, it is impossible to conclude other than that Mr McCourt’s work was dependent upon, and subservient to, Construct’s business. That being so, Mr McCourt’s relationship with Construct is rightly characterised as a contract of service rather than a contract for services. Mr McCourt was Construct’s employee.”

ZG Operations Australia Pty Ltd v Jamsek & Ors

The Court also delivered judgment in  the companion case of ZG Operations Australia Pty Ltd v Jamsek & Ors.

The case concerned the various entitlements of truck drivers, who derived their sole income by working for the same business for nearly 40 years – and the corresponding obligations of the company for which they worked. It’s not a labour hire case, but it raised similar characterisation questions about the role of the business test in determining whether workers are employees or independent contractors.

The workers were held to be contractors but some aspects of the case have been remitted to the Full Court of the Federal Court for Further determination.

We’ll also pull this case apart over the next few days and see what lessons can be taken from it for the recruitment & staffing industry.

Andrew C. Wood