Do the common law tests used to distinguish employment from independent contracting, override my decision to work for someone but not be their employee; to work for them, but not have them as my master?
We all know that there’s no longer any point in trying to define work relationships in our contracts. We can set out our respective rights and obligations; but only a court can say what the legal effect of that will be.[i] Everything else is just opinion. And, whilst some opinions are better than others, a court won’t give much weight to the label we have ascribed to our relationship – at least, not in Australia.
Is it a matter of consent rather than “labelling”?
Let’s accept, for argument’s sake, that the contract, which the court is going to interpret in order to define our work relationship, can never be any better than the consent that underpins it. So, what if, instead of “labelling” our relationship as one of “independent contract”, we were to insert a clause that made it clear that we did not consent to be an employee?
We’re talking, here, about a genuine refusal of consent to accepting the status of an employee. There’s no room for sham contracting or equivocation in this.
But, assuming that the withholding of consent is genuine, could a court, limiting its consideration of the relationship to an examination of the express terms of the contract (as it now says it must do), ignore an express withholding of consent, coupled with an interpretation provision along the lines of:
“Parties acknowledge and accept that the contractor does not consent to be an employee or to enter into any relationship of employment and reserves full capacity to perform the work required by this contract as an independent contractor (the contractor’s reservation).
The parties agree that any provision of this contract that contradicts the contractor’s reservation must be read down or severed to the extent necessary to uphold the contractor’s reservation.”[Experimental drafting for discussion purposes only]
A bit dramatic, perhaps. But would it work? Might it tip a court’s interpretation of an obligation to “co-operate”, say, from one of “control” (importing employment)[ii] in favour of one that recognises that “the parties intended to reserve to [the worker] a degree of independence and wished to avoid a relationship of subservience”.[iii]
But who wouldn’t want to be an employee?
Why might a person not consent to be an employee? Here are some reasons that reflect the unattractive status of employment under current Australian employment laws:
- I might not wish to be bound to my employer by a wide-ranging legal duty of fidelity and loyalty…
- especially as I might not wish to work under a legal relationship in respect of which the common law does not recognize an implied duty of mutual trust and confidence…[iv]
- … and is equivocal about whether my employer owes me any duty of good faith.
How are we doing so far? We might consider that we’d do better relying on a duty of good faith to the extent to which it has received some recognition in Australian commercial law. But let’s keep going…
- I might not wish to subject myself to an employer’s vaccination and other health mandates that are based on its power to command and my duty to obey what a court considers to be the employer’s reasonable and lawful directions. [Please note: I am not advocating an anti-vax position. Do I need to say that?]
- I might not wish the privacy of my personal information to be denied under the so-called “employee record exemption” in the Privacy Act.[v]
- I might not wish to be subjected to an employer’s power of control over my conduct outside the workplace.
- I might not agree with my employer’s position on matters of sustainability, politics, human rights, gender etc.
- I might have a philosophical, ideological or religious objection to being the employee of my boss.
And now, some more positive reasons…
- I might wish to maintain a greater measure of control over what work I do and how I do it.
- I might wish to maintain a measure of control over where I work (eg. from home) and when I do it.
- I might wish to preserve my intellectual property and not have it automatically vest in my employer.
- I might wish to have the assurance of small business standard form contract fairness protections in the Australian Consumer Law.
- I might wish to have the Independent Contractors Act assurance of protection against harsh and unfair terms.
- I might wish to collectively negotiate terms for the supply of my services under small business class exemption protections of the Competition & Consumer Act.
- I might want a labour hire agency to help find work for me with its clients, without being subservient to it merely because it has agreed to help me.[vi]
You might be able to think of some more. But perhaps there’s enough there to at least fairly ask the question.
It’s a shame, really…
It’s a shame that one would need to go to these lengths and raise these objections to avoid becoming an employee against one’s wishes.
In his dissenting judgment, Steward J in Personnel Contracting pointed out:
In 2005, the House of Representatives Standing Committee on Employment, Workplace Relations and Workforce Participation published the result of its inquiry into “independent contracting and labour hire arrangements”. The Standing Committee noted that the growth in “independent contracting and labour hire employment” had “clearly” indicated that it had “become a preferred employment choice for many Australians”. It also observed that “over 10 per cent of the workforce” at that time identified themselves as being “independent contractors across a wide variety of industries”.[vii]
That percentage has likely increased significantly by 2022 with the growth of the gig economy.
His Honour went on to trace the history of the development of the Independent Contractors Act 2006 (C’th), observing:
Section 3 of the Independent Contractors Act states that the objects of the Act include protecting “the freedom of independent contractors to enter into services contracts”; the recognition of “independent contracting as a legitimate form of work arrangement that is primarily commercial”; and the prevention of “interference with the terms of genuine independent contracting arrangements.”[viii]
Steward J, critical of the overturning of precedent which recognised the worker’s choice of status of an independent contractor, concluded that it will:
…potentially deny to workers a choice they may wish to make to supply their labour as independent contractors, thus possibly undermining one of the objects of the Independent Contractors Act.[ix]
In his Honour’s view, it was properly a matter for the legislative branch of government to consider. [x] And perhaps it is.
If nothing else, the government will at least have to deal with the spate of “double dipping” and award breach claims that will inevitably surface, now that a model for engaging workers that has stood for 30 years has been overturned.
Andrew C. Wood
[i] CFMMEU v Contracting Personnel  HCA 1 per Kiefel CJ and Keane & Edelman JJ at paras  and ; Gageler & Gleeson JJ at para .
[ii] Interpreted in CFMMEU v Contracting Personnel to indicate employment by a combination of control and integration tests. See: Kiefel CJ, Keane & Edelman LL at paras  and ; Gordon J at paras , ,  and .
[iii] Per Steward J (dissenting) in Contracting Personnel at para .
[iv] Commonwealth Bank of Australia v Barker  253 CLR 169.
[v] Privacy Act 1988 (C’th) section 7B(3).
[vi] See discussion of the evolving “labour hire subservience test” in related posts: Wood AC (2022) CFMMEU v Personnel Contracting: What did the High Court really say about the “own business” test; and Wood AC (2022) Constructing the ratio of CFMMEU v Personnel Contracting.
[vii] Personnel Contracting at para .
[viii] At para .
[ix] At para .
[x] At para .
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