When your “contractors” turn out to be your empolyees…

What about claims for past entitlements, like leave? Will there be double dipping? Are the “off set” provisions in your contracts any good?

You’re invited to bring your questions about the future of independent #contracting #labourhire along to WorkAccord’s Tuesday TalkAbout on 29 March 2022, and engage in the extended discussion via the Labour Hire Licensing & Regulation (Aust. & N.Z.) LinkedIn Group.

Let’s talk!

“Odco” Contracting: Where to from here?

You’ve probably heard enough about the Personnel Contracting Case and the supposed demise of “Odco” contracting by now …

… to be asking some questions of your own. At least you should have, if you’ve been running or working in an on-hire contractor services model and are now seeking to disentangle yourself from it.

Some of the questions you might be asking could be:

  • Must you reclassify your workers? If so, how?
  • What are your best guides now that the multi-factor test has been restricted to what’s in the contract, and the courts won’t give much weight to how you’ve described your relationship?
  • What might a contract include to preserve the independence of the contractor?
  • What penalties might employers now be facing?  After all, the Personnel Contracting Case involved an application for penalties for breach of the Award and the High Court has sent it back to the trial judge to be decided on the basis that the worker was an employee after all?
  • What about claims for past entitlements, like leave? Will there be double dipping? Are the “off set” provisions in your contracts any good?
  • If you’re left to pick up the bill, can you pass on additional costs to your client?
  • What happens to your client contracts, if you’ve agreed to supply on-hire contractor services but your workers are not contractors?
  • What are the FWO and Labour Hire Licencing regulators doing about this?
  • Should you be stepping away from supplying on-hire contracting services altogether? What other engagement and supply models are viable?
  • Could an on-hire engagement and supply model that didn’t promise “compliant” or “controlled” labour really work?
  • What does “compliant” or “control” really mean now anyway?
  • What about your staff consultants who may be engaged as independent contractors?
  • What happens to other provisions in your contracts – like your restraint of trade provisions – if your workers were engaged on the basis that they were independent contractors but now turn out to be your employees? Are those provisions still any good?
  • What happens if the contractor is working through their own company?
  • What about your contractors whom you’ve put out to be engaged by a payroll provider?
  • Where is the line drawn between sham contracting and simply getting it wrong?
  • What happens if your contract is NOT wholly in writing? Or if what is written is pretty light on?

Why not bring your questions along to WorkAccord’s Tuesday TalkAbout on 29 March 2022, and engage in the extended discussion via the Labour Hire Licensing & Regulation (Aust. & N.Z.) LinkedIn Group?

You can register for the session via the Eventbrite portal here.

We’d love to hear from you.

Let’s talk!

Andrew C. Wood

Tuesday TalkAbout is Returning

Hooray! The veil has been lifted on the keenly anticipated autumn collection of Tuesday TalkAbout, which features four webinars on essential topics for recruitment and staffing professionals.

New Inclusions for Extended Discussion

We’ve updated the engagement design to include an extended Q&A session, when you can ask the questions that you’ve been wanting to ask and we’ll see if we can put you on the right path to getting the information you need.

We’ll also be providing prep materials to registrants on the Friday before the webinar so that you can join in, already having a basic understanding of the topic we’re discussing and so that you can formulate questions specifically tailored to your interests.

You can even join in discussion, before or after the webinar, via one of our two moderated LinkedIn forums so that you can follow through on questions that are of particular interest to you.

Finally, for webinar attendees, we’re including a post-webinar 15 minute complimentary phone chat, when you can raise those “quick questions” that you weren’t able to raise in the public session. Appointments do need to be made via the WorkAccord website, and the booking “window” will be open only in the week of the webinar (Mon to Fri) whilst appointments are available.

Autumn Collection:

Independent Contracting On-Hire: Where to from here? (29 March 2022)

The Australian High Court’s recent decisions in CFMMEU v Personnel Contracting and ZG Operations Australia Pty Ltd v Jamsek have certainly NOT made life easier for on-hire agencies who, overnight, may have discovered that workers whom they thought were their contractors are, in fact, their employees.

So, what can you do about that? You plan your service model restructure – that’s what you do. But there are plenty of questions to be answered as you set about doing that.

You can find out more about the webinar and register via the Eventbrite portal here.

Labour Hire Licensing Five Years On: What we know and still need to know. (26 April 2022)

Since 2017, we’ve been learning to live with four separate licensing schemes. What have we learnt and what do we still need to know?

Join us as we examine the performance of the four state and territory schemes and examine some of their more difficult aspects – taking a closer look at difference at the difference between labour providers who need a licence and mere “intermediaries” who don’t.

We’ll talk about:

  • the Victorian extensions
  • the worker exemptions
  • the data on licence conditions, refusals and cancellations
  • the prosecution cases so far – who is getting prosecuted and why
  • the challenges of regulatory over-reach in a federal system

We’ll talk about avoidance; how you might detect it; and what you need to do about it.

You can find out more about the webinar and register via the Eventbrite portal here.

Talking Privacy: What recruiters need to know (3 May 2022)

It’s Privacy Awareness Week. So what better time to schedule a privacy refresher for recruiters, whose day-to-day work involves the handling of large amounts of personal information ?

In this session we’ll be looking at the different privacy frameworks that apply to recruitment operations – especially those using cloud-based technologies, artificial intelligence, and offshore processing or sourcing.

We’ll talk about:

  • what is really “necessary” and how necessity operates to limit the type of information you can collect, use or disclose
  • ID scanning
  • data breach notification
  • what case determinations are telling us
  • responsibilities as a contracted service provider to government agencies
  • privacy impact assessments – when and why you need to conduct them

You can find out more about the webinar and register via the Eventbrite portal here.

Care & Support Sector Workforce & Governance Reform: What it means for recruitment & staffing agencies (31 May 2022)

The Care & Support Sector (Aged Care, NDIS & Veterans Support) is undergoing significant workforce and governance reform. What is going on and what does it mean for recruitment & staffing agencies? Will it be business as usual, or will the changes affect the way you need to operate?

In this webinar, we’ll be reporting on the state of the reforms and examining the role of recruitment & staffing agencies as “facilitators of care”.

We’ll ask whether there still scope for “all care, no responsibility” service models, and start to explore the changes you may need to be making to your agency’s operations and networks.

You can find out more about the webinar and register via the Eventbrite portal here.

A Free Spirit’s Guide to Saying “No” to Employment; and “Yes” to Independent Contracting

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 [2022] HCA 1 per Kiefel CJ and Keane & Edelman JJ at paras [58] and [63]; Gageler & Gleeson JJ at para [127].

[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 [71] and [75]; Gordon J at paras [195], [196], [200] and [201].

[iii] Per Steward J (dissenting) in Contracting Personnel at para [204].

[iv] Commonwealth Bank of Australia v Barker [2014] 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 [210].

[viii] At para [212].

[ix] At para [222].

[x] At para [222].

Constructing the ratio of CFMMEU v Personnel Contracting

I opened a book today – one that I’ve not needed to look at since 1973.  In fact, I don’t think I could have looked at it too much, even back then. The pages were in pretty good condition…

The book is Maher, Waller & Derham (1971) Cases and Materials on the Legal Process (2 ed).  I opened it because I needed to refresh my memory (now fading) about the relationship between the binding rule of a case (its “ratio decidendi”) and its material facts. I wanted to do that because several aspects of the High Court’s recent decision in CFMMEU v Contracting Personnel were causing some panic in the labour hire industry, and I wanted to see if it was justified.

The aspects that were proving especially troublesome were those passages in the judgments that seemed to be suggesting that, as a matter of binding principle, the mere making of a promise to work through a labour hire firm might be enough to make a person that firm’s employee – if the promise were used by the labour hire firm in running its business, as of course it is. 

Such a principle, if indeed it were the correct principle to extract from the case, seemed to conflate the “control test” with the “integration” or “organizational test”, applying selected elements of the “multi-factorial test” (though only to the terms of the written contract – mostly), whilst viewing all through the “prism” of the “own business test”, or something not entirely unlike it.

Heaven help us if we’re teaching employment law this semester!

But there, on pages 113-114 of my cherished copy of Maher, Waller & Derham, purchased at the exorbitant price of $8.50, was what I was looking for – a lucid but barely remembered account of the relationship between the binding rule of a case and its facts, showing how the material facts of Donoghue v Stevenson (the famed “snail-in-the-ginger-beer-case”) could be divided into fact families, the members of which could be “stated at various levels of generality”.

Applying the method recommended by those esteemed authors, I was able to discern four families of important facts that might go some way towards explaining what the High Court really said, and which might allay some of the alarm currently circulating through the labour hire industry.   

I’ll set them out, and then see if I can combine them into a workable statement of principle.

  1. Facts as to the worker’s identity & capacity: The worker was an individual, not in his own business.
  2. Facts as to the contract: The contract with the labour hire firm was wholly in writing.
  3. Facts as to preservation of independence: the worker’s promise to perform work for the labour hire firm’s clients as directed was not subject to a sufficient reservation of independence – eg. as to what work he would do or how he would do it.
  4. Facts as to the labour hire firm’s control and use of the worker’s promise: The labour hire firm controlled and used the worker’s promise as an asset in its business.

It’s going to be difficult for labour hire firms to avoid #2 and #4.  But #1 and #3 might suggest there is some scope to fashion a different outcome in some cases.

So, here’s a first attempt to extract the principle in CFMMEU v Personnel Contracting:

Where A, being an individual not in business for themselves, makes a promise to B, in a wholly written contract without sufficient reservation of independence, to perform work for C, which promise B controls and uses in its business, then A may be characterized as B’s employee.

Don’t hold me to that. I’ll need time to refine it. In fact, it might not be settled until later courts tell us what the High Court really meant. But might it work?  Might it keep the doors of a few locum agencies and professional on-hire firms open a bit longer?

Here’s hoping a court that needs to consider the issue in a different occupational context might think so!

Andrew C. Wood