Changes to Contractor Rules: What it means for business

Friday 27 May, 2022 | By: Divya Aggarwal

CCIQ heard from Mark Curran, Principal Lawyer at Gilchrist Connell at a recent webinar about how the recent High Court decision changed the way the way independent contractors’ agreements are interpreted.

Mark said it was important to distinguish between a contractor and an employee. Under various legislations employees have entitlements such as sick leave, ability to access the unfair dismissal authority, and obligation to take out workers compensation insurance but the contractors do not. If the court interprets the contractor is an employee there can be claims for employee entitlements. Click here to watch the webinar with Mark on demand.

What has changed

As a result of the High Court’s recent decisions in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] and ZG Operations Australia Pty Ltd v Jamsek [2022], courts and commissions will now have to focus their attention upon the terms of the contract agreed between the parties as opposed to the conduct of the parties after entering into the contract.

The future

Moving forward, it will be important companies review their written contracts with employees and independent contractors to ensure that the contracts correctly give effect to the arrangement the parties understood were being entered into when the contract was formed. It is immaterial how a relationship has been labelled between parties or how parties understand the characterisation of the relationship. The High Court referred to the following factors when considering contracts:

• the mode of remuneration;
• the provision and maintenance of equipment;
• the obligation of work;
• the hours of work;
• the provision for holidays;
• the delegation of work;
• where the right to exercise direction and control resides.
  
  

 In particular, three factors are important:

1. A right to control the individual in the contract will point towards employment,
2. An obligation to provide significant equipment will point towards contracting; and
3. Payment at an hourly rate will support employment.

 Next steps

• Employers are encouraged to review the presentation to understand how the factors were applied in the recent High Court Decisions
• Purchase new Contractor Agreements drafted by Gilchrist Connell and confidently engage contractors without the risk of a claim for entitlements.    
  
  

The other side

Many people prefer not being on a company’s payroll but contracting independently and being a sole trader. This is still possible and an option with the High Court’s recent decisions where a professionally written contract plays a significant role, and the label (contractor or employee) parties give to their relationship. These recent decisions and the factors defined above have provided clarity for employers, contractors and employees.  For more information and assistance on Independent contractors’ contract, contact Jason Wales at [email protected] or call the Employer Assistance Helpline 1300 135 822.

Click here to purchase the contracts.

Watch the on demand webinar with Mark Curran to learn more about these contracts.

Thanks to Mark Curran, Emma Clarke, Jason Wales for contributing to this article.