15 March 2016

Getting independent contracts right: a case law follow up

In our most recent edition of Strateg-Eyes, we considered the use of “triangular contracting arrangements” as a means of mitigating the risk of a worker being deemed an employee when the intention was that they be engaged as an independent contractor. A timely decision of the Fair Work Commission (in Mr Norman Turner v Australian Postal Corporation [2016] FWC 801) has demonstrated the effectiveness of these arrangements when properly deployed in practice.

The decision

Mr Turner performed work for Australia Post and argued that he was unfairly dismissed following the termination of his engagement. Australia Post objected on the basis that Mr Turner was an independent contractor, not an employee.

Mr Turner argued that the relationship was one of employment based on certain of its characteristics, including that Australia Post:

  • controlled his mail delivery area;
  • dictated the appearance of the vehicle he was to use;
  • required him to wear an Australia Post uniform; and
  • required him to comply with certain of its policies and procedures.

Australia Post argued that no employment relationship existed because the Mail Contractor Agreement (the “Agreement”) it had entered into was between it and Coomba Park Couriers, Mr Turner’s company. That is, the Agreement was a triangular contracting arrangement.

The FWC accepted Australia Post’s argument, holding that because:

  • there was no contract between Australia Post and Mr Turner; and
  • the Agreement was not a “sham” (in that there was no evidence to suggest that it was not intended it would have “substantive legal effect”),
  • there was “no basis [on which] to undertake a ‘multi–factorial assessment’ to determine whether the character of any contract between Mr Turner and Australia Post (if it existed) was a contract of employment or alternatively a contract of some other character”.

As such, Mr Turner was precluded from bringing an unfair dismissal claim.

Lessons for employers

  • Independent contracting arrangements should be recorded in tripartite contracting arrangements where possible.
  • Such arrangements should contain express acknowledgments that the relationship they record is not one of employment.
  • Even where a number of features of a relationship are indicative of employment, if these features can be explained as genuine requirements of a commercial contract, the worker may not be deemed to be an employee.
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