Employers should be wary of incorrectly classing a worker as an independent contractor and treating them accordingly, when in fact they are an employee of the company. Decisions of various Courts, tribunals and the Fair Work Ombudsman demonstrate a high bar to reach for contractor status. For example, in ACE Insurance Limited v Trifunovski 2013 the Federal Court found that insurance sales representatives were employees of a company, despite their contracts explicitly labelling them as ‘independent contractors.’ This finding was based upon several factors, including the intensive training program undertaken by the sales representatives, the company’s control over their work and regular involvement in day-to-day activities as well as the inability of the sales representatives to delegate their work. These facts indicated that ultimately there was no true independence in the work. As a result of the Court’s finding that the sales representatives were in fact employees, the Company became liable to retrospectively pay approximately $500,000 being the total annual leave, sick leave and non-service leave owed. This decision serves as a warning to employers against incorrectly classing employees. Employers should contact M+E for advice before engaging contractors as this is a complex issue with potentially serious ramifications.
Caution Necessary when Distinguishing Contractors and Employees
Aug 9, 2019