When hiring an independent contractor, you as the employer must be cognisant of the difference in terms of contract between employees and independent contractors.

Traditionally, Courts applied various and wide multifactorial tests to determine the nature of the relationship between the worker and employer regardless of contracted terms.

However, in February 2022, the High Court of Australia passed down two employment law decisions critical to the interpretation of employment contracts. The two matters handed down were:

  • Construction, Forestry, Maritime, Mining and Energy Union & Anor v Personnel Contracting Pty Ltd [2022] HCA 1 (‘Personnel’); and
  • ZG Operations & Anor v Jamsek & Ors [2022] HCA 2 (‘Jamsek’).

The two rulings confirmed that once parties have committed the terms of their relationship in writing – consideration to whether a worker is an employee or contractor is interpreted through the principles of the contract.

Both Personnel and Jamsek reinforces an ongoing commitment to clauses and stipulations within the written contract and what responsibilities may arise from contractual relations.

Personnel and Jamsek were jointly heard, with the High Court determining that where the validity of the contract is not in question – the nature and character of the contracted parties relationship will not need to be considered.

The rulings denote that where there is comprehensive commitment to terms stipulated in a written contract, there will only be interpretation of the contract and the terms noted.

Furthermore, Personnel and Jamsek highlight the continuous necessity for independent contractor arrangements and agreements to illuminate genuine independent contractor arrangements, rather than imposing “employment like” terms.

Moving forward, it is critical that employers review their written contracts with employees and independent contractors to confirm that the contracts correctly give effect to the arrangement the parties understood were being entered into when the contract was formed.

With the rulings of the High Court, employers, their employees and independent contractors now have greater certainty that the relationship they entered into contractually will not be later found to affirm a different relationship than that of what was agreed.

We strongly recommended business owners involved with independent contractors to review their agreements to ensure rights and obligations are respectively protected and honoured.

If you require any further advice or assistance surrounding your business agreements, then please don’t hesitate to get in touch with us!