Is my Worker, an Employee or an Independent Contractor?
A large expense for most businesses is often its staff. When operating a business, the question that should also be asked is, “are my workers, employees or independent contractors”?
If a worker is an employee, then the Fair Work Act 2009 (Cth) (“FWA”) provides statutory rights to protect employees. This means that there are legal requirements that must be met by the employer.
For example, section 61 of the FWA sets out the ten National Employment Standards (“NES”) that must be followed. These relate to:
- Maximum weekly hours;
- Requests for flexible working arrangements;
- Parental leave and related entitlements;
- Annual leave;
- Personal/Carer’s Leave, Compassionate Leave and Unpaid Family and Domestic Violence Leave;
- Community service leave;
- Long service leave;
- Public holidays;
- Notice of termination and redundancy pay; and
- Fair Work Information Statement.
But how do you know if your worker is an Employee or an Independent Contractor?
In short, the way you identify an employee or an independent contractor is answered by “case law” (these are cases that have been heard by the court and which have made findings as to how you distinguish between the two).
Two High Court decisions during the 2000s, Hollis v Vabu Pty Ltd (2001) 207 CLR 21, (“Vabu”) and Sweeney v Boylan Nominees Pty Ltd (2006) 226 CLR 161 (“Sweeney”), show that the question can sometimes be complicated.
The High Court Cases of Hollis and Sweeney
Hollis involved a bicycle courier business, and its couriers. A Vabu courier, cycling and wearing a “Crisis Couriers” uniform, crashed into Mr Hollis. Unfortunately, Mr Hollis suffered personal injuries requiring knee surgery.
Was the Vabu courier, an employee or an independent contractor?
The High Court held that the Vabu courier was an employee. In reaching this decision, the High Court looked at a number of factors:
- Control: Vabu couriers had little control to how their work was performed. 
- Payment: Vabu gave payment summaries to their couriers.
- Insurance: Vabu gave insurance cover to their couriers.
- Presentation: Vabu couriers wore uniforms with Vabu’s logo.
- Skill: the labour supplied by Vabu couriers were not skilled or requiring any special qualifications.
However, in the case of Sweeney, involving the services of a mechanic, the mechanic was held to be an independent contractor.
The mechanic was a director of his own company. Boylan contracted the mechanic to fix a refrigerator. Subsequently, the refrigerator’s door collapsed onto Mr Sweeney.
The question was whether the mechanic was an employee of Boylan or an independent contractor?
The mechanic was held to be an independent contractor. Here, the Court looked at a number of similar factors, including:
- Control: The mechanic supplied his own tools and equipment and controlled how his work was performed.
- Finance: The mechanic invoiced Boylan for works performed.
- Insurance: The mechanic maintained his own workers’ compensation and public liability insurance.
- Presentation: The mechanic was not presented as an emanation or employee of Boylan.
- Skill: The mechanic provided skilled labour.
What should I look out for?
When determining whether a worker is an employee or an independent contractor, here are some of the questions that should be asked:
- Is there a contract in place?
- Is the labour/service provided by an individual or a company?
- Is there a requirement that a specific person provide the labour/service?
- Are there set hours and place of work?
- Is the party providing services to others?
- Who provides the tools/equipment to perform the task?
- Who is providing insurance?
- What has control of the work performed?
- What is the skill and labour provided?
- How are staff presented to the public?
- How are payments arranged/invoices issued?
- Does the person have an ABN?
What should I do now?
As a business owner you should:
- read the employment / independent contractor agreements that you have to understand your legal relationship with staff; and
- if you are still unsure about what to do next, or you do not have any contracts or agreements in place then you should consider getting professional legal advice to ensure that your employment / independent contractor agreements are correct and appropriate for your situation.
How can DSA Law help?
 Hollis v Vabu Pty Ltd (2001) 207 CLR 21.
 Sweeney v Boylan Nominees Pty Ltd t/as Quirks Refrigeration (2006) 226 CLR 161.