The question of whether a worker was an employee, or a contractor has been determined in the courts through the application of the so-called “multifactorial test”. In its application, courts have to consider the “totality of the relationship” between the parties by reference to a range of criteria, such as whether the worker exercised control over the way their work was performed or operated their own business.

However, the High Court surpassed the test. The first step in this direction was the so-called Rossato case concerning the nature of casual employment, where, as we reported in our previous article, the High Court stated that the focus must be on contractual obligations between the parties.

The last decisions of the Court confirm this trend:

• in Jamsek v ZG Operations Australia Pty Ltd, the High Court, overturning the Full Federal Court decision, stated that two delivery drivers were independent contractor, based on the contractor agreement signed between the parties and not questioned in its validity and content. The level of control exerted by ZG Operations and the requirement for the men to be at the company’s disposal 9 hours a day, 5 days a week, were considered irrelevant to the qualification of the relationship.
• in CFMEU v Personnel Contracting, the High Court stated that a worker in Personnel Contracting, engaged as a labourer on construction sites, was an employee, while the Full Federal Court previously found he was a contractor based on the multi-factorial test. In this case, the contract expressly provided the labour-hire company with the right to determine for whom the worker would work, and this level of control over the worker, according to the High Court decision, indicated an employment relationship.

In both cases, the High Court underlined that whether a person is an employee or an independent contractor is determined by the legal rights and obligations of the parties under the contract and the importance of applying the terms of the agreement where a valid agreement exists.

The High Court also stated that, unless the contract had been varied or waived, a review of the parties’ subsequent conduct was “unnecessary and inappropriate”.

According to these recent decisions, the multifactorial test should only be applied to the rights and duties of the parties as established in the contract (particularly the degree of control each party can exercise in relation to the work), and not to the conduct of the parties afterwards, in the qualification of the relationship.

It is more and more important for employers and contractors to review their contractual arrangements to make them clear about the nature of the relationship they intend to establish.