The High Court of Australia’s decisions of Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 (Personal Contracting) and ZG Operations Australia Pty Ltd & Anor v Jamsek & Ors [2022] HCA 2 (ZG Operations) seemed to suggest that the question of whether a worker is an employee or an independent contractor is a straightforward matter of looking at the terms of the contract.
However, the recent case of Yang v China Australia Travel Group Pty Ltd [2023] FedCFamC2G 1023 (China Australia Law) provides an interesting example of circumstances where there remains nuance in these types of matters.
The facts of the case in China Australia Travel seem to be all too common. The case involved China Australia Travel Group Pty Ltd (CAT) and Mr Yang, an individual with limited English who migrated to Australia in 2005.
In brief summary:
1. Mr Yang worked for CAT from June 2015 to September 2017 on a full-time basis. There was no written contract for the arrangement, but there were two conversations providing terms of the arrangement before Mr Yang commenced work for CAT in 2015.
2. During the period Mr Yang worked for CAT, he drove a bus provided to him by CAT for tourists based on itineraries provided by CAT and provided tour guide services for these tourists. Mr Yang performed the work under the control and direction of CAT and used the bus provided to him by CAT.
3. Mr Yang only received two payments from CAT during the period of the arrangement. One payment in or about July 2016 for $7,900.39 and one on 17 July 2017 for $5,000.
CAT argued that Mr Yang was an independent contractor of CAT, while Mr Yang argued he was an employee.
In China Australia Travel, Judge Obradovic briefly set out principals from Personal Contracting about whether a worker is an employee or contractor. In short:
1. It is necessary to look at the totality of the parties’ relationship and conduct to determine the nature and terms of the contract the parties entered into, but only in so far as it concerns the rights and duties established by the parties’ contract and not simply an aspect of how the parties’ relationship had come to play out in practice.
2. The court must analyse the totality of the parties’ relationship by reference to indicia provided for in case law, such as those including but not limited to:
a. the degree of control which the alleged employer can exercise over the alleged employee;
b. the mode of remuneration;
c. the provision and maintenance of equipment;
d. the obligation to work and the provision for holidays;
e. the deduction of income tax; and
f. the delegation of work by the alleged employee.
The Court found in China Australia Travel that Mr Yang was an employee of the company.
In determining that Mr Yang was a casual employee of CAT, the Court referred to the following points, among others:
1. CAT maintained a large degree of control over Mr Yang during the period he worked for them.
2. CAT provided vehicles for Mr Yang to drive while working for CAT. CAT also arranged for the repairs to the buses and directed Mr Yang to which repair shop to go to.
3. Mr Yang did not have the vehicle or shopfront to operate his own travel company.
4. Mr Yang generally did not work for anyone else between June 2015 and October 2017, except at the direction of CAT who occasionally instructed him to do work for other companies that CAT had business relationships.
5. CAT set the rates of remuneration and decided the shifts Mr Yang was to work.
6. CAT sent Mr Yang the itinerary for each shift, which he was required to follow.
7. Mr Yang was required to request time off when he could not attend a shift.
8. CAT provided directions to Mr Yang, which Mr Yang was required to obey.
9. The mere fact that Mr Yang asked to be paid into his wife’s bank account and had an ABN is not an indication that he was an independent contractor.
Ultimately, the Court found that CAT and the second and third respondents in the case were liable to pay Mr Yang $84,460.71, plus superannuation contributions.
China Australia Travel sets out an unusual case where an individual was working for a long period of time with very little payment and neither the worker nor the business that was engaging them reviewed the arrangement.
In any event, the case of China Australia Travel demonstrates the significant consequences of presuming a worker is an independent contractor.
If you have any questions about employment contracts, please feel free to contact one of our staff. Please also see our previous posts on independent contractors at the link here.
The article, the content and references made are intended to keep an audience updated with information. It is not intended that the article or part of it should be relied upon as advice. Information provided may not apply to in all circumstances or in particular situations. If you do want particular advice or you have any questions, we welcome you to contact us on (02) 9189 5905 or at [email protected]