Insights & News

June 30, 2022

The labour hire arrangement is a simple one. One organisation (the labour hire provider) employs workers and provides a service to another organisation (the labour hire user) by assigning those workers to perform work for that labour hire user. The labour hire user pays the labour hire business a fee for providing labour hire workers to work for them. Labour hire workers are employed by the labour hire provider; they are not employees of the labour hire user.

Labour hire arrangements are used in countless industries to provide organisations with specialised labour, often on a temporary basis, allowing them to streamline their processes by outsourcing recruitment and focus on the core aspects of their business. It can also have a beneficial impact on productivity, efficiency and the bottom line.

But this arrangement has been criticised by unions and employee advocacy groups who say it leads to labour hire workers being paid unfairly low wages to cover work that could be done by salaried employees of the labour hire user.

This criticism is one of the areas of workplace and industrial reform the new federal Labor Government says they intend to address through the principle of ‘same job, same pay’.

If this mantra is translated into law, it’s vital that all organisations who use labour hire arrangements, whether they be labour hire providers or labour hire users, understand the potential change and what it may mean for the way they do business.

The current position

Labour hire workers are covered by any relevant award and the National Employment Standards regardless of the employment arrangements in place at the labour hire user. A labour hire provider may have also have its own enterprise agreement that will apply to labour hire workers if it covers the work they perform.

Labour hire workers are not covered by an enterprise agreement made between a labour hire user and its own employees unless the labour hire provider itself is a party to the agreement. Whilst there are occasions (most commonly in manufacturing or heavy industry environments) where the terms of an enterprise agreement between a labour hire user and its own employees, may require the user to ensure that any labour hire provider it engages pays at least the pay and conditions reflected in the users enterprise agreement, these are arrangements set by the labour hire user. They are not enshrined in legislation and where they are not present, a labour hire worker can work side by side with an employee of the labour hire user on different terms and conditions, including different pay.

Labor’s policy position

Labor’s pre-election ‘Secure Australian Jobs’ policy included the principle that if you work the same job, you should get the same pay. Labor has committed to ensuring that workers employed through labour hire providers receive no less than workers employed directly by the labour hire users.

This will undoubtedly be achieved through introducing legislation that makes ‘same job, same pay’ a minimum entitlement, such as including it as a new National Employment Standard.

Labor has a majority in the House of Representatives, meaning it will only need the support of the Greens and one other Senator for such legislation to pass. Given the Greens had a similar pre-election policy stating that “Workers should be paid and treated equally for the same kind of work”, they are likely to support Labor’s amendments making the change almost inevitable. The only stumbling block may be if the Greens and/or an independent or minor party Senator demand more than Labor is willing to give, resulting in a stalemate.

Two weeks ago, Tony Burke said following the summit and more consultation, further consideration will be given to the implementation of the policy.

What would this change mean?

This change will have a significant impact on the way labour hire providers and most labour hire users conduct business.

In practice, it will mean that the wage rates of a labour hire user will be applied to the labour hire workers, where they are higher than they would ordinarily receive from the labour hire provider, and presumably only if there is like-for-like work being done where a clear comparison can be made.

The policy slogan however leaves many questions unanswered:

1. What does ‘same job, same pay’ mean for other entitlements beyond headline pay rates (such as overtime, penalty rates and allowances)? Will these need to be equal? If it is all monetary elements, this will remove one of the key incentives for labour hire users engaging labour hire workers – a more flexible labour model and differentiated cost base.
2. What does ‘same job, same pay’ mean for non-monetary terms and conditions such as working hours, rostering, and flexibility? When the Fair Work Commission applies the Better Off Overall Test when assessing enterprise agreements, they recognise that wage rates are only part of the equation and should not be considered in a vacuum, absent consideration of other terms and conditions. It is therefore an interesting and potentially dangerous approach to look at monetary elements in isolation from other terms and conditions.
3. What does ‘same job’ mean? Not all labour hire arrangements involve labour hire and labour user workers doing the same job side-by-side. Many labour hire arrangements are used by labour hire users to outsource entire functions, so that the labour hire user has none of its own employees performing those jobs. In this case, applying the ‘same job, same pay’ principle has no application.

A wholesale push of the policy may result in this becoming more prevalent which would make the policy self-defeating.

What should the impacted stakeholders be thinking:

For labour hire users:

• It may impact future enterprise agreement negotiations given the agreed wage rate (and potentially other monetary entitlements) may apply not only to an organisation’s employees, but to those they engage via labour hire arrangements.
• It may impact the business case as to whether to outsource certain functions or engage labour hire workers to supplement or replace your workforce.
• It may impact existing labour hire agreements.

For labour hire providers:

• It may change the way labour hire workers are employed, given their rate of pay will differ based on the wage rates of the labour hire user they are providing services to.
• It may impact on existing labour hire agreements.
• It may lead to a reduction or growth in the use of labour hire arrangements.

There is more to consider as the Government continues to develop its position on this important legislative issue. The upcoming Employment Summit, which the Government has indicated will bring together Unions, Employer groups and other stakeholders will be an important opportunity for these issues to be further discussed and detail debated.

We will continue to provide Insights as this issue develops. Please contact us if you have any questions.

June 9, 2022

In a decision published yesterday (CFMMEU v Falcon Mining)[1], a Full Bench of the FWC (Hatcher VP, Catanzariti VP and Easton DP) expressly disagreed with a decision made by another Full Bench (Gostencnik DP, Colman DP Saunders DP) in Simplot v AMWU.[2]

In yesterday’s decision, the Full Bench said they had reached the “firm conclusion” that the Simplot decision was “not correct.” The Full Bench went on to observe that the fact there are conflicting decisions is “obviously unfortunate” and that “appropriate legislative change to clarify the position would be desirable”.

The vexing question is whether the FWC can still arbitrate a dispute under an enterprise agreement if the agreement is replaced or terminated before the FWC has determined the matter.

The answers given by the FWC have varied over time.

In Falcon Mining, the Full Bench observed that:

“Simply put, the Commission is seized of jurisdiction to arbitrate in respect of a dispute arising under a dispute resolution term described in s 738(b) once an application is made in accordance with s 739(6) and the requisite agreement under s 739(4) exists, and it is thereafter entitled to exercise that jurisdiction to completion.”

That passage evokes an earlier decision of a single member of the Commission (now retired), Deputy President Sams, in 2018 in which he wrote “[t]o my mind, once the Commission is seized of jurisdiction, unless there is a specific statutory bar or the replacement Agreement expressly provides for its extinguishment, the Commission’s jurisdiction remains on foot, and is exercisable.”[3]

However, in Simplot, a Full Bench of the FWC disagreed with Deputy President Sams’ conclusion and held “[t]he Commission has no jurisdiction to deal with a dispute under a disputes procedure in an enterprise agreement that has ceased to operate.”

In light of the differing authorities, those employers and employees bound by enterprise agreements are left in something of a quandary. Perhaps the matter will be resolved at the government’s employment summit later this year. Alternatively, it may be a matter for which judicial guidance is needed.

[1] [2022] FWCFB 93.

[2] [2020] FWCFB 5054 (22 September 2020).

[3] APESMA v TransGrid [2018] FWC 6335, [98] (20 November 2018).

May 26, 2022

The 2022 federal election has delivered a new Labor Government. Whilst it is yet to be determined, it looks like Labor will form a majority in the House and Labor and the Greens will form a majority in the senate. This is likely to lead to workplace and industrial relations reform. Although Labor’s ‘Secure Australian Jobs’, ‘Aged Care’ and ‘Equality for Women’ pre-election policies give us a fair idea of what these reforms will be, the presence of Greens and teal independents in our Parliament may see a reprioritisation of proposed reforms or the adoption of reforms which were not front and centre during the election campaign.

Although we will have a better insight into what the key ticket items for the new Government will be following the ‘Australian Jobs Summit’ (which Labor intends to convene with the business community and trade union movement as soon as practicable), we predict what major reforms will be trumpeted in the short to medium term future below.

Au revoir ABCC (again)

It is likely that Labor (with the support of the Greens) will quickly introduce a Bill into Parliament to abolish the Australian Building & Construction Commission (ABCC) and repeal the Building and Construction Industry (Improving Productivity) Act 2016 including the Code for the Tendering and Performance of Building Work 2016.

While the legislation and Code remain in place for now, it is unlikely that moving forward the ABCC will prosecute new matters, particularly those relating to union activities (such as union materials on building sites).

I am woman, hear me reform

As well as being the “climate change election”, the election was also fought and won on gender issues. Labor, the Greens and several teal independents campaigned on the adoption of all 55 recommendations of the Australian Human Right Commission’s (AHRC) Respect@Work. As such, these recommendations are likely to be implemented sooner rather than later.

As a recap, key reforms recommended in the Respect@Work report include:

• Introducing a positive duty for employers to “take reasonable and proportionate measures to eliminate sex discrimination, sexual harrassment and vistimisation, as far as possible”. This will require employers to take active steps to make sure that its workplace(s) are free from sex discrimination, sexual harassment and victimisation. Simply having a policy which states that your organsiation has a zero-tolerance to these things is unlikely to be enough in fulfilling this positive duty. Employers will have to introduce measures such as mandatory bystander training for all employees, appointing “Respect@Work Officers” (as you would appoint First Aid Officers) to be a points of contact within your organisation for affected employees and those who need further education, regularly surveying employees on their experience within the workplace and holding managers accountable if there is any failure to prevent, or intervene early in cases of, sexual discrimination, sexual harassment and/or victimisation.
• Give the AHRC broader powers to assess compliance with the positive duty outlined above and investigate workplaces over systemic sexual discrimination and harassment. The AHRC will be given investigative and enforcement powers similar to those of the Fair Work Ombudsman, including powers to:
  • require the giving of information, production of documents and examination of witnesses;
  • enter into enforceable undertakings with an organisation in breach of the positive duty; and
  • apply to the Court for an order requiring compliance with the positive duty.
• Amend the AHRC Act to insert a cost protection provision where a claim proceeds to the Federal Court. The report recommends that such a provision is consistent with section 570 of the Fair Work Act 2009 (FW Act). In this past, the absence of a provision in the AHRC Act similar to section 570 of the FW Act has deterred persons from making an application to the Australian Human Rights and instead, these persons have utilised the general protections provisions in the FW Act (where applicable). Thus, employers can expect to see an uptick in claims made to the AHRC. Particularly in circumstances where the report also recommends that unions and other representative groups should be given the right to bring claims under the AHRC Act to Court.

In addition to the reforms recommended in the Respect@Work report, it is likely that the following will be introduced:

• ‘gender pay equity’ as an objective of the FW Act, a statutory ‘Equal Remuneration Principle’ (modelled on the Queensland Equal Remuneration Principle) and the establishment of a ‘Care and Community Sector Expert Panel’ and ‘Pay Equity Panel’ within the Fair Work Commission (FWC). In practice, this may result in a higher number of applications for equal remuneration orders and equal remuneration orders made by the FWC.
• payment of superannuation contributions on paid parental leave. Although Labor appeared to abandon this policy during its election campaign, this policy formed part of the Greens’ platform and therefore, may re-enter the policy debate, particularly if the Labor government secure a second term in 3 years.

Higher wages and ending insecure work

If Labor commands a majority in the House of Representatives in its own right, it is likely to be in a position to implement its ‘Secure Australian Jobs’ policy. Obviously, the composition of the Senate will have a baring on just how aggressive the policy position is pushed.  We consider that there are four key policies that Labor will prioritise.

• Casual definition – Labor will amend the definition of casual employment to enable post-contractual conduct to be taken into consideration (e.g. patterns of work) in assessing whether a casual employee is a “true” casual employee.
• Independent contractors – following the High Court decisions in Jamsek and Personnel Contracting, Labor will also likely introduce legislation which restores the ‘multifactorial test’ (or similar) previously applied by Courts and Tribunals in determining whether a person is an independent contractor or employee. Labor will also likely move to give the FWC new powers to deal with “employee-like” relationships (i.e. relationships in the gig economy), including powers to make orders for these workers and powers to resolve disputes between these workers and the platforms through which they perform work.
• Same job, same pay for labour hire employees – Labor will introduce legislation to ensure workers employed through labour hire companies receive at least the same pay as workers who are employed directly.
• Fixed term contracts – the FW Act will be amended to ‘cap’ fixed term contracts for the same role to two consecutive contracts or to a maximum duration, including renewals, of two years with some limited exceptions.

In addition, as promised during the election campaign, the Albanese-led Government will make a formal submission to the FWC (as part of its annual wage review this year) in support of an increase to the minimum wage. It is unclear what percentage increase the Government will be supporting, however, it is likely to be somewhere between 5% and 5.5% (an increase of 5.5% is contended for by the ACTU). Although any submission made by the Government to the FWC will not necessarily result in an increase higher than 5%, any position taken by the Government will likely impact on current and upcoming enterprise agreement bargaining rounds as unions shift to demand increases in line with any minimum wage increase contended for by the Government.

‘Unstacking’ of the Fair Work Commission

There has been a lot of talk from Labor this election about fixing the “stacking” of the FWC by appointing more “Labor representatives” to the FWC, before returning “half/half appointments”.

Labor will likely seek to justify making its new appointments by extending the powers of the FWC to include:

• the powers of the new expert ‘Care and Community Sector Expert Panel’ and ‘Pay Equity Panel’ (as outlined above).
• powers to deal with “employee-like” relationships (as outlined above).
• (potentially) powers to set minimum pay and standards for owner-drivers as previously done by the Road Safety Remuneration Tribunal. It is unclear whether there will be separate legislative provisions introduced into the FW Act including these powers or whether owner drivers will simply be covered by the new “employee-like” work jurisdiction. It is also possible that Labor will seek to set up a tribunal separate to the FWC to deal with minimum pay and standards for owner drivers, as currently pushed for by the Transport Workers Union.
• powers to regulate registered organisations. Labor will abolish the Registered Organisations Commission and refer serious contraventions of regulatory laws by registered organisations to the Australian Securities and Investments Commission for investigation and prosecution.
• (potentially) powers to conciliate and arbitrate (by consent) underpayment of wages claims.

It is also possible that Labor will introduce a ‘Fair Work Court’, an independent judicial division of the Fair Work Commission determining matters such as unlawful dismissal, general protections claims and underpayment of wages claims.

Criminalising wage theft and industrial manslaughter

The new Government is committed to legislate to make wage theft and industrial manslaughter criminal offences. It will consult with unions, States and Territories and employer groups to ensure federal wage theft and industrial manslaughter laws will not override existing state and territory laws in operation.

Employers need to start considering how they are currently managing these issues and how current policies could be strengthened. Apart from any Government policy, the Election results provide employers with helpful insights into what issues matter most to their employees which presents an opportunity to reflect on how your organisation fairs in relation to these issues.

We will continue to keep you updated as these post-Election issues develop. Please reach out if you have any questions.

May 10, 2022

The Victorian Government confirmed in last week’s State budget that $246 million has been set aside for the pilot Victorian Sick Pay Guarantee, an administrative scheme that provides casual employees and contract workers with a “guarantee” that they will be paid when they need time off sick or to care for loved ones.

Across 2021, the Victorian Government consulted with members of the community, both employers and employees, on the design of a scheme to improve the economic security of Victorian workers prompted by instances of COVID transmission by casual and contract workers continuing to attend work notwithstanding COVID symptoms due to a financial pressure to do so.

The belief was that there had been a ‘choice’ between a day’s pay and a worker’s health (or the health of their loved ones). This belief has now evolved into the creation of a state-run administrative scheme.

Do casuals in Victoria get sick leave now?

Yes. Both casual employees and contract workers now have the opportunity to register to access sick leave payments under the new Victoria Sick Pay Guarantee. It is estimated that around 150,000 workers will be eligible for the first phase of the Guarantee.

The Guarantee is currently operating under a pilot scheme that will last for two years.

It is, in effect, another form of portable leave designed to provide financial security to workers engaging in insecure work across different employers across Australia.

Who will fund the sick leave?

The scheme will be administered by the Victorian Government in an effort to minimise the administrative burden upon employers.

It is, however, difficult to conceive how the Government will verify eligibility without engaging with the employer of an employee or contract worker seeking to access sick pay.

While fully funded by the Victorian Government for the initial pilot, employers will also be expected to contribute levies to fund the scheme moving forward. What these levies will look like remains to be seen.

Which occupations does the Sick Pay Guarantee cover?

The first phase of the Guarantee is open to the following occupations, which the Victorian Government states are “highly insecure”:

• Hospitality workers
• Food preparation assistants
• Food trades workers
• Sales support workers
• Sales assistants
• Aged and disability carers
• Cleaning and laundry workers
• Security officers and guards
• Other labourers in the supermarket and supply chains industries

The full list of workers who are eligible appears on the Victorian Government website.

Workers also need to:

• Be 15 years of age or over;
• Be casual employees or self-employed with no other employees (for example, a sole trader operating with an ABN);
• Not be entitled to paid personal, sick or carer’s leave in any of their jobs (so, for example, a permanent part-time employee with a second casual job would not be entitled to register);
• Work physically in Victoria (no matter where they live) and have the right to work in Australia; and
• Work on average at least 7.6 hours per week in an eligible occupation.

It is clear that the Guarantee will cover employees in a range of small businesses, many of whom are dependent upon casual employees and contract workers to respond to the peaks and troughs of workload.

Do workers need to prove they are eligible for the Guarantee?

Yes. Workers must not only meet the extensive eligibility criteria of the Guarantee, but also furnish evidence that to prove that they are eligible.

They will need to show two identity documents (for example, an Australia drivers’ license, passport or birth certificate) although if they are under 18 and only have two forms of ID, they can apply with only one.

They will also need to prove that they are eligible by showing documents to prove that they are either casual employees or self-employed individuals. This may include, for example, their employment contract, a recent payslip, a recent invoice issued by their business or their most recent business activity statement.

Does Victoria’s new sick pay guarantee protect ‘insecure’ workers?

The new Guarantee provides certain casual employees and contract workers with rights to register for a new government scheme with a view to receiving pay when they need time off sick or to care for others.

However, casual employees already had the benefit of the general protections provisions of the Fair Work Act 2009. They could not be subject to adverse action, such as dismissal or reducing shifts, because they suffered an illness or injury, or because they needed to care for a member of their household or immediate family.

The introduction of the Sick Pay Guarantee, therefore, doesn’t create new rights or obligations in this regard. Although it may mean that casual employees may view their right to be absent from work due to illness more strongly.

What does this mean if I hire casual employees or contract workers?

If you hire casual employees or engage contract workers in Victoria, then you will need to take particular note of the new Sick Pay Guarantee.

• Keep an eye out on the news about the Guarantee and, in particular, who will finance it once the two-year pilot comes to an end.
• The administrators of the Guarantee may approach you to confirm whether an applicant to the Guarantee is eligible. Take particular care in how you respond to such request for your employees’ information.
• Human Resources teams should make clear to their casual employees the company’s expectations around absences. It is foreseeable that, in light of the Guarantee, there may arise a perception amongst casual employees that they are not accountable to their employer when they fail to attend work for single day absences.
• If you haven’t already, review your employment agreements with your casual staff to ensure they are consistent with changes to the law of casual employment that occurred in 2021.

Get in touch with our specialist employment team at Kingston Reid if you have any questions about how the Victoria Sick Pay Guarantee Scheme will affect you and your staff.

February 11, 2022

The High Court’s decisions on Tuesday in ZG Operations Australia Pty Ltd v Jamsek[1](Jamsek) and CFMMEU & Anor v Personnel Contracting Pty Ltd[2] (Personnel Contracting) provide a refreshing reset on how to assess whether a person is a contractor or employee.

The decisions provide more certainty to business’ that have genuinely and comprehensively committed the terms of their relationship with a contractor in a written contract. Instead of engaging in a subjective, checklist approach, Courts will now consider the question of employee vs contractor through the prism of normal principles of contractual interpretation, consistent with the High Court’s decision last year in WorkPac Pty Ltd v Rossato[3]. The indicia set out in the multifactorial test will now only be relevant to the extent they are concerned with the rights and duties established by the parties’ contract.

Less about totality

Determining the nature of the relationship has, to date, not been an easy task – despite the fact that there is usually a written contract entered into at the outset of either relationship which purports to make it clear.

This is because, historically, Courts have looked beyond the terms of the written contract, considering the “totality of the relationship” between the parties. Commonly known as the multifactorial test, Courts have considered the totality of the relationship between parties by reference to a range of indicia including the degree of control the worker is under and whether workers operate their own business.

In applying the multifactorial test, Courts have long grappled with the notion of whether a person is truly a contractor in circumstances where the weight accorded to each indicium is wholly in its discretion.

The application of this discretion has meant that, to date, the well-settled multifactorial relationship test applied by Courts has yielded different and sometimes inconsistent assessments of whether a person is a contractor or not.

Take Jamsek as an example.

In this case, two truck drivers provided delivery services to ZG Operations Pty Ltd (and its predecessors) (ZG Operations), initially as employees and subsequently as contractors. On agreeing to “become contractors”, the drivers set up partnerships (with their respective wives). Via their newly formed partnerships, the drivers purchased vehicles from ZG Operations and executed contracts with it for the provision of delivering services. The drivers subsequently made deliveries as requested by ZG Operations. Lawyers for ZG Operations argued that from this point, each driver owned their own business and there was no basis to conclude they were employed.

At first instance, the primary judge found that the truck drivers were contractors for the relevant period that they operated their partnerships, owned their trucks, and contracted their services to ZG Operations. The primary judge reached this view applying the multifactorial test, emphasising the drivers’ provision of vehicles and provision of services via partnership arrangements as significant factors.

On appeal, the Full Bench of the Federal Court of Australia disagreed with the primary judge and unanimously held that, when viewed in totality, the relationship remained one of employment. One factor that weighed heavily with the Full Court was the exercise of superior bargaining power by ZG Operations.

In the High Court, the majority rejected the Full Court’s invocation of the disparity of bargaining power, finding that such considerations cannot alter the bargains that were struck between ZG Operations and the partnerships. The majority pointed to existing remedies within Australian law which deal with injustices arising from the disparity of bargaining power, such as sham or unfair contract provisions. On the basis that no claim had been made challenging the validity of the contracts between the ZG Operations and the partnerships (via sham contracting provisions or otherwise), the majority proceeded to interpret the contracts, finding that the drivers were individual contractors.

The finding that day-to-day instruction or expectations of ZG Operations in relation to the drivers wearing a uniform or displaying a company logo on their trucks (factors that weighed in favour of the Federal Court’s decision in assessing the drivers as employees) did not alter the contractual rights and obligations which characterised the relationship between the parties.

Unsurprisingly, in reaching this conclusion, the majority in Jamsek – Kiefel CJ, Keane J and Edelman J – followed the principles set out by the same majority in Personnel Contracting. Published moments earlier, Personnel Contracting makes it clear that it is erroneous for Courts to apply the multifactorial test by reference to how the parties have conducted themselves over the decades of their relationship. Instead, where the parties have entered into a comprehensive written contract, the various indicia in the multifactorial test only bear on the nature of their relationship to the extent that they are concerned with the rights and duties established by the parties’ contract.

For example, in Personnel Contracting, the majority considered whether the worker was subject to the control of Construct (the trading name of Personnel Contracting, which is a labour-hire company). In interpreting the contract, the majority found that the worker had no right to exercise any control over what work he was to do and how that work was to be carried out. Specifically, the majority referenced a clause in the contract which stated that the worked was obliged to “[c]o-operate in all respects with Construct and the [host company] in the supply of labour to the [host company]”. This duty, along with others, led to the majority concluding that the parties’ description of their relationship as principal and agent in the contract was not determinative.

What does this mean in practice?

The High Court’s ruling simplifies the analysis for determining whether a person is a contractor or employee in circumstances where the character of the relationship between the parties can be determined by the reference to terms of the written agreement.

Is the multifactorial test dead?

No.

As mentioned above, where the rights and duties of the parties are found exclusively within a written contract, the various indicia in the multifactorial test are still relevant. However, the indicia only bear on the nature of the parties’ relationship to the extent that they are concerned with the rights and duties established by the parties’ contract.

Importantly, the conduct of the parties is no longer relevant in applying the multifactorial test. Instead, the conduct of the parties is only relevant as per established contractual principles. For example, the subsequent conduct of the parties may be relevant to ascertain whether the terms of the original contract have been varied.

Do I need to review my independent contractor contracts?

Yes.

As mentioned above, the parties’ description of their relationship as principal and agent in the contract is not determinative. Instead, the terms of the contract when read as a whole must reflect the status of the relationship as principal / independent contractor.

Contract terms which may suggests a relationship of employment include:

• terms that fix the worker’s remuneration;
• terms that state a principal is a worker’s paymaster;
• terms which oblige the worker to perform work as directed by the principal or host; and
• terms which authorise a principal to terminate a worker’s engagement should they fail in any respect to obey directions.

As such, it is important that principals check contractors’ terms and conditions to ensure they could not be interpreted in favour of an employment relationship.

It is also important to review current practices with contractors to ensure that there can be no argument that their current contract is a sham, or its terms have been varied by conduct.

Are there specific implications for labour hire entities?

Yes.

The majority in Personnel Contracting found that “there is nothing in the tripartite nature of a labour-hire arrangement that precludes recognition of [a principal’s] contractual right to control the provision of [the worker’s] labour to its customers, and the significance of the right to the relationship between [the principal] and [the worker]”. In other words, although a host entity may supervise and direct every aspect of a worker’s work, if this subordination is attributable to the terms of the contract between the worker and the principal (i.e. via a term stating that the worker is obliged to perform work as directed by a host), this will suggest that a worker is subject to the control of a principal. This will weigh towards a Court finding that a worker is an employee rather than a contractor.

[1] [2022] HCA 2.

[2] [2022] HCA 1.

[3] [2021] HCA 23.