Sometimes the line between an employee and an independent contractor can be blurred. The Uber decision recently made headlines when the Fair Work Commission found that an Uber driver was an independent contractor and not an employee.

This will not be the last case to consider whether a person is an employee or a contractor, and further cases are likely to refine the key High Court case of Hollis v Vabu Pty Ltd [2001] HCA 44.

The facts

Vabu Pty Ltd conducted ‘Crisis Couriers’ business. Mr Hollis, who was also a courier, but for a different firm, was struck by a cyclist who worked for Crisis Couriers, knocked to the ground and suffered personal injury as a result of the accident. Although the cyclist was not identified, his clothing contained the words ‘Crisis Couriers’.

Employee not contractor – Crisis was liable

The trial judge held that the cyclist was an independent contractor, but the High Court overturned this decision and held that the respondent was vicariously liable, as the bicycle courier was an employee of the respondent, Vabu Pty Ltd.

The High Court’s decision

The High Court found that the Court of Appeal erred in finding that the cyclist was an independent contractor by placing too much emphasis on the fact that “the bicycle couriers owned their own bicycles, bore the expenses of running them and supplied many of their own accessories”.

The High Court looked at the test that should be used to determine employment status. The High Court considered the case of Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16 at 20 where Mason J said that: “control is not now regarded as the only relevant factor. Rather it is the totality of the relationship between the parties which must be considered."

The High Court applied the factors in Hollis (which were also applied in the case of Damevski v Giudice (2003) 133 FCR 438) as follows:

• The bicycle couriers were not providing skilled labour or labour which required special qualifications and were not running their own enterprise.
• The bicycle couriers had little control over the manner of performing their work; they had to follow deadlines, an assigned work roster and were not able to refuse work.
• The couriers presented to the public and to those using the courier service as emanations of Vabu Pty Ltd as shown by the uniforms bearing Vabu’s “Crisis Couriers” logo and other attire requirements.
• Vabu superintended the couriers’ finances: Vabu produced pay summaries, the couriers were required to dispute errors by a certain deadline and had no scope to bargain for the rate of their remuneration.   
• Regarding the use of tools and equipment, even though the couriers had to provide their own equipment and pay for the cost of replacements and repairs themselves, this does not indicate the existence of a relationship of independent contractor and principal.
• Vabu Pty Ltd retained control of the allocation and direction of various deliveries; the couriers had little latitude and Vabu’s business involved the marshalling and direction of the labour of the couriers.

Other relevant factors to consider

A concise but non-exhaustive list of the factors that should be considered when determining whether a worker is acting on behalf of an employer or on their own behalf was provided in the case of Abdalla v Viewdaze Pty Ltd t/a Malta Travel PR927971 (AIRCFB, Lawler VP, Hamilton DP, Bacon C, 14 May 2003) at para. 34, [(2003) 122 IR 215]. The factors include:

• Whether the putative employer exercises, or has the right to exercise, control over the manner in which work is performed, place or work, hours of work and the like.
• Whether the worker performs work for others (or has a genuine and practical entitlement to do so).
• Whether the worker has a separate place of work and or advertises his or her services to the world at large.
• Whether the worker provides and maintains significant tools or equipment.
• Whether the work can be delegated or subcontracted.
• Whether the putative employer has the right to suspend or dismiss the person engaged.
• Whether the putative employer presents the worker to the world at large as an emanation of the business.
• Whether income tax is deducted from remuneration paid to the worker.
• Whether the worker is remunerated by periodic wage or salary or by reference to completion of tasks.
• Whether the worker is provided with paid holidays or sick leave.
• Whether the work involves a profession, trade or distinct calling on the part of the person engaged.
• Whether the worker creates goodwill or saleable assets in the course of his or her work.
• Whether the worker spends a significant portion of his remuneration on business expenses.

The FWC’s stance on the difference between an employee and a contractor

The Fair Work Commission’s (FWC) website outlines the difference between an employee and an independent contractor, and says: “In an employment relationship, labour (being a combination of time, skill and effort) is traded for remuneration. There is a provider, a purchaser, an exchange and a contract containing terms and conditions that regulate the exchange.”

Although the label expressly given in a contract to the legal relationship between the parties is important, these express contractual terms cannot take effect if such terms contradict the terms of the contract as a whole, or as the FWC says, “the parties cannot deem the relationship between themselves to be something it is not”.

Therefore, a proper consideration of all the facts and the relevant cases is required to determine whether or not your relationship is classified as one of employment.

If you require workplace law advice, contact Peter McNamara.

To read the full decision of Hollis v Vabu Pty Ltd [2001] HCA 44, click here.