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INDEPENDENT CONTRACTORS SUMMIT

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					   INDEPENDENT CONTRACTORS SUMMIT



     CONTROLLING YOUR
        WORKFORCE
DOES CONTROL = EMPLOYMENT?

       RECENT COMMON LAW DEVELOPMENTS


 TANYA CIRKOVIC & ASSOCIATES
 T: +61 3 9654 7633
 E: admin@tcalawyers.com
    Why is this question important?
   Rights and obligations attaching to employees:
    – Award Rights
           Minimum Wages
           Annual Leave, Sick Leave, Severance Pay
           Security of Employment
           Allowances
    – Statutory Rights
           Parental Leave
           Unfair Dismissal Rights
           Workcover (usually deemed to include contractors)
    – Common Law Obligations
           Duty to obey lawful directives
           Duty to act in the best interests of the employer
           Duty to work exclusively for the employer
           Duty to perform work personally

TANYA CIRKOVIC & ASSOCIATES
T: +61 3 9654 7633
E: admin@tcalawyers.com
    Why is this question important?
                 (cont.)
   Rights and obligations attaching to
    employers:
    – Vicarious Liability
       (i)   Employer/Employee relationship –
             employer almost always liable for acts of
             employee
       (ii)  Principal/Contractor arrangement –
             principal seldom liable for acts of
             contractor


TANYA CIRKOVIC & ASSOCIATES
T: +61 3 9654 7633
E: admin@tcalawyers.com
   How does the Court distinguish
     between Employees and
          Contractors?

   Even where parties intended to enter a
    Principal / Contractor relationship,
   Courts will look “behind the veil” and
     determine their view of the “true”
                  position.

TANYA CIRKOVIC & ASSOCIATES
T: +61 3 9654 7633
E: admin@tcalawyers.com
    1. Original Test – Control Test

   Employment relationship was
    determined by the level of control that
    the hirer had over the worker

   Evolved into the “right to control”



TANYA CIRKOVIC & ASSOCIATES
T: +61 3 9654 7633
E: admin@tcalawyers.com
            2. Multiple Indicia Test
                 (current test)
   1986 – High Court said control is not the only
    factor – the appropriate test is now one of
    multiple indicia.
            Control Test
            Intention of the Parties
            Independent Economic Unit (Organisational Test)


             Each are to be accorded weight depending on
             the circumstances of the case and a decision
             made on the “totality” of the facts.
TANYA CIRKOVIC & ASSOCIATES
T: +61 3 9654 7633
E: admin@tcalawyers.com
  Detail of Multiple Indicia Test
1. Control:
   Whether the hirer has the right to control the manner in which the
   worker undertakes his or her work.
2. Intention of the Parties:
   Whether the parties intended to enter a relationship of
   employer/employee or principal/contractor. Eg What does the
   contract say?
3. Economic Independence (organisational test):
   Whether the worker is dependent on the hirer for an income, or
   can be said to be an independent economic unit, not forming part
   of the hirer’s organisation. Eg does the person work for anyone
   else?

TANYA CIRKOVIC & ASSOCIATES
T: +61 3 9654 7633
E: admin@tcalawyers.com
    Summary of Common Law
           Position
   Control Test

   Multiple Indicia Test

   Third Test?
           Intention over control? (Roy Morgan Research Centre)


TANYA CIRKOVIC & ASSOCIATES
T: +61 3 9654 7633
E: admin@tcalawyers.com
Should the intention of the parties
     be “lightly put aside”?

Roy Morgan Research Centre Pty Ltd v State
Commissioner for State Taxation (Victoria
and SA) (on appeal)




TANYA CIRKOVIC & ASSOCIATES
T: +61 3 9654 7633
E: admin@tcalawyers.com
      Facts applied to the tests:
           Control
            –   Detailed manual prescribing how work to be done
            –   Detailed instructions as to which houses to attend
            –   RMRC uniforms and badges worn
            –   No delegation permitted without consent

            BUT
            – very little if any supervision
            – relatively free to choose own hours
            – no reporting to office


TANYA CIRKOVIC & ASSOCIATES
T: +61 3 9654 7633
E: admin@tcalawyers.com
   Facts applied to tests cont…

           Intention of the Parties
             – Independent contractors agreement (written)
             – No income tax deducted by Federal Government
             – Right to complete as many surveys as possible and
               therefore profit above and beyond wages
             – No claims to the contrary made by interviewers




TANYA CIRKOVIC & ASSOCIATES
T: +61 3 9654 7633
E: admin@tcalawyers.com
   Facts applied to tests cont…
           Independent Economic Unit (Organisational
            Test)

             – Exclusivity not required (but in practice usually found)
             – No reporting to office
             – Right to complete as many surveys as possible and
               therefore profit above and beyond wages

             BUT
             – Very little capital outlay for contractors
               (economic elitism?)
             – Little room for “accumulation of good will”

TANYA CIRKOVIC & ASSOCIATES
T: +61 3 9654 7633
E: admin@tcalawyers.com
   What did the Courts decide?
VICTORIA: Employees

Why? High degree of control
(therefore control over intention of parties (Gray J in Re Porter)


SOUTH AUSTRALIA: Contractors

Why? Intention of parties prevailed over considerations
of control. Court willing to consider that the intention of
the parties should be the prima facie position and the
Court should only “lift the veil” where circumstances are
unusual or suspicious.

TANYA CIRKOVIC & ASSOCIATES
T: +61 3 9654 7633
E: admin@tcalawyers.com
                    Conclusions
Why should intention prevail over court constructed tests
such as “control”?
    – Court’s paternal, interventionist approach is an attack on freedom of
      contract – parties should be able to choose own arrangements

    – Workers should be free to engage in profitable enterprise, no matter
      how small their capital outlay

    – Parties must have certainty in their arrangements

    – Outmoded and outdated protectionism has no place in a competitive
      economy

    – Myth that employment is the most desirable relationship for workers

TANYA CIRKOVIC & ASSOCIATES
T: +61 3 9654 7633
E: admin@tcalawyers.com

				
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