CONSTRUCTION, FORESTRY, MARITIME, MINING AND ENERGY UNION V PERSONNEL CONTRACTING PTY LTD [2022] HCA 1 (9 FEBRUARY 2022)

06 Apr CONSTRUCTION, FORESTRY, MARITIME, MINING AND ENERGY UNION V PERSONNEL CONTRACTING PTY LTD [2022] HCA 1 (9 FEBRUARY 2022)

With the rise of the gig economy and labour hire businesses, the distinction between an employee and a contractor has again been considered by the High Court.

This case is of interest because it demonstrates that (notwithstanding reporting of some recent decisions in the same area of law) the Court will always look to the substance of the arrangement as described in the applicable contract when characterising the nature of the relationship.

Facts

The Perth-based labour hire company (trading as “Construct”) engaged Mr McCourt for the purpose of hiring him out to builders to perform construction work. Mr McCourt signed an agreement with Construct which established that Mr McCourt was a ‘self-employed contractor’. Mr McCourt’s work included carrying out construction work for Hanssen Pty Ltd, with which Construction had a Labour Hire agreement. The question was whether Mr McCourt could be characterised as an independent contractor or an employee for his labour services for Construct under the Fair Work Act 2009 (Cth) (“the Act”). Mr McCourt sought to be paid as a Construct’s employee in accordance with the Building and Construction General on-site Award 2010 (“the Award”).

The matter was heard at first instance in 2019 by the Federal Court of Australia where the primary judge decided that Mr McCourt was an independent contractor, and an appeal to the Full Court was dismissed. Special leave was granted for Mr McCourt to appeal to the High Court of Australia where the matter was heard in 2022.

Decision

Notwithstanding Mr McCourt’s characterisation as an independent contractor in the agreement, the High Court majority including Justices Gageler, Keane, Gordon, Edelman, and Gleeson, analysed the agreement and focused on the following matters: control and commitment. The majority reasoned that the agreement between Mr McCourt and Construct established a contractual relationship between them, and by extension, a relationship of employee and employer. This is because the agreement illustrated that in return for Mr McCourt’s work, he would be paid by Construct and additionally, while engaged by Construct, he would not complete work for bodies other than Hanssen. This right to control Mr McCourt’s work comprised an employee-employer relationship between him and Construct, and the fact that they described him as a contractor was irrelevant here. The majority asserted that ‘where the terms of the parties’ relationship are comprehensively committed to a written contract, the validity of which is not challenged as a sham…there is no reason why the legal rights and obligations so established should not be decisive of the character of the relationship’ [at 43].

The reasoning led to the majority finding that Mr McCourt was Construct’s employee and not an independent contractor, and that the original judgment made on 6 November 2019 should be set aside. Furthermore, the majority ordered that the case be remitted to the primary judge for a final determination regarding Mr McCourt’s rights under the Act to be paid in accordance with the Award.