Classification: employee

## Approach

This is a legal-classification hypothetical asking for the application of the High Court of Australia's 2022 approach to distinguishing an employee from an independent contractor. I have answered the three parts as required, with the classification on its own first line.

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(a) Classification: employee

(b) The controlling approach the High Court adopted

In 2022 the High Court reset the test for distinguishing an employee from an independent contractor. Where the parties have committed the terms of their relationship to a **comprehensive written contract that is not a sham and is not otherwise challenged** (e.g. for variation, waiver, estoppel, or as a sham), the character of the relationship is to be determined by reference to the **legal rights and obligations created by that contract** - that is, by construing the contract - rather than by a broad, impressionistic review of how the parties actually conducted themselves over the life of the relationship.

The leading case is **Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 275 CLR 165** (often called the *Personnel Contracting* or *"ZG Operations / Jamsek and Personnel Contracting"* line; *Personnel Contracting* is the directly applicable authority on these facts). The companion case decided the same day is **ZG Operations Australia Pty Ltd v Jamsek (2022) 275 CLR 254**.

Applying that approach here: the contract is wholly in writing and not a sham, so the rights and obligations it creates govern. The **contractual label "self-employed contractor" is not decisive** - a label cannot change the character of a relationship the substance of the contracted-for rights establishes. The decisive rights are the company's contractual **right to control** how, when and where the labourer works and to direct his work, combined with the absence of any genuine business of his own, no significant equipment, and no right to delegate. On the *Personnel Contracting* facts (a young British backpacker engaged through a labour-hire company that on-hired him to a builder under an "Odco"-style "self-employed contractor" agreement), a majority of the High Court held the worker was an **employee**. The "own business / employer's business" inquiry, assessed through the lens of the contracted rights (especially the right of control), pointed firmly to employment. The same reasoning applied to the present facts produces the same result.

(c) One practical consequence for the engaging business

Because the labourer is an **employee**, the engaging business carries the full suite of employer obligations and liabilities rather than the lighter contractor footing it intended. One concrete consequence: the business must make **compulsory superannuation guarantee contributions** on his behalf (and, correspondingly, faces PAYG withholding, payroll tax, leave/National Employment Standards and award entitlements, and potential back-pay and penalties for having mis-classified him). Equally, as the employer it is **vicariously liable** for wrongs the labourer commits in the course of that employment - a liability it would largely have avoided had he genuinely been an independent contractor.