Classification: employee

## Approach

This is a hypothetical applying the High Court of Australia's 2022 approach to the employee/contractor distinction. I identified the controlling authority, applied its test to the facts, and stated a practical consequence.

## (a) Classification

**Classification: employee**

## (b) Controlling approach and leading case

In 2022 the High Court recast the employee/contractor distinction in **Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1** (the "Personnel Contracting" or "ZG Operations/Jamsek" pairing, decided alongside *ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2**).

The controlling approach is this: **where the parties have committed the terms of their relationship to a comprehensive written contract that is not a sham and is not varied or waived, the characterisation of the relationship is determined by the legal rights and obligations created by that contract - not by how the parties later conducted themselves in practice.** The court construes the contract and asks, on its terms, whether the worker is serving in the business of the other party (an employee) or carrying on a business of their own. The old "multifactorial" survey of the totality of the parties' subsequent conduct is displaced; the wording of the contract (the "label" the parties attach, such as "self-employed contractor") is not decisive, because the parties cannot change the true legal character of their relationship merely by attaching a label inconsistent with the rights and duties they have actually agreed.

Applying that to the facts here: the contract is wholly in writing and not a sham, so its terms govern. Those terms give the company the right to control how, when and where the labourer works, require him to do the work the company directs on its client's sites, and do not permit delegation. He has no business of his own, supplies no significant equipment, and bears no entrepreneurial risk. On the rights created by the contract, he is working in the company's business, not his own. The contractual "self-employed contractor" label does not displace that legal characterisation. He is therefore an **employee** (this mirrors the outcome for Mr McCourt in *Personnel Contracting*).

## (c) One practical consequence for the engaging business

Because the worker is an employee, the engaging business carries employer obligations and liabilities it would not owe a genuine contractor. One concrete example: it must make **Superannuation Guarantee contributions** for him (currently 12% of ordinary time earnings in FY2025-26), and is exposed to the superannuation guarantee charge plus penalties if it fails to. (Other equivalent consequences would include liability for PAYG withholding, paid leave and other National Employment Standard entitlements, award coverage and minimum wages, and potential back-pay claims for entitlements not provided while the worker was mischaracterised.)