Employee/independent contractor distinction

The distinction between employees and independent contractors is a critical legal issue impacting rights and obligations under Australian law. This guidance note explains the evolving legal landscape shaped by recent High Court decisions and legislative amendments, including the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2023, effective from 26 August 2024. Practitioners must understand how the nature of contracts of service versus contracts for services affects employment status, superannuation liabilities, workers compensation coverage, and vicarious liability risks.

Topics Covered

• Independent contractors
• Labour hire arrangements
• General protections against sham contracting
  
  

Essential Insights

• Assess the primacy of contractual terms following the High Court’s 2022 rulings on employment status.
• Consider the complex interplay between common law tests and statutory “deemed employee” definitions.
• Recognise risks of “deemed employee” status for incorporated contractors under superannuation law.
• Understand how vicarious liability applies differently to employees versus contractors.
• Evaluate how recent case law restricts reliance on post-contractual conduct in status determinations.
• Stay alert to upcoming statutory changes that will reshape the totality-of-relationship approach.