Skip to main content
Community News

Not so independent – despite contract

By 24 February 2013No Comments
Employers seeking to use more flexible labour arrangements need to be aware that it is not enough to rely on the existence of an independent contractor agreement. The Courts are showing a willingness to look beyond the parties’ intention and focus on the real nature of the relationship. 
The ACE Insurance case — what does it mean for you?


As reported last week on WorkplaceInfo, a full Federal Court has recently upheld a 2011 ruling that five insurance sales representatives were employees despite signing contracts that said they were independent contractors, resulting in more than $500,000 in accrued annual and long service leave being credited to the employees.


The Court confirmed that there is no one single criterion that will necessarily determine whether an arrangement is a contract of employment or an independent contractor arrangement.


In this case (ACE Insurance Limited v Trifunovski [2013] FCAFC 3 (25 January 2013)), an important element for the Court was the insurance company’s right to control the work of the agents. The representatives were trained in particular techniques of selling which the company adopted as its own. The representatives also worked under the company’s close direction, supervision and organisation, with a view to selling insurance products in a way determined by the company.


Employers, note


Before engaging independent contractors, businesses should seek advice to ensure the arrangement is a true independent contractor relationship in order to avoid a later claim for back-pay and unpaid leave entitlements.


Source: Sam McIvor is a Brisbane-based lawyer with Australian Business Lawyers and Advisors with a special interest in employment law.

Purnima Kabra