Are you an Employee or a Contractor?. That was a question that was determined in the Supreme Court of Tasmania when the Court found that an employee was a contractor although the employer claimed he was a contractor. The ramifications are significant for both the worker and the employer.
The employer disputed liability to pay Workers Compensation and the matter was referred to the Workers Compensation and Rehabilitation Tribunal. A significant issue was whether the worker was working for the employer as an independent contractor or engaged as an employee under a contract for services.
The worker failed before the Tribunal to show that he was an employee. The Tribunal found that the worker paid his own tax, had an ABN, issued his own invoices, obtained income protection and public liability insurance, was able to work for others, tell his employer when he was unavailable for work and knew that he was not entitled to sick or personal leave. The Tribunal concluded that the totality of the relationship between the worker and the employer indicated that the parties were conducting themselves as if the worker was a contractor.
Notwithstanding the above the Tribunal said there was evidence that the worker was not an independent contractor. The employer received and provided tools and equipment, determined the remuneration of the worker, that he did not promote his own business or build goodwill, wore the employers clothing and drive the employers vehicle, had no capacity to delegate, worked only for the employer and had little autonomy in his hours of work and was subject to direction of others. However, the Tribunal considered these factors had little weight.
The worker appealed to the Supreme Court and the decision of the Tribunal was reversed. The Court came to the conclusion that the evidence of the totality of the employment relationship led to the conclusion that the worker was an employee.
The Court found that the personal circumstances of the worker prior to seeking employment with the employer was relevant. In particular his limited language skills, the fact that he had business experience or skills and that he was a ‘self taught handyman’ with no formal qualifications. In relation to the ABN and personal insurance policies the Court accepted that these were obtained by the worker only because the employer told him to do so.
So a person whom may be said to be a contractor may at law in fact be an employee. In that situation the injured worker may be entitled to benefits such as annual leave, long service leave, superannuation, workers compensation. Such claims may be made over the period of time the worker has been with the employer for those benefits.
If an employer engages a worker as a Contractor and it is a sham arrangement there are significant risks, in addition to the above, for the employer such as:
- Monetary penalties;
- Exposure to prosecution;
- Exposure to Unfair Dismissal Laws.
So if you would like to know where you stand in relation to an work injury claim, call Peter Moore, Compensation Lawyer of Brazel Moore Compensation Lawyers for a free down to earth chat.