Employment Law · Additional Resources

Whether a person is an employee or an independent contractor has remained a difficult question for many years and has been the subject of many cases before the Courts and still at the current date has no simple answer.


Firstly, there are taxation considerations. Particularly in the building industry, there is an opportunity for individuals to split their income with their partners or take other lawful means to minimise their tax liability if they are able to operate as an independent contractor.


There is also the issue of responsibility or obligation between either the employer or the worker depending on the type of employment. An employer is responsible for superannuation and to have appropriate Workers’ Compensation cover for employees. Independent contractors however are required to make their own arrangements for superannuation payments and to arrange their own Workers’ Compensation cover for any injuries. If there is an accident that occurs at work which results in damage to employers property or loss to the employer, or alternatively an injury to the employee, liability will differ depending on whether the person is an independent contractor or employee.

Control Test

The original determination for whether there was an independent contract arrangement or employment contract was determined by the “test of control”, ie what level of control the employer had over the particular work. The greater the degree of control, the more likely there was a proper employer/employee relationship.

Total Relationship Test

Then in the High Court decision of Stevens -v- Brodribb Sawmill & Co. Pty Ltd in 1986 the Court adjusted the simple control test to recognise the change in social conditions of employment and thereby adopt a more flexible approach by shifting the emphasis from actual exercise of control so that control was not regarded as the only relevant factor. It was said to be the totality of the relationship between the parties which must be considered.

The sort of criteria that have to be considered in determining whether there is an employee relationship or independent contractor that are regularly considered by the Courts are set out as follows:-

Recent Law

This issue was again revisited in a 2001 High Court decision of Hollis -v- Vabu Pty Ltd. It dealt with bicycle couriers and the Courier Company that employed them and arose out of a dispute as to liability for injuries caused to a third party by a bicycle courier rider. Although quite a detailed Judgment involving separate decisions of 5 Judges, it does appear from the reasoning of the decision in that case that whilst the Australian Courts look at the totality of the relationship and consider all the different aspects of the employment or contract that the control exercised by the employer was a very important criteria for determining whether the courier riders were employees or independent contractors. It appears the Courts may now again be placing a lot more emphasis on “control” when considering all criteria.