Written Contracts Reign

Earlier this year, the High Court published its decision in the Personnel Contracting case[1] setting out the principles around the primacy of a lawful written contract in determining the nature of an employment relationship. The High Court decision means that parties can rely on a written contract that clearly identifies the nature of the working relationship, and the parties’ mutual rights and obligations, without the requirement to have regard to the parties’ post-contractual conduct.

The High Court decision was contrary to the previously accepted principle that the “totality of the relationship” should be examined in order to ascertain the true nature of the working relationship.

In a case before the Federal Circuit and Family Court last week[2], Judge McNab stated that he was bound to follow the principles laid down by the High Court and emphasised that a written contract will be the primary source to determine the true nature of the working relationship.

Judge McNab found that the worker was not an employee despite working full time hours over an extended period for a single company. Relevant considerations included that the worker provided invoices for services rendered and the rate charged by the contractor was approximately double the minimum award rate.

While in this particular case there was no written contract, and consequently the post-contractual conduct could be considered, the decision reinforces that the courts will now look primarily to the contractual terms where these are available in order to determine the nature of working relationships.

Lessons for Employers:

Employers should:

  • Review arrangements with workers including having proper documentation on file (e.g is there a signed agreement?)
  • Ensure there is a written agreement in place for all workers that properly sets out the nature of the working relationship and the terms and conditions of engagement.

If you would like to discuss these or other workplace issues please contact Andrew Bland or call 02 9412 3077.

[1] Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 (9 February 2022)

[2] Pruessner v Caelli Constructions Pty Ltd [2022] FedCFamC2G 206 (25 March 2022)

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