Contracts can disguise employment relationships

The Full Bench of the Fair Work Commission (FWC) has upheld the original decision of the FWC that a personal care worker had the standing to bring an employee claim under the Fair Work Act 2009 (Cth), despite two contracts that described her as an independent contractor.

In Aspire 2 Life Pty Ltd v. Jessica Tidmarsh [2024] FWCFB 289, a former worker was granted standing to bring a claim under s. 365 of the Fair Work Act, despite the jurisdictional objection that she was not an employee who could be dismissed.

The worker was engaged by Aspire 2 Life Pty Ltd as a home care services support worker. After obtaining an ABN, as required by the company, the worker entered into a Contracted Service Provider Agreement and a Contract Work Opportunity document. She then began receiving shift offers through the rostering app, ShiftCare, and was charged a monthly fee.

After working for nine months, the worker informed one of the directors that she had contacted the Fair Work Ombudsman regarding her working arrangements. The company then sent an email to her terminating her contract.

Following the finding of the FWC that the worker had standing to bring an employee claim, the company appealed. The sole appeal ground of Aspire 2 Life was that the FWC wrongly found that the worker was an employee rather than a contractor.

The FWC determined that the current case was distinguishable from the High Court’s ruling in relation to employment relationships in Construction, Forestry, Maritime, Mining and Energy Union (CMMFEU) v. Personnel Contracting Pty Ltd [2019] FCA 1806, as Aspire 2 Life was a business that delivered care services, rather than a general labour hire agency.

Employer-employee relationship

The contractual arrangements between Aspire 2 Life and the worker established an employer and employee relationship, as Aspire 2 Life reserved the right to determine the services that would be delivered by the worker. While various terms within the Agreement and Work Opportunity document were consistent with the notion that the worker operated independently, there were two key provisions that pointed to the worker being integrated into and serving Aspire 2 Life as an employee.

The FWC identified these as the following:

• The right to give instructions to the worker to meet client needs, was granting Aspire 2 Life the right to control the way the care services were performed by the worker.
• The capacity for the worker to refuse work was constrained, as she was required to be available to work at the agreed times six months from the Agreement date and needed to provide two weeks’ notice if her availability changed.

The Agreement stipulated the way in which the worker provided services and constrained her employment by competing businesses, and, in many ways, integrated the worker into Aspire 2 Life in a way that an employed personal care worker would be.

The contractual rights and obligations imposed on the worker left little scope for entrepreneurship on the part of the worker. The Full Bench dismissed the appeal on the basis that the aspects of the Agreement and Work Opportunity document that pointed towards an employee and employer relationship outweighed the aspects that pointed to an independent contracting agreement.

Takeaways for employers

Determining whether working arrangements are either an employment relationship or a contracting arrangement is notoriously difficult. The decision in this case was acknowledged by the Full Bench of the FWC as having significant implications of employment relationships and contracting arrangements.

Employers should consider conducting a review of their operations, contracts and policies in light of this case.

Belinda Winter is a partner at Cooper Grace Ward in Brisbane, specialising in employment, industrial relations, discrimination, and safety law. Chelsea Huth is a law clerk at Cooper Grace Ward in Brisbane.