If it looks like a duck and quacks like a duck… Is it a duck?

In December last year, the High Court of Australia handed down judgment in the matter of Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd.

Quest Serviced Apartments (“Quest”) employed two housekeepers over several years. It then entered into a contract with Contracting Solutions whereby the two women would become independent contractors engaged by Contracting Solutions, though they continued to work for Quest and performed the same roles.

This arrangement was effectively sham contracting, which is prohibited under Commonwealth legislation.

Section 357 of the Fair Work Act 2009 (Cth) restrains an employer from representing to an individual that they are working as an independent contractor when they are working as an employee.

As a result of its sham contracting, Quest now faces pecuniary penalties, which can be as high as $54,000 per breach for a corporation. 

So how do you know if your employees are genuinely employees or independent contractors? There is no hard and fast rule and it can often depend on the individual circumstances of the situation.

There are several indicators to consider when determining the nature of your employment relationship, such as how the worker is paid, who makes the taxation payments and whether the worker is a representative of the business.

The entire arrangement will need to be considered to determine the nature of the working relationship.

If you are unsure whether your workers are employees or independent contractors, speak to one of the Workplace Relations team at Nevett Ford on (03) 9614 7111.