‘Contractor’ Truck Drivers were Employees

Two truck drivers who spent 40 years working for the same employer were found to be employees not independent contractors, meaning they were entitled to receive leave, redundancy, and superannuation payments.

The case was first heard in 2017 by the Federal Court after the drivers were dismissed by their employer to cut costs. The Federal Court ruled that they were independent contractors after assessing the intentions when making work arrangement, drivers use of partnership arrangements and changing ownership of trucks. The drivers appealed this decision to the Full Federal Court which resulted in it being overturned.

The drivers argued they were employees and therefore required full entitlements including annual leave, public holiday pay, overtime, redundancy, and Superannuation Guarantee contributions.

The circumstances of their work were:

  • The business was their sole source of income, they did not engage in entrepreneurial activities, a feature of independent trading.
  • Their duties and work hours remained constant, working five days a week, which leaves little scope to seek other work.
  • Their trucks and work clothes had the company logo.
  • The drivers lacked the capacity to generate goodwill from their businesses if they were to sell their trucks.
  • The drivers work duties, remuneration rates, paperwork and annual leave were dictated by the employer.

From 1977 to 1986 the drivers were employees until they received an ultimatum from their employer and were urged to sign an agreement to become contractors. In the process, they were required to buy the trucks they had driven for a non-negotiable price set by the employer. The court noted the new contracts did not significantly change the previous relationship between the parties and the power relationship when making new arrangements strongly favoured the employer.

The Full Federal Court reversed the decision, focusing on what the drivers did and the relationship between the parties, indicating they were employees, rather than the wording of the documents. The case was remitted to assess potential breaches and compensation for the employees.

Disputes around the definition of employees and contractors for the purpose of entitlements are complex and context-dependent on the work relationship. This decision was based on what actually happened in the workplace and the working relationship rather than the wording of contracts.  The drivers, in this case, acted as full-time employees who could not realistically work for other clients and work conditions were controlled by the employer.

For assistance with employment contracts and determining correct employee entitlements contact ProcessWorx on (08) 9316 9896 or enquiries@processworx.com.au

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Written by Danielle McNamee

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