Can businesses reduce the risk of incorrectly classifying workers as employees or contractors?

• Published date: 28 July 2023
• Law Firm: Cooper Grace Ward
• Author: Mr Murray Shume

Correctly distinguishing between employees and contractors is critical for businesses, with significant consequences for incorrectly applying the law. The case law has developed rapidly in this space in the last couple of years. Those cases provide some helpful lessons for businesses seeking to reduce their risks when contracting with sole traders.

Context

We previously wrote about the employee/contractor distinction after the High Court delivered judgment in two cases: CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2.

More recently, the Full Court of the Federal Court applied the principles in CFMMEU and Jamsek to JMC Pty Ltd v Commissioner of Taxation [2023] FCAFC 76.

What happened in JMC's case?

JMC Pty Limited carries on a business providing accredited higher education programs to students. JMC contracted with Mr Harrison to deliver teaching services to its students.

Mr Harrison's contract required him to deliver 'teaching services', which included delivering a course of lectures and marking papers. Mr Harrison was paid a separate hourly rate for lecturing and marking papers.

In the contract, the parties...