Do Not Judge a Book by its Cover – Independent Contractor vs Employee 

A Full Bench Decision of the Fair Work Commission (the Commission) on 20 June 2024 serves as a timely reminder to correctly classify workers as employees or independent contractors ahead of the new definitions of “employer” and “employee” becoming operative in the Fair Work Act 2009 from 26 August 2024. 

Was the worker an Employee or an Independent Contractor? 

In Aspire 2 Life Pty Ltd v. Jessica Tidmarsh [2024] FWCFB 289, Ms Jessica Tidmarsh (Ms Tidmarsh) was engaged by Aspire 2 Life Pty Ltd, a disability services provider, as an independent contractor. The primary issue being considered was whether Tidmarsh was an employee or an independent contractor. 

Aspire 2 Life (Aspire) appealed the decision of Deputy President Roberts of 27 October 2023, where he ruled that Ms Tidmarsh was an employee, not an independent contractor. The appeal was based on several grounds such as the nature of the relationship and degree of control. Notably, Aspire contended that the Deputy President failed to consider the following contractual indicia which favour a characterisation of the relationship as one of principal and independent contractor: 

Ms Tidmarsh was required to provide her own “equipment, including specialised clothing or safety equipment”; 

There was a requirement on the part of Ms Tidmarsh to hold a tertiary qualification in disability or aged care; 

Ms Tidmarsh had the right under the contract to subcontract work to another person; 

The contract provided that all rates of pay were inclusive of goods and services tax; 

The contract did not restrain Ms Tidmarsh from providing services for, or being employed by, a competing business; and 

Ms Tidmarsh had the right under the contract to its immediate termination. 

The Full Bench agreed with the initial finding of Deputy President Roberts in that the terms of the contract describing Ms Tidmarsh as an independent contractor were to be given little or no weight in the overall analysis of the relationship. 

The Commission conducted a detailed review of the contractual rights and obligations of each party and Aspire’s business model. In reaching its decision that Ms Tidmarsh is an employee, the Commission looked at the practical reality of the arrangement. It found that Ms Tidmarsh undertook personal care work for clients sourced by Aspire 2 Life, for which she was paid an hourly rate by Aspire 2 Life.

The right to control the nature of the services to be provided to clients, when those services were provided, and the way in which the personal care work was to be undertaken by Ms Tidmarsh lay in the hands of Aspire 2 Life, which is consistent with its ongoing responsibility to manage the services being provided to the clients. In many ways, Ms Tidmarsh was integrated into the business of Aspire 2 Life in a way in which a person employed as a personal care worker would be. Ms Tidmarsh also did not have the right to subcontract the care work to third parties. 

Significance to Employers 

The Full Bench acknowledged in its decision that the outcome of this case will have significant implications for the classification of employment relationships and independent contracting arrangements, particularly in the National Disability Insurance Scheme (NDIS) and community services sector where many workers under similar circumstances are historically classified as independent contractors. 

This decision, in light of the upcoming changes to the definition of employee and employer where the determining factor would be the “real substance, practical reality and true nature of the relationship between parties,” reminds Employers of how the contractual relationship should reflect the real relationship between the worker and the employer.  

This case highlights the importance of reassessing your existing contractual relationships to ensure that they reflect the contract. 

The team here at IRiQ Law is equipped to navigate you through any of the upcoming changes and its implications to your business.