ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2; (2022) 275 CLR 254; 96 ALJR 144; 398 ALR 603; 312 IR 74
- High Court of Australia
- Judgment date: 9 February 2022
- Kiefel CJ, Gageler, Keane, Gordon, Edelman, Steward and Gleeson JJ.
- Nature of employment relationship – Employee or independent contractor
The case ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2 deals with the determination of whether two former truck drivers, Martin Jamsek and another respondent, were employees or independent contractors of ZG Operations Australia Pty Ltd.
Case Background (ZG Operations Australia Pty Ltd v Jamsek)
The respondents worked as truck drivers for the appellant’s predecessors since 1977. In 1986, they were required to purchase their own trucks and entered into contracts with the company through partnerships formed with their spouses. They invoiced the company for services and declared partnership income.
In 2017, after the termination of their contracts, the respondents sought statutory entitlements, claiming they were employees under the Fair Work Act 2009 (Cth), the Superannuation Guarantee (Administration) Act 1992 (Cth), and the Long Service Leave Act 1955 (NSW).
Primary Legal Question
Whether the respondents, under the changed contractual arrangements, were employees or independent contractors.
Court History
The primary judge ruled that they were independent contractors.
The Full Court of the Federal Court reversed this decision, finding them to be employees.
The High Court ultimately reinstated the view that they were independent contractors, allowing the appeal by ZG Operations.
High Court’s Rationale (ZG Operations Australia Pty Ltd v Jamsek)
The High Court emphasized the significance of the written contracts governing the relationships between the company and the partnerships. The respondents were found to have acted as partners in a business providing delivery services, rather than as employees. The partnerships owned and bore the operational risks of the trucks, further supporting the conclusion of independence. Disparities in bargaining power and other contextual factors, while relevant, were insufficient to alter the contractual character of the relationship.
In the words of KIEFEL CJ, KEANE AND EDELMAN JJ. –
“…the character of the relationship between the parties in this case was to be determined by reference to the rights and duties created by the written agreement which comprehensively regulated that relationship.”
“…the reality of the situation is that the partnerships, and not the respondents individually, owned and operated the trucks. The partnerships contracted with the company and invoiced the company for delivery services provided by the operation of the trucks. The partnerships earned income from the company, incurred expenses associated with the ownership and operation of the trucks, and took advantage of tax benefits of the structure. It is not possible to square the contention that the respondents were not conducting a business of their own as partners with the circumstance that, for many years, they enjoyed the advantages of splitting the income generated by the business conducted by the partnerships with their fellow partners.”
Significance of the case
The decision clarifies that the characterization of a worker’s relationship with a company must primarily derive from the written contractual terms unless claims like sham arrangements or unconscionable conduct are made. It underscores the boundaries of employee vs. contractor distinctions in the context of modern labour arrangements.
List of references:
https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/2022/2.html
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