How to determine whether a person is an employee or contractor

What follows is an extract from a decision of the Chief Justice of the Federal Court of Australia in an important case about the manner in which courts and tribunals should approach the legal issue of determining whether the relationship between parties is that of employer and employee or principal and independent contractor. His Honour’s decision highlights the legal tension between approaches which have traditionally been taken by the courts, namely whether to give primacy of influence to the express terms of the contract which creates the relationship or the real and practical day to day nature of the relationship in terms of how it works.

This post is the first of two which I will publish about this very important case, given its implications for employment law.

“The appeal concerns the employment status of Mr Daniel McCourt, the second appellant, who for some months in 2016 and 2017 worked as a general labourer on two construction sites in Perth under the supervision and control of workers of a builder, Hanssen Pty Ltd, the second respondent, the proceedings against which were discontinued before the hearing of the appeal.  No one contended that Hanssen was the employer of Mr McCourt; it did not pay him; his services as a labourer were supplied to Hanssen by a labour hire company, Personnel Contracting Pty Ltd, the first respondent; Personnel paid Mr McCourt; Hanssen paid Personnel.

The question at issue before the primary judge, and on appeal was whether Mr McCourt was an employee of Personnel or an independent contractor retained by Personnel and supplied as such to Hanssen.  If Mr McCourt was an employee his status was a casual employee.

The context of the enquiry was the claims brought by Mr McCourt and his union, the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU), against Personnel and Hanssen under ss 545, 546 and 547 of the Fair Work Act 2009 (Cth) for orders for compensation and penalties based on the allegation that Mr McCourt was not paid or treated according to the relevant award, the Building and Construction General On-Site Award 2010. He was entitled to be paid under the award only if he was an employee, but not if he was an independent contractor. There is no issue about the fact that Personnel paid Mr McCourt what he was due under the terms of the contract with it and that such payments were approximately 75% of that which Mr McCourt was entitled under the award for the work he did over the time he did it, if he was an employee.

The case and the appeal raise important questions as to the approach to tripartite labour hire arrangements in which companies such as Hanssen, requiring labour, both skilled and unskilled, outsource the provision of their labour force, or at least some of it, to labour hire companies, such as Personnel.  In such arrangements it is usual, as occurred here, for there to be no contractual arrangement between the worker and the requirer of the labour (here, the builder, Hanssen); rather the contractual relationship involving the worker is between the worker and the labour hire agency or provider.  Such contractual arrangement is complemented by a contractual arrangement between the labour hire company and the requirer of the labour (here Personnel and Hanssen, respectively) regulating their mutual rights and obligations.

The legal framework for the question is the Fair Work Act, but it was common ground that the question was to be answered by reference to common law principles.  That said, the statutory context is relevant to how the common law approaches the question at hand: Tattsbet Ltd v Morrow [2015] FCAFC 62; 233 FCR 46 at 50 [5]. One aspect of the statutory context is that the enquiry has a binary character: either Mr McCourt was an employee of Personnel (in this case necessarily casual) or he was an independent contractor. Another aspect of the statutory context is the recognition in the Fair Work Act of casual employment.

Importantly also, the question of employment arises in the context of a statute of social, economic or industrial regulation with the consequences referred to by Bray CJ in R v Allan; Ex parte Australian Mutual Provident Society (1977) 16 SASR 237 at 247 referred to with approval by Northrop, Deane and Fisher JJ in Rowe v Capital Territory Health Commission [1982] FCA 106; 2 IR 27 at 28. This assists in reinforcing the caution with which one must approach self-categorising or self-characterising terms of a contract which seek to determine contractually the nature of the relationship.

As the authorities referred to by Lee J and in the discussion below reveal, the answer to the question of Mr McCourt’s status by reference to his relationship with Personnel is provided by the process of characterisation of the facts involved in the whole relationship, including, but not limited to, the terms and proper objective construction of the underlying constituent contract.  A contract (express or implied or a mixture of the two) is essential to found the employment relationship, but its terms are not definitive of the character of the relationship, nor are they exhaustive of the considerations relevant to its ascertainment.  The question is one of characterisation of the status or relationship of parties as independent contractor or employee in the infinite variety of factual circumstances that the provision of labour for reward may take place in society.  No doubt, statute can create a status that provides for consequences different to the application of common law principles: ample examples can be readily identified as the foundation for responsibilities connected with workers’ compensation, superannuation, taxation, occupational health and safety and other matters.

We are concerned, however, with a binary question: was Mr McCourt an employee or an independent contractor, at common law.  The distinction between the two is “too deeply rooted to be pulled out”: Sweeney v Boylan Nominees Pty Ltd [2006] HCA 19; 226 CLR 161 at 173 [33]. The principles applicable are to be found in decisions of binding authority for this Court: in particular Hollis v Vabu Pty Ltd [2001] HCA 44; 207 CLR 21; and Stevens v Brodribb Sawmilling Co Proprietary Limited [1986] HCA 1; 160 CLR 16; and in decisions of intermediate courts of appeal of persuasive authority.

The valuable, if I may respectfully say, review of many aspects of the issue of the relationships between employer/principal and employee/contractor by Buchanan J in ACE Insurance Ltd v Trifunovski [2013] FCAFC 3; 209 FCR 146 (with which judgment Lander and Robertson JJ agreed), together with the reasons of Lee J, relieve me of the necessity to undertake any detailed review of the cases. I agree with the reasons of Buchanan J and they assist significantly in ordering the analysis for this case.

As Buchanan J observed, the contract-centred focus of cases such as Connelly v Wells (1994) 55 IR 73, Australian Mutual Provident Society v Chaplin (1978) 18 ALR 385, and Narich Pty Ltd v Commissioner of Pay-roll Tax [1983] 2 NSWLR 597 appears to have given way to an approach where all circumstances should be taken into account: ACE Insurance 209 FCR at 174 [107]. Such an approach of characterisation from all the circumstances was not new: Colonial Mutual Life Assurance Society Limited v Producers and Citizens Co-operative Assurance Co of Australia Limited [1931] HCA 53; 46 CLR 41 at 46 and 48; Marshall v Whittaker’s Building Supply Co [1963] HCA 26; 109 CLR 210 at 214–215; and R v Foster; Ex parte Commonwealth Life (Amalgamated) Assurances Limited [1952] HCA 10; 85 CLR 138 at 150–151 and 153–154. The correct approach is revealed by the passage in Hollis v Vabu 207 CLR at 33 [24] (referred to by Buchanan J in Ace Insurance 209 FCR at 174 [107]):

[T]he relationship between the parties … is to be found not merely from [the] contractual terms.   The system that was operated thereunder and the work practices imposed by Vabu go to establishing the “totality of the relationship” between the parties; it is this which is to be considered.

This passage echoed (and took the quoted words (“totality of the relationship”) from) Stevens v Brodribb Sawmilling 160 CLR at 29 (Mason J).

It is important to recognise that the process is one of characterisation of the facts by reference to the whole arrangement to reach a conclusion as to the nature of the relationship.  For its coherent undertaking, that process of characterisation must have principles or organising conceptions that inform the relevant binary distinction in order that the task is not one to determine a legal category of meaningless reference: cf Stone J, The Province and Function of Law (rev ed, Harvard University Press, 1950) at 171.  The guiding principles or informing conceptions are illuminated by description and articulation, and not definition or some form of logical deduction.  The guiding principles or informing conceptions were explained timelessly by Dixon J in Colonial Mutual Life 46 CLR at 48 and by Windeyer J in Marshall 109 CLR at 217 which explanations were at the heart of the plurality’s reasons in Hollis v Vabu 207 CLR at 38–39 [38]–[40]. In Colonial Mutual Life, Dixon J was concerned with the question in the context of ascertaining vicarious liability or not, as was the Court in Hollis v Vabu 207 CLR 21. Windeyer J in Marshall 109 CLR 210 was concerned with injury and workers’ compensation. In that latter context, Windeyer J said at 217:

[The] distinction between a servant and an independent contractor … is rooted fundamentally in the difference between a person who serves his employer in his, the employer’s, business, and a person who carries on a trade or business of his own.

In his concurring reasons in Hollis v Vabu 207 CLR at 48 [68], McHugh J expressed the conception of an independent contractor as “someone who acts as an independent principal, exercising an independent discretion in carrying out a task for his own business interest and who is retained simply to produce a result.”

Attention to these expressions of the underlying conceptions involved does not lead one to a simple formula or definition, but rather it illuminates the need for characterisation of a human, social, legal and commercial relationship embodying such relational conceptions, to which process the rights and obligations sourced in contract and the practical realities of execution, performance and relationship are relevant. Thus, the finely worked language of the lawyer’s craft, designed to do everything possible to lead to one conclusion or another in the interests of one party or another (in reality, the party with the dominant bargaining position), is unlikely to be definitive of a whole relationship.  Indeed the repeated and emphatic language that a person is not an employee, but an independent contractor or agent, may often draw the comment (not a conclusion, but a comment) of the kind that fell from Dixon, Fullagar and Kitto JJ in R v Foster 85 CLR at 151:

Provisions of this character are perhaps more likely to arouse misgivings as to what the practical situation of the agent may be in fact than to prevent a relation of master and servant being formed.

As the reasons of Lee J reveal, it is necessary to be both more comprehensive and precise as to the applicable governing principles.  Those principles involve both bipartite relationships of employer or principal, and employee or independent contractor, as well as the tripartite relationships involved in labour hire and supply which is now a feature of the modern industrial and employment landscape.

Here, there was no dispute about the primary facts.  The dispute lay in their characterisation, and in the appropriate application of legal principle.  It is helpful to say something of the judicial technique in this process of characterisation.

In a passage approved by a Full Court of this Court (Keane CJ, Sundberg and Kenny JJ) in Roy Morgan Research Pty Ltd v Federal Commissioner of Taxation [2010] FCAFC 52; 184 FCR 448 at 460 [31] and by the Victorian Court of Appeal (Winneke P, with whom Phillips and Kenny JJA agreed) in Roy Morgan Research Centre Pty Ltd v Commission of State Revenue (Vic) (1997) 37 ATR 528 at 533, Mummery J in Hall (Inspector of Taxes) v Lorimer [1992] 1 WLR 939 at 944 described the judicial technique of characterisation involved in determining whether a person was a servant or an independent contractor as follows:

It is clear from these cases that there is no single satisfactory test governing the question whether a person is an employee or is self-employed.  As Lord Griffiths observed in the last, most recent and authoritative case the question has never been better put than by Cooke J. in the Market Investigations case, at p. 184G.  The question is: does the taxpayer perform his services as a person in business on his own account?  If he does, his work as a vision mixer for the various television production companies must be regarded as performed under a series of contracts for services, entered into by him in the course of carrying on his own business.  If he does not, his work must be regarded as performed under a series of contracts of employment with those companies.

In order to decide whether a person carries on business on his own account it is necessary to consider many different aspects of that person’s work activity.  This is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation.  The object of the exercise is to paint a picture from the accumulation of detail.  The overall effect can be only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole.  It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details.  Not all details are of equal weight or importance in any given situation.  The details may also vary in importance from one situation to another.

The process involves painting a picture in each individual case.  As Vinelott J. said in Walls v. Sinnett (1986) 60 T.C. 150, 164:

It is, in my judgment, quite impossible in a field where a very large number of factors have to be weighed to gain any real assistance by looking at the facts of another case and comparing them one by one to see what facts are common, what are different and what particular weight is given by another tribunal to the common facts.  The facts as a whole must be looked at, and what may be compelling in one case in the light of all the facts may not be compelling in the context of another case.

In Roy Morgan Research Centre 37 ATR at 533, after approving this passage, Winneke P added the following about the process of characterisation (with which comments the Court in Roy Morgan v FCT 184 FCR at 460 [32] also agreed):

Although technically it remains true that the question whether a person is engaged on a contract of service or for services is one of mixed law and fact, in reality the task of the trial judge in determining that question, in a case like the present one, involves an assessment and evaluation of evidence for the purpose of identification and isolating factors or indicia which are capable of pointing in one direction or the other, and then weighing or balancing those factors in accordance with established principles, none of which is conclusive, in order to reach a conclusion.

The expression of the task by Mummery J is valuable because it illuminates, in language of metaphor, the relevance of intuitive appreciation and assessment of the whole, rather than a process of mechanically disaggregating and deconstructing different parts of the relationship by tests drawn from other cases.   This role of intuitive appreciation of the whole can also, to an important degree, be seen in Hollis v Vabu 207 CLR at 42 [48].

The process of characterisation is not the process of construction or interpretation of the written contract.  The decision or conclusion as to the character of the relationship is affected by the terms, meaning and content of the contract in particular by the clauses that give rise to rights and obligations, rather than those that simply seek to place a contractual label on the relationship.  It is essential to recall, however, that it is not the contract that is to be characterised, but the relationship.  The relationship is founded on, but not defined by, the contract’s terms.  Hence the importance of standing back and examining the detail as a whole, by reference to the guiding underlying conceptions discussed at [13]–[15] above which distinguish the two relationships: employee and independent contractor or principal. This perspective is essential to view the circumstances as a practical matter (cf Hollis v Vabu 207 CLR at 41–42 [47]). This perspective and proper approach to the characterisation of the whole is likely to be distorted, not advanced, by an overly weighted importance being given to emphatic language crafted by lawyers in the interests of the dominant contracting party. The distortion will likely see formal legalism of the chosen language of such party supplant a practical and intuitively sound assessment of the whole of a relationship by reference to the elements of the informing conceptions.

It is necessary to say something about the nature of the appeal in these circumstances.  This is not an exercise in, or akin to, discretionary decision-making.  There may be evaluation involved but the person is either an employee or an independent contractor.  The conclusion here is one drawn from largely uncontested facts without any assessment of demeanour or veracity of witnesses intruding.  The case was not exceptionally long, five days including careful and detailed submissions.  There is no call for the kind of consideration in State Rail Authority (NSW) v Earthline Constructions Pty Ltd (In Liq) [1999] HCA 3; 73 ALJR 306 of an advantage in the primary judge having the evidence fall out in sequence over a period of time permitting absorption, contemplation and reflection of the whole of the evidence, including its complexities as it unfolded over time. This Court has had the advantage of skilled and carefully put submissions of senior counsel, not to mention the advantage of a carefully expressed and clear judgment of the learned primary judge. There is no particular advantage of the trial judge to call up the need for deference or full weight to be given to the impressions of the primary judge as in such contexts described in Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; 117 FCR 424 at 437–438 [29].  This Court is in as good a position as the primary judge to assess and characterise the relationship between Mr McCourt and Personnel.  The conclusion here is an example of what was said in Branir at 436 [25]: “where, by the nature of the fact or conclusion, only one view is (at least legally) possible … the preference of the appeal court for one view would carry with it the conclusion of error.”

The description of the judicial technique in the task of characterisation of the relationship can be compared to the approach to the question were it to be decided in a jury trial.  As Mr Glass QC and Mr McHugh (as they then were) said in The Liability of Employers in Damages for Personal Injury (Law Book Co, 1966) at 78–79, if the only evidence relating to the nature of the relationship is to be found in a written document a question of law is involved and the matter would be for the judge: Performing Right Society Ltd v Mitchell and Booker (Palais de Danse) Limited [1924] 1 KB 762. If there is, however, other evidence of the circumstances attending the relationship it will be a matter for the jury to consider the written document and to decide, by reference to the instructions of the judge. As the authors said at 79:

It [the jury] will be entitled to disregard the written document if this does not correspond to the real arrangement between them.

The tripartite arrangement of two organisations and one worker is not new.  Problems of responsibility and vicarious liability arose in the 19th and 20th centuries.  See the discussion in ACE Insurance 209 FCR at 153–156 [39]–[51]. In Johnson v Lindsay & Co [1891] AC 371, the context of the dispute was the operation of the doctrine of common employment, and the question was for whom an employee worked. Lord Herschell said at 377–378:

The general servant of A may for a time or on a particular occasion be the servant of B., and a person who is not under any paid contract of service may nevertheless have put himself under the control of an employer to act in the capacity of a servant, so as to be regarded as such.  This, as has been pointed out, is the position of a volunteer.

In such circumstances, the question is who is liable for the negligence of the employee: the general employer who lends or hires the employee or the hirer of the employee who might be called the particular employer, pro hac vice.  Cases such as Mersey Docks and Harbour Board v Coggins & Griffith (Liverpool) Ltd [1947] AC 1; Bain v Central Vermont Railway Co [1921] 2 AC 412 at 416; McDonald v Commonwealth (1945) 46 SR (NSW) 129 at 132; Cameron v Nystrom [1893] AC 308 at 312; and Century Insurance Co v Northern Ireland Road Transport Board [1942] AC 509 at 517 focus attention on control. See generally ACE Insurance 209 FCR at 153–156 [39]–[51].

The question here, however, is not whether Hanssen would be liable to someone injured by Mr McCourt’s negligence in the performance of his work; it is whether the company which paid him for the time he worked on Hanssen’s sites and which provided him to Hanssen was his employer.  A conclusion that it was would not prevent Hanssen being found to be the particular employer for the purposes of common law vicarious liability.  It is difficult to see why the nature of the contractual terms or contractual relationship between Mr McCourt and Personnel should make any difference to that.

What are the facts here, stripped of the detail of the precise and closely-worded terms of the documentation?  A young tourist looking for work approaches Personnel.  He has no specialist skills, though he has experience working as a barman in a hotel and as a labourer on building sites back home in England.  He has no business.  He is not attempting to commence a business.  He wishes to obtain labouring work on a building site to sustain him while in this country.  He is prepared to sign relevant documentation to enable him to work.  Personnel carries on the business of supplying workers to companies such as Hanssen who may need them.  It is prepared to pay the worker by reference to time spent working at the premises of the person, in this case a builder, Hanssen, who needs the labour.  Upon acceptance of the opportunity to work at Hanssen’s site Mr McCourt spends regular working hours on Hanssen’s site taking instruction from, and being under the control of, supervisors at Hanssen in respect of basic building work such as cleaning the site, removing rubbish and preparing the site for the work of others. This is the kind of work that both Personnel and Mr McCourt expect that he will be doing.  All aspects of how he works at the site, including how he is under direction, supervision and control at the site by Hanssen employees and officers conform with the character of a relationship of employment, or the status of being an employee.  There is no exercise of any independent discretion by Mr McCourt in carrying out a task either for his own business or to produce a result which he has been retained to produce; nor does anyone expect this of him.  He can leave the site on short notice; but then so could any employee, casual or not.  He is paid by the hour for the time he works.

The notion that Mr McCourt was an independent contractor when working on the building site and that Hanssen was not liable for his negligence would defy any rational legal principle and common sense.  The liability of Hanssen as such cannot turn upon the intricacies of the documentation that Personnel place before people such as Mr McCourt for signing: cf Denham v Midland Employers Mutual Assurance Ltd [1955] 2 QB 437 at 443–444; and Ace Insurance 209 FCR at 151 [28]–[29].

The day-to-day reality of the arrangement between Personnel and Mr McCourt was as I have described at [27] above. The arrangement had within it a right in Personnel to require an unskilled builder’s labourer, such as Mr McCourt, to comply with all reasonable and lawful directions and supervision by Hanssen. A contract purported to regulate their arrangement by which Mr McCourt would be given the opportunity to earn money working as a supervised and directed labourer on a building site. He remained under contract with Personnel which paid him for his supervised and directed (by Hanssen) labour. Whilst controlled by Hanssen, Mr McCourt was nevertheless paid by Personnel for working in the business of Personnel (as a provider of labour) by dutifully performing the tasks of a labourer for Hanssen in circumstances that would undoubtedly render Hanssen liable for his negligence. No aspect of the relationship of Mr McCourt or Personnel evinced any incident of Mr McCourt carrying or wanting to carry on any business of any kind: he merely sought payment for working as a builder’s labourer.

The particular circumstances of parties involved in disputes over so-called Odco contracts may lead to different conclusions about the characterisation of the relationship between the labour hire company and the would-be worker.  The model has entrenched itself into modern industrial relations and employment.

Unconstrained by authority I would favour an approach which viewed the relationship between Mr McCourt and Personnel as that of casual employment. I would see my preference being entirely in accord with the application of principle reflected in the decision of the Supreme Court in Autoclenz Limited v Belcher [2011] UKSC 41; 4 All ER 745, especially [23]–[37]. This characterisation is in circumstances where Mr McCourt had no aspect of a business or intended business, no expressed desire to act in any capacity other than as a builder’s labourer, and merely sought remuneration for the deployment of his labour on a building site supervised, directed and controlled by the builder; where Personnel retained him to supply him to Hanssen to work as such and in that manner, requiring him, by express or implied contractual term, to obey the reasonable and lawful directions of the builder; where he does work as a labourer under the supervision, direction and control of Hanssen; and where the expectations of the parties were that the relationship would operate as I have described at [27] above. In this conclusion, I would prefer the approach of the Full Bench of the Western Australian Industrial Relations Commission in Construction Forestry Mining and Energy Union of Workers v Personnel Contracting Pty Ltd trading as Tricord Personnel [2004] WAIRC 11445 and of EM Heenan J (in dissent) in the decision of the Western Australian Industrial Appeal Court (effectively the Full Court of the Supreme Court of Western Australia, the Court of Appeal coming into existence a month later) reviewing the decision of the Commission: Personnel Contracting Pty Ltd t/as Tricord Personnel v Construction Forestry Mining and Energy Union of Workers [2004] WASCA 312; 141 IR 31. That litigation, as explained by Lee J, concerned an earlier version of this very contract, and, although not involving Mr McCourt, involved the CFMEU and Personnel. A majority of the Court (Steytler J and Simmonds J) found the contractual relationships between Personnel and two men in relevantly similar circumstances as Mr McCourt to be that of principal and independent contractor. As explained by Lee J, their Honours gave significant weight to the relevant contractual terms. That the contract is real and not a sham may not, however, permit significant weight to be given to carefully crafted terms that bear little practical connection to the simple and straightforward expectations of the parties, reflected in the reality of the situation, as to the undertaking of paid labouring work by a working man or woman.

The decision in Personnel v CFMEU was after Hollis v Vabu.  In 2012, the Full Court of the Supreme Court of Tasmania in Young v Tasmanian Contracting Services Pty Ltd [2012] TASFC 1 held that a worker hired out as an unskilled labourer was a contractor.

Notwithstanding the approach to characterisation in this matter which I would favour, I agree with the orders proposed by Lee J.  I do so for a number of reasons.  First, at least two intermediate courts of appeal have, by application of principle since Hollis v Vabu, characterised the relationship between an unskilled worker and a labour hire company as one of principal and independent contractor, by reference substantially to the terms of the contract of retainer with the labour hire company:  Personnel v CFMEU and Young v Tasmanian Contracting.

Secondly, one of those cases concerned, effectively, this very contract, with workers in the same position as Mr McCourt.

Thirdly, whilst what might be seen as a contract-centred or dominated approach in Connelly v Wells, Chaplin and Narich is difficult to reconcile with Hollis v Vabu and other cases that emphasise the analysis of the whole relationship, they cannot be dismissed as irrelevant, being judgments of the New South Wales Court of Appeal, authored by Gleeson CJ, and of the Privy Council.  These cases, and others that have followed them (as set out by Lee J), raise the question of the residual weight to be given to the contract, especially when the other factors affecting the characterisation process are seen to be evenly weighted. This tendency to default to the contractual terms may in any given case place emphasis on the contractual terms beyond their appropriate weight.  That consideration of the appropriate weight to be given to the contractual terms explains the difference in my preferred approach and that of Steytler J and Simmonds J in Personnel v CFMEU in 2004 and that of the primary judge.  That such a default weight might be given to the contractual terms can be easily understood if weight and deference is to be given to the customarily succinct words of Gleeson CJ in Connelly v Wells 55 IR at 74 as some form of default rule:

Where the relationship between two persons is founded in contract the character of the relationship depends upon the meaning and effect of the contract.

Embedded in my difference with the majority in Personnel v CFMEU is the approach to the contract.  In some circumstances it would be perfectly legitimate to give significant weight to its negotiated terms.  By way of example only, such circumstances may include where the working man or woman wanted to work as an independent contractor, perhaps with a family trust arrangement, and made that clear in negotiations.  There may be countless other circumstances of a relationship intended and expected by both parties in creation and operation to exhibit the distinguishing features of independent contracting to which I have referred.  Here, however, the standard form documentation is provided by Personnel, to be signed by Mr McCourt. The documentation provided by the dominant party is not of any particular interest to Mr McCourt, other than being necessary to sign if he were to be given the work he wanted. There is no unconscionability or predation; the contract is real, not a sham, but in the light of the whole relationship, including the expectations of the parties, it is difficult to see why it should have influential or tie-breaking effect. This question of the circumstantial weight of contractual terms is sufficiently varied in application by different courts, but potentially so crucial, that it is not for an intermediate court of appeal to seek to state a binding expression of approach where that is the point of distinction with another, here Personnel v CFMEU and Young v Tasmanian Contracting Services.

Fourthly, this question of the weight to be given to the contract is particularly acute in a labour hire tripartite arrangement.

Fifthly, added to these legal considerations there is the important public policy of comity between intermediate courts of appeal.  The Full Court of the Supreme Court of Western Australia (sitting as the Industrial Appeal Court) has expressed a view (over 15 years ago) on a version of this contract not materially different, by application of reasoning and principle that does not reveal clear error, beyond, perhaps, an overly weighted importance to the contractual terms.

Sixthly, not only has this particular commercial party (Personnel) relied on the earlier decision of Personnel v CFMEU, it is safe to assume that other parties around Australia have done so as well.  This reliance has not only been in regard to the structure of contractual relationships with third parties, but also in regard to compliance with laws, breach of which would amount to a civil penalty.

For these reasons I am not prepared to express the view that Personnel v CFMEU is plainly wrong and that it should not be followed. “


Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2020] FCAFC 122 delivered 17 July 2020 per Allsop CJ, Jagot and Lee JJ