Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd

• Jurisdiction: Australia Federal only
• Judge: Kiefel CJ,Keane,Edelman JJ.,Gageler,Gleeson JJ,Gordon J.,Steward J
• Judgment Date: 31 August 2021
• Neutral Citation: [2022] HCA 1
• Docket Number: P5/2021
• Court: High Court

Construction, Forestry, Maritime, Mining And Energy Union & Anor

Appellants

and

Personnel Contracting Pty Ltd

Respondent

[2022] HCA 1

Kiefel CJ, Gageler, Keane, Gordon, Edelman, Steward and Gleeson JJ

P5/2021

HIGH COURT OF AUSTRALIA

Industrial law (Cth) — Nature of employment relationship — Employee or independent contractor — Where second appellant backpacker with limited work experience sought construction work from respondent — Where respondent in business of labour-hire — Where respondent and second appellant entered written contract describing second appellant as “self-employed contractor” — Where respondent assigned second appellant to work on construction site run by respondent's client — Where second appellant agreed with respondent to co-operate with respondent and client in all respects in supply of his labour to client — Where no contract between second appellant and client — Where respondent paid second appellant for work performed for client — Whether second appellant employee of respondent.

Words and phrases — “business of supplying labour”, “contract of service”, “contractor”, “control”, “employee”, “independent contractor”, “label”, “labour-hire”, “legal rights and obligations”, “multifactorial approach”, “own business”, “own business/employer's business dichotomy”, “performance of work”, “serving in the business of the employer”, “subsequent conduct”, “totality of the relationship”, “triangular labour-hire arrangement”, “written contract”.

Fair Work Act 2009 (Cth), ss 13, 14.

Representation

B W Walker QC with M A Irving QC and T J Dixon for the appellants (instructed by Construction, Forestry, Maritime, Mining and Energy Union)

J B Blackburn SC with M L Felman for the respondent (instructed by Hotchkin Hanly Lawyers)

ORDER

• 1. Appeal allowed with costs.

• 2. Set aside the order of the Full Court of the Federal Court of Australia made on 17 July 2020 and, in its place, order that:

  • (a) the appeal be allowed;

  • (b) the order of the Federal Court of Australia made on 6 November 2019 be set aside;

  • (c) it be declared and ordered that, between 27 July 2016 and 6 November 2016 and 14 March 2017 and 30 June 2017, the second appellant was employed by the respondent; and

  • (d) the matter be remitted to the primary judge for determination according to law.

1 Kiefel CJ, Keane and Edelman JJ. The respondent (trading as “Construct”) is a labour-hire company based in Perth, which engages workers to supply their labour to building clients. Construct's major client was Hanssen Pty Ltd (“Hanssen”), a builder of high-rise residential apartments and offices 1.

2 In 2016, Mr McCourt was a 22-year-old British backpacker who had travelled to Australia on a working holiday visa. Seeking a source of income, and with limited prior work experience as a part-time brick-layer and in hospitality, Mr McCourt obtained a “white card”, which enabled him to work on construction sites. He contacted Construct and attended an interview on 25 July 2016. At the interview, Mr McCourt indicated that he was prepared to do any construction work, and was available to start work immediately. He confirmed to the Construct representative that he owned a hard hat, steel-capped boots and hi-vis clothing, having purchased them for less than $100 in the hope of finding construction work. He was offered a role and presented with paperwork to sign. Among the documents he signed was an Administrative Services Agreement (“ASA”), which described Mr McCourt as a “self-employed contractor” 2.

3 The day after Mr McCourt's interview, Construct contacted him to offer him work at Hanssen's Concerto project site beginning the following day. When he arrived on site, Mr McCourt was given the Hanssen Site Safety Induction Form and Hanssen Site Rules. He was told that he would be supervised primarily by a leading hand employed by Hanssen, Ms O'Grady 3. Mr McCourt did not sign a contract with Hanssen.

4 Mr McCourt worked at the Concerto site between 27 July and 6 November 2016. While on site, Mr McCourt worked under the supervision and direction of Hanssen supervisors, including Ms O'Grady. Although Construct staff sometimes conducted site visits, they never directed Mr McCourt in the performance of work,

except to draw his attention to workplace health and safety issues in the manner of his work 4. Mr McCourt's primary tasks were described as follows 5:

“For a period of months, he engages in basic labouring tasks; he takes out the bins, cleans workspaces and moves materials. He is not an entrepreneur nor a skilled artisan; he is paid by the hour, and when at work, is told what to do and how to do it.”

5 On 6 November 2016, Mr McCourt finished work at the Concerto site and left Perth. He returned the following March and, on 14 March 2017, recommenced work on the Concerto project. On 26 June 2017, he began working on Hanssen's Aire project, performing work that was substantially identical to the Concerto project. On 30 June 2017, Mr McCourt was told that he was not to continue working at the Aire project. Thereafter, Mr McCourt did not receive any work from Construct 6.

6 Mr McCourt and the Construction, Forestry, Maritime, Mining and Energy Union commenced proceedings against Construct seeking orders for compensation and penalties pursuant to ss 545, 546 and 547 of the Fair Work Act 2009 (Cth) (“the Act”). The claims were made on the basis that Construct had not paid Mr McCourt according to his entitlement, as an employee of Construct, to payment in accordance with the Building and Construction General On-site Award 2010. Similar orders were sought against Hanssen, on the basis that it was liable as an accessory for Construct's alleged breaches.

7 The crucial question in the proceedings was whether Mr McCourt was an employee of Construct for the purposes of the Act. The primary judge (O'Callaghan J), applying a multifactorial approach to that question, treated the description of Mr McCourt in the ASA as “the Contractor” as decisive of that

question in circumstances where the other factors were “reasonably evenly balanced” 7. On that basis, the proceedings were dismissed 8

8 The primary judge's conclusion was upheld on appeal by the Full Court of the Federal Court of Australia 9. The members of the Full Court (Allsop CJ, Jagot and Lee JJ) also approached the question by a multifactorial analysis, but made it clear 10 that had it not been for the decision of the Western Australian Industrial Appeal Court in Personnel Contracting Pty Ltd v Construction, Forestry, Mining and Energy Union of Workers11 (“ Personnel (No 1)”) – which involved “essentially the same dispute between the same parties” 12 – their Honours would have held that Mr McCourt was an employee of Construct. Lee J, with whom Allsop CJ and Jagot J agreed, described the notion that Mr McCourt was an independent contractor as “somewhat less than intuitively sound” 13. But because their Honours were not able to conclude that Personnel (No 1) was plainly wrong 14, they held that Mr McCourt had been engaged by Construct as an independent contractor and, therefore, was not an employee.

9 For the reasons that follow, Mr McCourt was employed by Construct, and so the appeal to this Court must be allowed.

The contractual arrangements between the parties

10 The relationship between Mr McCourt and Construct was governed by the ASA. The relationship between Construct and Hanssen was governed by a Labour Hire Agreement (“LHA”). There was no contractual arrangement between Mr McCourt and Hanssen.

The LHA

11 The LHA described Construct's role as “an administrative services agency, liaising between the client and self-employed contractors for the provision of labour by self-employed contractors to the client”15. Construct's workers were referred to Hanssen on a “daily hire basis” for which Hanssen agreed to pay Construct at an hourly rate, negotiated between Hanssen and Construct, and invoiced weekly 16. Construct was responsible for the suitability of its workers, and agreed to replace a worker at no charge if notified of the worker's unsuitability within four hours on the first day of an assignment 17. Hanssen agreed to comply with all workplace health and safety laws applicable to Construct's workers 18.

12 It is unnecessary, and indeed inappropriate, to refer to the terms of the LHA in any greater detail because Mr McCourt was not a party to the LHA. His contract with Construct was not affected by the terms of the LHA. Clause 4 of the LHA, however, is significant because its import was reflected in the ASA. Clause 4 was entitled “Direction”, and provided as follows:

“[Construct's] contractors are under the client's direction and supervision from the time they report to the client and for the duration of each day on the assignment.”

13 The bargain between Construct and Hanssen dovetailed in this respect with the bargain between Construct and Mr McCourt in that the latter arrangement facilitated Construct's performance of the former. As will be seen, under the ASA,

Construct had the right to subject Mr McCourt to the direction of Hanssen in respect of what work he was to do and how he was to do it

The ASA and related documents

14 Given its central importance to the characterisation of Mr McCourt's relationship with Construct, it is desirable to set out the terms of the ASA in full:

“ RECITAL

• A. Construct is an administrative services agency operating essentially within the building industry, liaising between builders (or their contractors) (both described as ‘builders’) and self-employed contractors for the provision of labour by self-employed contractors to builders and supplying to the self-employed contractors financial administrative services.

• B. The Contractor requires Construct to keep the Contractor informed of opportunities for the...