JUDGING THE EMPLOYMENT STATUS OF WORKERS: AN ANALYSIS OF COMMONSENSE REASONING.

• Date: 01 December 2022
• Author: Sutherland, Carolyn

CONTENTS I Introduction: 'Common Sense' and Judicial Assumptions II Commonsense Reasoning A 'Common Sense' and the Common Law B Commonsense Reasoning and Its Consequences III Background to the Analysis of Cases about Employment Status A The Legal Criteria for Categorisation of Workers B Analytical Approach C Identifying Commonsense Reasoning IV Analysis of Assumptions in Cases about the Status of Workers A Assumption One: Free Enterprise Produces Optimal Outcomes for Society B Assumption Two: Capital Investment Is an Indicator of Entrepreneurial Activity C Assumption Three: Modern Business Arrangements Necessitate the Exercise of High Levels of Control over Independent Contractors V Conclusion I INTRODUCTION: 'COMMON SENSE' AND JUDICIAL ASSUMPTIONS

The 'common sense' of judges has typically played a crucial role in developing common law principles. 'Common sense' draws upon judges' knowledge of everyday life in the community in which the courts operate to ensure that the common law reflects shared community values. (1) This is illustrated in Australian judicial decisions that determine employment status by categorising a worker as either: an employee, who is entitled to a safety net of statutory protections; or an independent contractor, who is running a business on their own account and cannot access these protections. (2) In these decisions, judges often rely on intuition to apply a multi-factorial test to a wide range of contexts. (3) When determining that particular facts point towards a classification of one status or another, and by placing particular weight on one factor over another, judges draw heavily on values and assumptions that are drawn from their own experience as proxies for values and assumptions in the wider community. Assumptions drawn from judges' own experience are typically presented as 'common sense' and signalled by reference to common knowledge, well-known phenomena and notorious understandings. (4) However, rapid changes in business models, and the selection of judges from a narrow socio-economic pool, make it difficult for judges to maintain an up-to-date understanding of the everyday reality of workplaces. As a consequence, the 'common sense' of judges may fall out of step with the 'common sense' of the broader community. Where this results in judicial reliance on commonsense knowledge that is discriminatory and partial, the legitimacy of legal judgment may be called into question. (5)

Court decisions about the status of workers (as either employees or independent contractors) provide a useful context in which to explore the capacity of the common law to evolve to accommodate the realities of contemporary life. (6) These cases tap into the contest of ideas over the economic and social effects of modern work arrangements. For example, the rise of the gig economy as a consequence of rapid advances in technology produces conflicting narratives about the capacity of the model to either exploit workers or to provide new and desirable options for flexible work. (7) To resolve disputes about worker status, it is important that courts explicitly engage with these and other underpinning assumptions about the nature of work. Scholarly analysis of judicial decisions about the status of workers suggests that courts are not meeting this challenge. The decisions have been criticised for incoherence in both judicial reasoning and outcomes. (8) Lizzie Barmes argues that problems of inconsistency and even illogicality reflect the difficulty that courts face in 'fitting the law to the reality of working lives'. (9)

This article is concerned with commonsense assumptions for two reasons: first, because those assumptions may be hidden in judicial reasoning, reducing transparency; and second, because the content of those assumptions is often shaped by the feudal roots of the contract of employment and the (often narrow) sociocultural experiences of judges, reinforcing rather than combating the imbalance of power between capital and labour. As a consequence, commonsense reasoning may fall out of step with community expectations about justice in labour law.

This article aims to identify and, where appropriate, challenge the assumptions that underpin judicial reasoning. It will pay particular attention to the language used by judges and highlight instances where this language perpetuates notions that appear obvious and inevitable, but are in fact outmoded, inaccurate or misaligned with the values of the wider community. When judges draw on commonsense reasoning (explicitly or implicitly), there is a risk that their assumptions will reinforce a conservatism that overlooks the lived experience of workers. Ultimately, the ideal is to subject commonsense assumptions to a process of critical reflection by judges, and to broaden the range of perspectives that are reflected in legal judgments to ensure the continued relevance of labour law to all participants in the labour market.

This article is divided into five parts, commencing with this introduction (Part I). Part II examines the nature of commonsense reasoning by exploring the relationship between 'common sense' and the common law, and by considering the potential for commonsense reasoning to either undermine or enhance good judgment. Part III provides the context for the analysis of cases about the status of workers: first, by explaining the legal criteria for categorising workers as either employees or independent contractors; second, by justifying the analytical focus of the paper on judicial language and reasoning, rather than on doctrinal coherence and outcomes; and finally, by identifying the ways in which examples of commonsense reasoning can be identified.

Part IV examines selected decisions of Australian courts that deal with the characterisation of workers as either employees or independent contractors. This analysis highlights three examples of assumptions that influence decisions in this context: first, that free enterprise and market-based solutions produce optimal outcomes for society as a whole; second, that a worker's investment in capital indicates a desire to be an entrepreneur; and third, that the demands of modern business arrangements necessitate the exercise of high levels of control over independent contractors (without transforming their status into one of employment). The final section of this article (Part V) concludes by highlighting reflective practices of judging. These practices prompt judges to question whether their assumptions are drawn from historical and cultural contexts that may be outdated or exclusionary, and to consider whether matters that are taken to be 'common sense' are, in reality, commonly held and aligned with the views of the wider community.

II COMMONSENSE REASONING

A 'Common Sense' and the Common Law

One of the perceived strengths of the common law is its capacity to adapt to a changing social context. As articulated by McHugh J of the High Court:

The genius of the common law is that the first statement of a common law rule or principle is not its final statement. Rules and principles are modified and expanded by the pressure of changing social conditions and the experience of their practical application in the life of the community. (10) Renowned United States evidence scholar Ronald Allen goes further, arguing that the law is, and must be, 'the embodiment of common sense' (11) Given its interaction with 'virtually all of life', if the law 'were not generated largely from and consistent with the conventional interactions of individuals, it would not survive'. (12) This expectation that the law will be generated and maintained to reflect evolving social conditions suggests that judges must actively monitor those conditions in order to meet the demands of justice in common law cases. In addition, there may be cases where conventional interactions within the community are exclusionary and outdated. (13) In such cases, one legitimate role of the judiciary might be to mete out justice that challenges the conventional, dominant view. (14)

The demands of justice may also require judges to consider whether the application of 'common sense' reinforces existing power structures or challenges those structures. (15) This will depend on whether judges are alert to the possibility that their knowledge will, at times, reflect their place within the dominant classes, and whether they are willing to proceed in a way that 'imaginatively references' the broader, everyday experiences of workers. (16) The factual accounts of workers' experiences are often presented to judges in considerable detail. (17) To maintain the connection between law and the community, it is important that workers' accounts are reproduced in judgments in ways that reflect, rather than dismiss, those experiences. But this is unlikely to happen where the lived experience of workers, particularly those in a weak labour market position, are overlooked in judicial accounts--either because they do not readily align with judges' experience of the world, or because they do not easily fit within the established legal tests. (18)

Those who support formal legalist approaches to judging may object that the role of judges is not to supplant the legislative function by changing the legal tests (to accommodate workers' needs), but to implement the existing law. (19) According to American jurist, Richard Posner, such approaches are 'premised on a belief that all legal issues can be resolved by logic, text, or precedent, without a judge's personality, values, ideological leanings, background and culture, or real-world experience playing any role'. (20) However, it is widely recognised that judicial decision-making in a common law system may legitimately involve creativity and choice. (21) More than 80 years ago, Harlan Stone of the Supreme Court of the United States suggested that the task of the common law system was to provide 'suitable protection...