STATUTORY NORMS AND COMMON LAW CONCEPTS IN THE CHARACTERISATION OF CONTRACTS FOR THE PERFORMANCE OF WORK.

• Date: 01 January 2019
• Author: Bomball, Pauline

Contents I Introduction II The Australian Approach to the Characterisation of Work Contracts A The Common Law Concept of Employment B The Characterisation of Work Contracts in Statutory Contexts III A Purposive Approach to the Employment Concept in Protective Labour Statutes A Justifying the Comparators B Reasons for Adopting a Purposive Approach to the Employment Concept 1 Vicarious Liability and Protective Labour Statutes: Different Purposes 2 The Purposive Approach to Statutory Interpretation in Australia IV Barriers to Adopting a Purposive Approach to the Employment Concept in Australia A Statutory Terms with Common Law Meanings: The Interpretive Principle B The Limits of Judicial Lawmaking V Conclusion I Introduction

In recent years, the relationship between statute and common law has attracted increased interest. (1) In the labour law context, a burgeoning body of academic work has examined the interaction between statute and common law in relation to the implied term of mutual trust and confidence in employment contracts. (2) Far less attention, however, has been directed at exploring this interaction in cases involving the characterisation of contracts for the performance of work. (3)

The characterisation of a work contract as an employment contract, under which a worker performs work as an employee, or an independent contract, under which a worker performs work as an independent contractor, carries significant consequences in a range of contexts. (4) The distinction between employees and independent contractors is important in the law of vicarious liability, because employers are vicariously liable for the torts of their employees but principals are not vicariously liable for the torts of their independent contractors. (5) The distinction is also relevant to the operation of various statutes that confer rights or impose obligations by reference to the concept of employment. For example, the Fair Work Act 2009 (Cth) ('FW Act'), which is the primary labour statute in Australia, generally confers rights upon employees only. (6) Workers who are not employees, such as independent contractors, are generally not entitled to these rights. As a result, the employment concept operates as a gateway to the rights in the FW Act.

The employment concept is also used in other statutes, such as those dealing with superannuation and taxation. For example, state payroll taxation statutes impose tax upon the wages that employers pay to their employees. (7) Under the Superannuation Guarantee (Administration) Act 1992 (Cth), employers must make superannuation payments on behalf of their employees. (8) Employers must also withhold income taxation from the wages of their employees under the Taxation Administration Act 1953 (Cth). (9)

Despite their widespread adoption by statutes, the terms 'employee' and 'employer' are often left undefined, or are only minimally defined, by those statutes. For example, s 15 of the FW Act, headed '[o]rdinary meanings of employee and employer', simply states that '[a] reference in this Act to an employee within its ordinary meaning: (a) includes a reference to a person who is usually such an employee; and (b) does not include a person on a vocational placement', and '[a] reference in this Act to an employer with its ordinary meaning includes a reference to a person who is usually such an employer'. (10) The Explanatory Memorandum that accompanied the Fair Work Bill 2008 (Cth) stated that the terms 'employee' and 'employer' in the legislation referred to those concepts as understood 'at common law'. (11)

The 'common law concept of employment' (12) was developed primarily in tort law cases involving claims of vicarious liability. (13) Australian courts have had recourse to this common law concept when determining whether a worker is an employee for the purposes of a statute that invokes the term 'employee' as a criterion for its operation. For example, in ACE Insurance Ltd v Trifunovski, (14) a case involving a claim by a group of workers to certain leave entitlements under the Workplace Relations Act 1996 (Cth), (15) Perram J stated that the question of whether these workers were 'employees', and thereby covered by the Act, was to be answered by reference to the common law concept of employment. The question was, therefore, to be 'approached from the common law's perspective on the imposition of vicarious liability and with it a subsisting policy debate about the distributive allocation of losses between tortfeasors and their victims'. (16) His Honour observed that the common law concept of employment was unaffected by the purposes underpinning any statute that engaged the concept. (17)

There is, however, reason to question such an approach to the employment concept in statutory contexts. In the special leave hearing in ACE Insurance Ltd v Trifunovski, Hayne J suggested that there may be a 'deeper question of principle' (18) relating to whether 'the question of employment for the purposes of entitlements of the kind now in issue was to be determined according to considerations that made, for example, the vicarious responsibility cases irrelevant'. (19) The application for special leave was ultimately refused, (20) and the deeper question of principle that Hayne J identified lingers, unanswered, in Australian law.

Some judges have addressed the point briefly in obiter dicta. For example, in Day v The Ocean Beach Hotel Shellharbour Pty Ltd, Leeming JA stated that 'a conclusion that a person is an "employee" or "independent contractor" for a particular purpose (such as payroll tax, or superannuation, or employment law) cannot determine whether the relationship is such as to engage the rules of vicarious liability'. (21) More recently, in Tattsbet Ltd v Morrow, Allsop CJ observed that '[t]he statutory and factual context will always be critical in a multifactorial process of characterisation of a legal and human relationship: employment'. (22) His Honour referred to the approach of the United States Court of Appeals for the Second Circuit ('US Second Circuit Court of Appeals') in Lehigh Valley Coal Co v Yensavage ('Lehigh Valley'), (23) one of the early cases in the United States ('US') that expounded a purposive approach to the employment concept. Allsop CJ did not, however, elaborate upon why or how the statutory context was relevant to the characterisation exercise.

A purposive approach to the employment concept has been adopted by courts in some overseas jurisdictions, including the Supreme Court of Canada (24) and, for a time, the Supreme Court of the United States ('US Supreme Court'). (25) Under such an approach, the purposes underpinning a common law doctrine (for example, the doctrine of vicarious liability) that engages the employment concept, or the purposes underpinning a statute that operates by reference to the employment concept, are taken into account in determining whether a worker is an employee in a particular context. (26) One consequence of adopting a purposive approach to the employment concept is that a worker may be an employee in one context but not another. (27) For example, a worker may be characterised as an employee for the purposes of a labour statute conferring employment rights and protections, but an independent contractor for the purposes of a taxation statute or vicarious liability in tort law, or vice versa. (28) The reason for this is that different statutes with different purposes operate by reference to the employment concept. (29) These purposes also differ from the purposes informing the common law doctrine of vicarious liability.

Purposive approaches to labour law have attracted interest in other jurisdictions (30) but received limited attention from the judiciary and scholars in Australia. (31) This article seeks to begin a conversation about the utility and viability of a purposive approach to the employment concept in Australia. It does so by canvassing the arguments in favour of a purposive approach and identifying some of the primary barriers to the adoption of such an approach by Australian courts. It critically evaluates several strands of reasoning in the Australian case law, both within and outside of the labour law context, that have a bearing upon the viability of a purposive approach to the employment concept. It also draws upon Canadian and US case law for comparative insights. This article focuses on statutes that confer employment entitlements and protections, such as leave entitlements and protections from unfair dismissal, upon those who are 'employees'. These statutes will be referred to as 'protective labour statutes'. (32) The reason for focusing on these statutes is that much of the Canadian and US case law on the purposive approach to the employment concept involves protective labour statutes. (33) Despite this focus, some of the arguments made in this article have implications for other types of statutes in Australia that engage the employment concept.

This article proceeds in three parts. Part II critically analyses Australian cases concerning the characterisation of work contracts. It demonstrates that in determining whether a worker is an employee in respect of a particular statute that engages the employment concept, courts have generally applied the common law concept of employment as expounded in vicarious liability cases without regard to the purposes underlying the relevant statute. In several cases, however, this approach has been called into question and it has been suggested that statutory purpose should be taken into account in the characterisation exercise. (34) Part III and Part IV of this article assess the utility and viability of this alternative approach. To this end, Part III undertakes a comparative analysis, drawing upon decisions of the Supreme Court of Canada and the US Supreme Court that have adopted a purposive approach to the employment concept in respect of protective labour statutes. Part...