Home - Drivers driving a vehicle supplied by principal found to be contractors

UpdatesJul 28, 2022

Drivers driving a vehicle supplied by principal found to be contractors

A recent Federal Court decision, Fair Work Ombudsman v Avert Logistics Pty Ltd (2022), is the latest in a series of court and tribunal decisions that have applied an approach to contractor status that was set earlier this year in the cases ZG Operations Australia v Jamsek (2022) and CFMMEU v Personnel Contracting (2022).

What is the approach?

The decisions in ZG Operations Australia v Jamsek (2022) and CFMMEU v Personnel Contracting (2022) reset the analysis as to when a worker is an independent contractor as opposed to an employee.

According to these rulings, when seeking to characterise whether a worker is a contractor or employee:

Find more information about the cases in our 17 February bulletin.

What’s the latest?

Since those rulings, a series of court and tribunal decisions have applied this approach to uphold contractor status. Fair Work Ombudsman v Avert Logistics Pty Ltd (2022) is the latest in such cases.

In this case, the Fair Work Ombudsman (FWO) commenced proceedings against a transport company for underpayment of four workers undertaking driving duties, arguing they were employees.

A comprehensive written agreement governed their relationship with the company and no issue arose as to its application. The agreement described the relationship as principal/contractor.

Provisions pointing to an employment relationship

The Court observed a number of provisions made by the agreement that pointed towards an employment relationship, namely:

The Court noted the provisions allowing the company to control the performance of driving services. However, it ruled the drivers’ obligations to observe the company’s directions were confined to those directions that were reasonable (this qualification wasn’t expressed in the agreements, but the Court felt it was implied to give business efficacy to the agreements). The transport company could not “micromanage” the conduct of the deliveries; it could only direct when and where goods were to be picked up and delivered.

Provisions pointing to a contractor relationship

The Court considered a more powerful consideration telling towards the relationship being one of independent contractor were the provisions in the agreement for the drivers to:

Other provisions in the agreement found to be inconsistent with an employment relationship included that the drivers:

Ultimately, it appears the Court was willing to overlook the fact that the transport company supplied the vehicle, and focused on the fact that each of the drivers became the registered owner of the vehicle, took it into their ‘own business’ and assumed responsibility for fuel, running costs and insurances.

The FWO may seek special leave to appeal this case to the High Court.

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