Home - How to determine whether an employment relationship exists

UpdatesAug 12, 2021

How to determine whether an employment relationship exists

Most of the rights and entitlements in the Fair Work Act 2009 (Cth) will not apply to a person unless they are an employee in an employment relationship.

When does an employment relationship exist?

An employment relationship can only exist where a person agrees to perform work pursuant to a contract of service or a contract of employment.

This requires:

An agreement to do something is only regarded as a contract if the parties intended the agreement to be legally binding and carry legal consequences. That is, if something goes wrong, if one party failed to act in accordance with the agreement, the other party would be entitled to take legal action to seek performance. In employment situations where work is intended to be performed for payment, the necessary legal relations are generally present.

Sometimes, where there is no evidence that the parties reached agreement either verbally or in writing, the intention to enter into legal relations can be inferred from the way the parties have treated each other.

Internships, unpaid work experience or legal clerkships may not be employment if:

‘Case’ in point

In Barbour v Derbas Lawyers (2021), the Fair Work Commission (FWC) had to determine whether a law graduate doing unpaid work at a law firm was an employee of the firm.

The FWC ruled the relationship was one of work experience, not employment.

The FWC was not satisfied that the parties had reached an agreement on the terms of a contract. The claimant (graduate) relied on the fact that he was told of appropriate dress standards in a legal office, but the FWC considered this would be consistent for work experience.

The FWC was also not satisfied that the training or supervision the firm provided to the claimant constituted consideration to support a finding of employment.

The claimant argued the intention to create legal relations was shown by:

The FWC disagreed and ruled there was no intention to create a legal relationship of employment (noting that the above were questionable practices given the potential for clients to be misled about the skills, experience, qualifications and employment status of volunteers or work experience placements).

The FWC found:

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