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#Employment contracts

Employment contracts

Contract of employment or independent contractor

An "employee" is a worker who works for another in exchange for wages. There are other arrangements for the performance of work that look like employment contracts . but are treated as independent contracting arrangements, or contracts for the provision of services.

The contract under which an employee performs work is called a "contract of service". The contract under which an independent contractor performs work is called a "contract for services".

Independent contractors generally are not covered by statutory minimum standards, awards or workplace agreements made under the WRA or the FW Act (see "National Employment Standards ", "Awards " and "Workplace Agreements ", below). Independent contracting arrangements are widely used in the transport and building industries.

The courts have developed a series of tests for distinguishing between employees and independent contractors. The touchstone is the nature and degree of detailed control that the employer exercises over an individual's work. Other factors are also considered, such as whether the worker or the employer:

• supplies tools and equipment;
• pays the worker's income tax; and

whether the worker:

• is able to work for other employers;
• is able to delegate work to an employee or sub-contractor; and
• carries a financial risk or has an opportunity to participate in the profits of the employer's business.

In the case of Hollis v Vabu Pty Ltd [2001] HCA 44 (9 August 2001) the High Court determined that the relationship between a courier company (Vabu Pty Ltd) and its couriers was that of employer and employee. The court considered relevant the fact that the couriers were not providing skilled labour, had little control over the manner of performing their work where Vabu had considerable scope to exercise control, wore the uniforms of Vabu Pty Ltd, and were provided with pay summaries.