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CFMMEU v Personnel Contracting

[2022] HCA 1

(Decision by: Kiefel CJ, Keane J, Edelman J)

Construction, Forestry, Maritime, Mining and Energy Union
v Personnel Contracting Pty Ltd

Court:
High Court of Australia

Judges:
Kiefel CJGageler J

Keane JGordon J

Edelman JSteward J
Gleeson J

Legislative References:
Fair Work Act 2009 - 13; 14

Hearing date: 31 August 2021
Judgment date: 9 February 2022

Canberra


On appeal from the Federal Court of Australia

Decision by:
Kiefel CJ
Keane J
Edelman J

1 The respondent (trading as "Construct") is a labour-hire company based in Perth, which engages workers to supply their labour to building clients. Construct's major client was Hanssen Pty Ltd ("Hanssen"), a builder of high-rise residential apartments and offices. [1]

2 In 2016, Mr McCourt was a 22-year-old British backpacker who had travelled to Australia on a working holiday visa. Seeking a source of income, and with limited prior work experience as a part-time brick-layer and in hospitality, Mr McCourt obtained a "white card", which enabled him to work on construction sites. He contacted Construct and attended an interview on 25 July 2016. At the interview, Mr McCourt indicated that he was prepared to do any construction work, and was available to start work immediately. He confirmed to the Construct representative that he owned a hard hat, steel-capped boots and hi-vis clothing, having purchased them for less than $100 in the hope of finding construction work. He was offered a role and presented with paperwork to sign. Among the documents he signed was an Administrative Services Agreement ("ASA"), which described Mr McCourt as a "self-employed contractor" [2]

3 The day after Mr McCourt's interview, Construct contacted him to offer him work at Hanssen's Concerto project site beginning the following day. When he arrived on site, Mr McCourt was given the Hanssen Site Safety Induction Form and Hanssen Site Rules. He was told that he would be supervised primarily by a leading hand employed by Hanssen, Ms O'Grady [3] Mr McCourt did not sign a contract with Hanssen.

4 Mr McCourt worked at the Concerto site between 27 July and 6 November 2016. While on site, Mr McCourt worked under the supervision and direction of Hanssen supervisors, including Ms O'Grady. Although Construct staff sometimes conducted site visits, they never directed Mr McCourt in the performance of work, except to draw his attention to workplace health and safety issues in the manner of his work [4] Mr McCourt's primary tasks were described as follows: [5]

"For a period of months, he engages in basic labouring tasks; he takes out the bins, cleans workspaces and moves materials. He is not an entrepreneur nor a skilled artisan; he is paid by the hour, and when at work, is told what to do and how to do it."

5 On 6 November 2016, Mr McCourt finished work at the Concerto site and left Perth. He returned the following March and, on 14 March 2017, recommenced work on the Concerto project. On 26 June 2017, he began working on Hanssen's Aire project, performing work that was substantially identical to the Concerto project. On 30 June 2017, Mr McCourt was told that he was not to continue working at the Aire project. Thereafter, Mr McCourt did not receive any work from Construct [6]

6 Mr McCourt and the Construction, Forestry, Maritime, Mining and Energy Union commenced proceedings against Construct seeking orders for compensation and penalties pursuant to ss 545, 546 and 547 of the Fair Work Act 2009 (Cth) ("the Act"). The claims were made on the basis that Construct had not paid Mr McCourt according to his entitlement, as an employee of Construct, to payment in accordance with the Building and Construction General On-site Award 2010. Similar orders were sought against Hanssen, on the basis that it was liable as an accessory for Construct's alleged breaches.

7 The crucial question in the proceedings was whether Mr McCourt was an employee of Construct for the purposes of the Act. The primary judge (O'Callaghan J), applying a multifactorial approach to that question, treated the description of Mr McCourt in the ASA as "the Contractor" as decisive of that question in circumstances where the other factors were "reasonably evenly balanced" [7] On that basis, the proceedings were dismissed [8]

8 The primary judge's conclusion was upheld on appeal by the Full Court of the Federal Court of Australia [9] The members of the Full Court (Allsop CJ, Jagot and Lee JJ) also approached the question by a multifactorial analysis, but made it clear [10] that had it not been for the decision of the Western Australian Industrial Appeal Court in Personnel Contracting Pty Ltd v Construction, Forestry, Mining and Energy Union of Workers [11] ("Personnel (No 1)") - which involved "essentially the same dispute between the same parties" [12] - their Honours would have held that Mr McCourt was an employee of Construct. Lee J, with whom Allsop CJ and Jagot J agreed, described the notion that Mr McCourt was an independent contractor as "somewhat less than intuitively sound" [13] But because their Honours were not able to conclude that Personnel (No 1) was plainly wrong [14] , they held that Mr McCourt had been engaged by Construct as an independent contractor and, therefore, was not an employee.

9 For the reasons that follow, Mr McCourt was employed by Construct, and so the appeal to this Court must be allowed.

The contractual arrangements between the parties

10 The relationship between Mr McCourt and Construct was governed by the ASA. The relationship between Construct and Hanssen was governed by a Labour Hire Agreement ("LHA"). There was no contractual arrangement between Mr McCourt and Hanssen.

The LHA

11 The LHA described Construct's role as "an administrative services agency, liaising between the client and self-employed contractors for the provision of labour by self-employed contractors to the client" [15] Construct's workers were referred to Hanssen on a "daily hire basis" for which Hanssen agreed to pay Construct at an hourly rate, negotiated between Hanssen and Construct, and invoiced weekly [16] Construct was responsible for the suitability of its workers, and agreed to replace a worker at no charge if notified of the worker's unsuitability within four hours on the first day of an assignment [17] Hanssen agreed to comply with all workplace health and safety laws applicable to Construct's workers [18]

12 It is unnecessary, and indeed inappropriate, to refer to the terms of the LHA in any greater detail because Mr McCourt was not a party to the LHA. His contract with Construct was not affected by the terms of the LHA. Clause 4 of the LHA, however, is significant because its import was reflected in the ASA. Clause 4 was entitled "Direction", and provided as follows:

"[Construct's] contractors are under the client's direction and supervision from the time they report to the client and for the duration of each day on the assignment."

13 The bargain between Construct and Hanssen dovetailed in this respect with the bargain between Construct and Mr McCourt in that the latter arrangement facilitated Construct's performance of the former. As will be seen, under the ASA, Construct had the right to subject Mr McCourt to the direction of Hanssen in respect of what work he was to do and how he was to do it.

The ASA and related documents

14 Given its central importance to the characterisation of Mr McCourt's relationship with Construct, it is desirable to set out the terms of the ASA in full:

"RECITAL

A.
Construct is an administrative services agency operating essentially within the building industry, liaising between builders (or their contractors) (both described as 'builders') and self-employed contractors for the provision of labour by self-employed contractors to builders and supplying to the self-employed contractors financial administrative services.
B.
The Contractor requires Construct to keep the Contractor informed of opportunities for the Contractor to provide builders with labour services and to provide the Contractor with financial administrative support to enable the Contractor to concentrate on maximising the supply of quality labour to builders.

IT IS AGREED
1. Construct's Responsibilities
Construct shall:

(a)
Use reasonable endeavours to keep informed of opportunities in the building industry for the Contractor to supply labour to builders identified by Construct;
(b)
Inform the Contractor when, and on what basis, an opportunity arises for the Contractor to supply labour to a builder;
(c)
Liaise between builders and the Contractor regarding the means by which the Contractor shall supply labour to such builders, including the duration that the builder requires such labour, the place at which labour is to be supplied, the daily hours of work during which labour is to be supplied and any other terms and conditions upon which labour is to be supplied by the Contractor to the builder;
(d)
Subject to performance by the Contractor of his or its obligations under this Agreement, underwrite payment to the Contractor, within 7 days of receipt of an invoice from the Contractor, of all payment rates payable by the builder in respect of the supply of labour to the builder by the Contractor, including payment rates negotiated by the Contractor directly with the builder;
(e)
Complete administrative forms and undertake necessary correspondence with Government authorities as may be required under any law of Western Australia relating to labour supplied to builders under this agreement, other than the completion by the Contractor of his taxation returns, including any instalment activity statement or business activity statements.

2. Construct's Rights
Construct shall be entitled to:

(a)
Negotiate with any builder a payment rate for the supply by the Contractor of labour to the builder, provided that the Contractor shall be at liberty to negotiate with the builder an increase in the payment rate and any other terms and conditions upon which labour is to be supplied by the Contractor to the builder, subject to the Contractor properly performing his obligations under this Agreement;
(b)
Negotiate with the builder the basis upon which Construct is to be remunerated on a commission basis as a percentage of the agreed payment rate for the supply of services by the Contractor to the builder;
(c)
Negotiate with the builder for remuneration in respect of any increase in the payment rate negotiated directly by the Contractor with the builder;
(d)
Withhold from the Contractor payment of any monies reasonably required by Construct to compensate it for any claim made against Construct by the builder in respect of the supply of labour by the Contractor to the builder.

3. The Contractor's Warranties
The Contractor warrants that:

(a)
He has provided Construct with true and accurate information regarding his work experience and capability for the supply of labour to builders;
(b)
He is self-employed;
(c)
He does not require Construct to guarantee the Contractor work of any type or of any duration;
(d)
That he shall keep Construct fully informed of the outcome of negotiations with the builder by the Contractor in order to ensure that Construct is promptly and accurately informed of any higher rate of payment agreed by the builder and the value of any other terms and conditions agreed with the builder by the Contractor;
(e)
Construct shall not be liable to pay the Contractor any amounts in respect of annual leave, sick leave, long service leave or any other statutory entitlement required in an employer-employee relationship.

4. The Contractor's Obligations
The Contractor shall:

(a)
Co-operate in all respects with Construct and the builder in the supply of labour to the Builder;
(b)
Ensure accurate records are maintained as to the amount of labour supplied to the builder by the Contractor;
(c)
Attend at any building site as agreed with the Builder at the time required by the Builder, and shall supply labour to the Builder (subject to notification under clause 5(c)) for the duration required by the Builder in a safe, competent and diligent manner;
(d)
Indemnify Construct against any breach by the Contractor of sub-paragraph 4(c) hereof;
(e)
Supply such tools of trade and equipment, for safety or other reasons, as may be required by the builder, in respect of which the Contractor is solely responsible;
(f)
Possess all statutory certification relevant to the supply of labour, and shall ensure that these certificates be both current and valid in Western Australia;
(g)
In the event that the Contractor reasonably considers that his safety is endangered by conditions on the building site, promptly report the unsafe conditions to Worksafe if unable to have the unsafe conditions rectified by the builder promptly;
(h)
Not represent himself as being an employee of Construct at any time or otherwise represent himself as authorised to act on behalf of Construct other than strictly under the terms of this Agreement.

5. The Contractor's Rights
The Contractor is entitled to:

(a)
Receive payment from Construct of all amounts negotiated with the builder by Construct and the Contractor within seven (7) days of the issue by the Contractor of a valid invoice delivered to Construct by the Contractor for the supply of labour to the builder by the Contractor;
(b)
Refuse to accept any offer of work from a builder;
(c)
Notify the builder and Construct on 4 hours notice that he is no longer available for the supply of labour under the terms of this Agreement."

15 A number of observations may be made here about the terms of the ASA. First, Recital A might be said to suggest that Construct was engaged merely in seeking out business opportunities for Mr McCourt. But the operative terms of the ASA and the factual matrix in which it was made make it clear that Construct's business was more substantial than introducing labourers to builders. Under cl 2(a), Construct was empowered to fix Mr McCourt's remuneration, subject to the possibility that he might negotiate extra benefits from Hanssen. And under cll 1(d) and 5(a), Construct assumed the obligation to pay Mr McCourt for his work with Hanssen.

16 Once Mr McCourt accepted an offer of work, his core obligation pursuant to cl 4(a) was to "[c]o-operate in all respects with Construct and [Hanssen] in the supply of labour to [Hanssen]". This included, pursuant to cl 4(c), the obligations to attend Hanssen's worksite at the nominated time, and to supply labour to Hanssen "for the duration required by [Hanssen] in a safe, competent and diligent manner".

17 Similar obligations were contained in Construct's Contractor Safety Induction Manual signed by Mr McCourt. By that document, which was found by the Full Court to have contractual force between Mr McCourt and Construct [19] , Mr McCourt agreed, inter alia: to follow all worksite safety rules and procedures given by Construct's "host client", and to report any safety hazards, incidents or injuries to the site supervisor or administrator and to Construct [20]

18 Before both the primary judge and the Full Court, the facts surrounding the work practices of Construct and Hanssen, and the specific arrangements vis-à-vis Mr McCourt, were canvassed at length. Given there was no challenge to the validity of the ASA nor any suggestion that the contract had been varied by conduct, a review of how the parties went about discharging their obligations to each other after execution of the ASA was unwarranted. It is unnecessary and inappropriate to replicate that fact-finding exercise in this Court. To the extent that this discussion of post-contractual performance had a bearing upon the reasoning of the courts below, it is sufficiently apparent from the reasons given for their decisions.

The primary judge

19 The primary judge applied a "multifactorial approach" to the question whether Mr McCourt was an employee or an independent contractor, in which both the terms of the ASA and the work practices imposed by each of Construct and Hanssen were relevant, though neither was dispositive [21]

20 The primary judge regarded the circumstances of control as tending against the conclusion that Mr McCourt was an employee of Construct. His Honour considered that the entity that had control over the performance of work by Mr McCourt was Hanssen, not Construct [22] The primary judge rejected an argument that Construct had either control, or a right of control, over Mr McCourt on the basis that his obedience of Hanssen's directions derived from his contractual promises to Construct under the ASA. In the primary judge's view, Mr McCourt's generally expressed obligations to cooperate with Construct's client, and to turn up for work at a time and place nominated by the client, were insufficient to vest in Construct "control" over Mr McCourt in the relevant sense [23]

21 The primary judge considered that Mr McCourt was an "unskilled labourer" and that it was "obvious that Mr McCourt did not operate a business on his own account" [24] His Honour rejected an argument that the question whether Mr McCourt was conducting his own business ought to be determinative of his employment status. His Honour regarded that argument as inconsistent with the nature of a multifactorial assessment [25] His Honour considered that the circumstance that Mr McCourt was not operating a business on his own account was just one factor in the analysis, and that it supported a conclusion that he was an employee.

22 The primary judge considered that the circumstance that Mr McCourt was not integrated into the business of Construct tended weakly against the conclusion that he was an employee [26] On the other hand, the circumstance that Mr McCourt provided only limited tools and equipment of his own was an indicator in favour of the conclusion that he was an employee [27] His Honour considered that the absence of leave and employee entitlements was inconclusive, since that circumstance merely reflected Construct's understanding of the character of its relationship with Mr McCourt [28]

23 Ultimately, the primary judge concluded that because relevant factors pointed "in opposite directions" [29] and were "reasonably evenly balanced" [30] , it was "important to pay close regard to the way in which the parties have characterised their relationship" [31] His Honour held that in the present circumstances, where there was a written agreement between the parties and there was no suggestion of sham or pretence [32] :

"it seems to me that there is no sufficient reason not to find that the parties' agreement that Mr McCourt was self-employed means, and was intended to mean, what it says."

24 In his Honour's view, the various terms of the ASA wherein Mr McCourt warranted that he was a "self-employed contractor" [33] and that he would not represent himself as being an employee of Construct [34] were clear statements of intent that the relationship between Construct and Mr McCourt was not to be one of employment, but one of principal and independent contractor. On that basis, his Honour concluded that Mr McCourt was not an employee of Construct [35]

The Full Court

25 In the Full Court, Lee J applied a multifactorial approach [36] , although his Honour identified three "tensions" in the application of that approach to a case such as the present. Those were: the identification of "control" in a trilateral relationship; the extent to which the question whether the worker conducts his or her own business is determinative of the characterisation of the relationship; and the weight to be given to the contractual description of Mr McCourt in the ASA as "the Contractor".

26 As to "control", Lee J considered that the gravamen of the concept of control was not the circumstance that the putative employee was in fact in a position of subordination but rather that it is the putative employer which commands the right to subordinate the employee in a position of service to the employer [37] However, his Honour emphasised that control, while important, was but one indicator in the characterisation inquiry [38] Indeed, his Honour went so far as to say that the control indicium "may not be particularly helpful in the characterisation of multilateral arrangements" [39]

27 As to the "own business" test, Lee J considered that while focussing the multifactorial approach on the question whether a worker is conducting a business on his or her own account may in some cases detract attention from the central question, in other cases it may prove to be a "useful way of approaching the broader inquiry". Ultimately, his Honour considered that the weight to be afforded to the "own business" question should be assessed in light of the whole picture and on a case-by-case basis [40] In the circumstances of the present case, Lee J was inclined to accept the submission that the primary judge did not afford sufficient weight to the uncontested fact that Mr McCourt was not in business on his own account, noting that it was a "surprising result" to ascribe to a 22-year-old backpacker with Mr McCourt's limited work experience the status of "independent contractor" [41]

28 As to the description of Mr McCourt as "the Contractor", Lee J disagreed with the primary judge's use of that contractual designation as an indicator with "tie-break" effect [42] His Honour considered that, in the context of a multifactorial approach that involved many factors weighed in the balance, there was a logical difficulty in assigning decisive weight to one factor [43]

29 Despite these differences of approach from that of the primary judge, Lee J dismissed the appeal and accepted that Mr McCourt was an independent contractor. His Honour said that, had the question been considered tabula rasa, he may have reached the opposite conclusion [44] Ultimately, however, Lee J concluded that the present circumstances were "materially identical" [45] to those considered in Personnel (No 1) [46]

30 In that case, a majority of the Western Australian Industrial Appeal Court (Steytler and Simmonds JJ, E M Heenan J dissenting) held that two labourers who had entered into agreements with Construct to supply labour to Hanssen, on similar terms to the ASA signed by Mr McCourt, were independent contractors. Lee J suggested that some of the misgivings he expressed in relation to the primary judge's approach - including those in relation to the relevance of the "own business" question and the contractual designation terms - might apply equally to the majority's reasoning in Personnel (No 1). However, Lee J could not conclude that the decision was plainly wrong [47] Lee J noted that it had stood for 16 years, during which time many entities had presumably relied on the decision in structuring their own arrangements [48] On that basis, Lee J dismissed the appeal [49]

31 Allsop CJ, if unconstrained by authority, would also have concluded that Mr McCourt and Construct were in a relationship of employment [50] because there was no indication that Mr McCourt was carrying on a business on his own account or that he was acting in any capacity other than as a builder's labourer [51] Nevertheless, Allsop CJ agreed with Lee J that the appeal should be dismissed because the reasons of the majority in Personnel (No 1) did not disclose clear error, notwithstanding what Allsop CJ considered to be an overly weighted importance on the contractual designation terms [52]

The employment relationship and the multifactorial test

32 Both the primary judge and the Full Court applied a "multifactorial test" to the determination of whether Mr McCourt was an employee of Construct. The manner in which that approach was applied by those courts, following Personnel (No 1), is problematic in a number of respects.

The "own business/employer's business" dichotomy

33 A multifactorial approach is open to the objection that it "does not provide any external test or requirement by which the materiality of the elements may be assessed" [53] As Lee J recognised in this case, without guidance as to the relative significance of the various factors the "multifactorial test" is distinctly "amorphous" [54] in its application, is "necessarily impressionistic" [55] , and thereby is "inevitably productive of inconsistency" [56] Such a test is apt to generate considerable uncertainty, both for parties and for the courts. That uncertainty is exacerbated where it is contended that the test is to be applied in respect of the parties' conduct over the whole course of their dealings with each other.

34 In Stevens v Brodribb Sawmilling Co Pty Ltd [57] and Hollis v Vabu Pty Ltd [58] , it was said that the characterisation of a relationship as being either one of employment or one of principal and independent contractor is to be determined by reference to "the totality of the relationship between the parties". It was not suggested that this assessment should proceed as if the court is running down items on a checklist in order to determine a balance of ticks and crosses. It has never been suggested that the factors identified to be relevant are of equal weight in the characterisation of the relationship. Some understanding as to the relative significance of the various factors is desirable, both to minimise the extent to which application of the test may produce an impressionistic and subjective outcome on the one hand, and to avoid the injustice of a mechanistic checklist approach on the other [59]

35 In this Court, the appellants submitted that the question whether a labourer is conducting his or her own independent business, as distinct from serving in the business of the employer, provides a more meaningful framework to guide the characterisation of the parties' relationship. There is force in that submission.

36 The value of the "own business/employer's business" dichotomy in determining whether a person engaged to undertake work for another is an employee of that other has long been recognised. In an opinion written a century ago, expressed in the language of the time, by Andrews J for a strong New York Court of Appeals in Braxton v Mendelson [60] , his Honour said:

"Ordinarily no one fact is decisive. The payment of wages; the right to hire or discharge; the right to direct the servant where to go, and what to do; the custody or ownership of the tools and appliances he may use in his work; the business in which the master is engaged or that of him said to be a special employer; none of these things give us an infallible test. At times any or all of them may be considered. The question remains: In whose business was the servant engaged at the time?"

37 In Marshall v Whittaker's Building Supply Co [61] , Windeyer J said that the distinction between an employee and an independent contractor is:

"rooted fundamentally in the difference between a person who serves his employer in his, the employer's, business, and a person who carries on a trade or business of his own."

38 In Stevens [62] , Wilson and Dawson JJ observed that Windeyer J in Marshall "was really posing the ultimate question in a different way". Similarly, in Hollis [63] , the plurality referred to the statement of Windeyer J as reflecting the "representation and ... identification with the alleged employer" that characterises a relationship as one of employment. In their Honours' view, it was another way of putting the proposition that an independent contractor "carries out his work, not as a representative but as a principal" [64] It may also be noted that the Federal Court has previously recognised that viewing the totality of the relationship between the parties through the prism of this dichotomy can give useful shape and meaning to the assessment of the relative significance of the parties' rights and duties [65]

39 While the "central question" [66] is always whether or not a person is an employee, and while the "own business/employer's business" dichotomy may not be perfect so as to be of universal application for the reason that not all contractors are entrepreneurs, the dichotomy usefully focusses attention upon those aspects of the relationship generally defined by the contract [67] which bear more directly upon whether the putative employee's work was so subordinate to the employer's business that it can be seen to have been performed as an employee of that business rather than as part of an independent enterprise. In this way, one may discern a more cogent and coherent basis for the time-honoured distinction between a contract of service and a contract for services [68] than merely forming an impressionistic and subjective judgment or engaging in the mechanistic counting of ticks on a multifactorial checklist.

The employment relationship and the contract of employment

40 In Commonwealth Bank of Australia v Barker [69] , French CJ, Bell and Keane JJ said:

"The employment relationship, in Australia, operates within a legal framework defined by statute and by common law principles, informing the construction and content of the contract of employment."

41 An employment relationship will not always be defined exclusively by a contract between the parties [70] Historically, the employment relationship was recognised and regulated by the law before the law of contract came to govern the relationship [71] An employment relationship, though principally based in contract, may be affected by statutory provisions and by awards made under statutes [72] It may also be that aspects of the way in which a relationship plays out "on the ground" are relevant for specific statutory purposes. So, for example, a statute may operate upon an expectation generated in one party by the conduct of another, even though that expectation does not give rise to a binding agreement [73]

42 A contract of employment may be partly oral and partly in writing, or there may be cases where subsequent agreement or conduct effects a variation to the terms of the original contract or gives rise to an estoppel or waiver. In such cases, it may be that the imposition by a putative employer of its work practices upon the putative employee manifests the employer's contractual right of control over the work situation; or a putative employee's acceptance of the exercise of power may show that the putative employer has been ceded the right to impose such practices [74]

43 While there may be cases where the rights and duties of the parties are not found exclusively within a written contract, this was not such a case. In cases such as the present, where the terms of the parties' relationship are comprehensively committed to a written contract, the validity of which is not challenged as a sham nor the terms of which otherwise varied, waived or the subject of an estoppel, there is no reason why the legal rights and obligations so established should not be decisive of the character of the relationship [75]

44 Not only is there no reason why, subject to statutory provisions or awards, established legal rights and obligations in a contract that is entirely in writing should not exclusively determine the relationship between the parties but there is every reason why they should. The "only kinds of rights with which courts of justice are concerned are legal rights" [76] The employment relationship with which the common law is concerned must be a legal relationship. It is not a social or psychological concept like friendship. There is nothing artificial about limiting the consideration of legal relationships to legal concepts such as rights and duties. By contrast, there is nothing of concern to the law that would require treating the relationship between the parties as affected by circumstances, facts, or occurrences that otherwise have no bearing upon legal rights.

45 In Narich Pty Ltd v Commissioner of Pay-roll Tax [77] , approving the earlier decision in Australian Mutual Provident Society v Chaplin [78] , in the course of delivering the reasons of the Privy Council dismissing the appeal from the Supreme Court of New South Wales, Lord Brandon of Oakbrook said that:

"where there is a written contract between the parties whose relationship is in issue, a court is confined, in determining the nature of that relationship, to a consideration of the terms, express or implied, of that contract in the light of the circumstances surrounding the making of it; and it is not entitled to consider also the manner in which the parties subsequently acted in pursuance of such contract."

46 The one exception to this principle was said to be the case where subsequent conduct could be shown to have varied the terms of the contract [79] To similar effect, in Connelly v Wells [80] , following Narich, Gleeson CJ said:

"Where the relationship between two persons is founded in contract, the character of the relationship depends upon the meaning and effect of the contract. In the absence of a suggestion that a contract was varied after it was originally made, its meaning and effect must be determined as at the time it was entered into. If the contract is in writing, then the court which is considering the nature of the relationship between the parties is directed to an examination of the terms of the written agreement in the light of the circumstances surrounding its making [81] ."

Numerous other Australian courts have continued to recognise as authoritative the decisions in Chaplin and Narich [82]

47 In a number of decisions [83] , however, including the decision of the Full Court in this case [84] and the decision of the Western Australian Industrial Appeal Court in Personnel (No 1) [85] , which the Full Court had reluctantly followed in this case, courts have proceeded on an understanding that the approach stated in Chaplin and Narich has been superseded by the adoption of a multifactorial test in cases where the relationship sought to be characterised is either one of employment or one of principal and independent contractor, even where the terms of the relationship are comprehensively contained within a written contract. On this approach, the terms of the written contract are only "factors" to be considered along with other circumstances. But no decision of this Court has ever adopted or endorsed such a departure from Chaplin and Narich.

48 Indeed, the decisions in Chaplin and Narich exemplified a long line of authority in Australia which took the same approach. This is, perhaps, unsurprising in circumstances in which the older authorities focussed upon whether the relation involved a contract of service or a contract for services. Of course, some of these decisions had regard to the factors involving the work practices of the parties in order to determine common law questions relating to the rights and duties of the parties: the terms of a contract which is partly written and partly oral; whether a contract is a sham; or whether the terms of the contract have been varied or waived, or are subject to an estoppel. But none of these decisions can be understood as a rejection, sub silentio, of the approach taken in Chaplin and Narich. To the contrary, the decisions are based upon the same principled understanding. It is necessary to descend to the detail of these cases to show why it would be a large step to reinterpret these cases to justify a departure from the settled law of Chaplin and Narich.

49 In R v Foster; Ex parte The Commonwealth Life (Amalgamated) Assurances Ltd [86] , this Court considered an application for an order nisi for prohibition by an insurance company seeking to restrain proceedings in the Commonwealth Court of Conciliation and Arbitration in relation to an industrial award on the basis that "agents" who canvassed insurance policies and collected premiums were independent contractors outside the concept of an industrial dispute within s 51(xxxv) of the Constitution. The company relied upon a clause in a written agreement which provided that the relationship between the parties "will be strictly that of principal and agent and not in any way whatever that of employer and employee". The union alleged that the agreement was a sham and that the matter should be remitted to a single judge to determine the facts [87]

50 The Court declined to settle the issue for a trial before a single Justice to determine whether the "real relation" between the parties was one of employer and employee, although it was observed that the materials before the Court were not satisfactory. It was enough that the company had failed to exclude the possibility of an employment relationship "whatever the agreement may say" [88] In addressing the submission of sham, the joint reasons of Dixon, Fullagar and Kitto JJ described the "case for the respondent union" as being that the contract "does not represent the reality of the relation in practice" and said that "if in practice the company assumes the detailed direction and control of the agents in the daily performance of their work and the agents tacitly accept a position of subordination to authority and to orders and instructions as to the manner in which they carry out their duties, a clause designed to prevent the relation receiving the legal complexion which it truly wears would be ineffectual" [89]

51 Perhaps because Dixon, Fullagar and Kitto JJ did not expressly use the word "sham" when addressing the submission of the union, the reference by their Honours to the "true" legal complexion of contractual obligations in R v Foster has also been understood to be a reference to a variation of the agreement [90] Indeed, the language of a subsequent assumption of rights by the company and an acceptance of duties by the agents, as to the "legal" complexion of a relationship, is almost a textbook description of a variation of contract by conduct. This was the approach taken in Ex parte Robert John Pty Ltd; Re Fostars Shoes Pty Ltd [91] , where, in the course of considering whether a deed described as a deed of "licence" created a lease, Sugerman J referred to R v Foster and spoke of the need to "have regard to the real character of the relationship of the parties ... as their relations worked out in fact" apart from "the deed of licence if considered alone". As Sugerman J explained in the immediately preceding paragraph [92] , this was addressing the submission, set out earlier [93] , that "even if it be taken that the relationship between the parties was originally that of licensor and licensee, the only reasonable construction to be placed upon subsequent events is that, by tacit consent, the character of the appellant's occupation of the premises was later changed and the relationship became one of lessor and lessee". Plainly, Sugerman J was not silently abandoning "traditional principles" [94] or established orthodoxy which requires that the character of an agreement as either a lease or a licence "can only be determined by consideration of the effect of the agreement" [95] His Honour was describing a variation of the agreement.

52 Prior to Chaplin and Narich, examples abound of this Court focussing only upon the terms of the contract, with any consideration of subsequent conduct of the parties for the purposes only of assessing alterations of their rights such as variations of their agreement. In case after case after case, this Court can be seen to be applying basic, established principles of contract law rather than effecting a silent revolution.

53 In Logan v Gilchrist [96] , this Court treated the question of whether a drover was an employee or an independent contractor as whether, as Isaacs J put it, the putative employer has "a right at the moment to control the doing of the act" [97] or, as Higgins J put it, a question which "is answered by the contents of the agreement" [98] In Queensland Stations Pty Ltd v Federal Commissioner of Taxation [99] and Humberstone v Northern Timber Mills [100] , Dixon J spoke respectively of whether "such a contract created the relation of ... employer and employee" and whether "the contract placed the supposed servant subject to the command of the employer ... not whether in practice the work was in fact done subject to a direction and control". In Federal Commissioner of Taxation v J Walter Thompson (Aust) Pty Ltd [101] , Latham CJ spoke of the "decisive element" in characterising a relationship of employment as being "the extent of control which, by the agreement, the master may exercise".

54 In other cases, members of this Court have considered subsequent conduct of the parties but only in order to ascertain the effect upon the legal rights of the parties, such as whether an agreement was a sham or whether the terms had been varied. For instance, in responding to a submission of sham in Cam and Sons Pty Ltd v Sargent [102] , Dixon J spoke of investigating the "substance" of a written agreement that contained "elaborate provisions expressed in terms appropriate to some other relation", but emphasised that it was the agreement which was to be analysed [103] Lest there be any doubt, it has been held that this decision is consistent with the focus in Chaplin and Narich upon the terms of the written contract [104] In Neale v Atlas Products (Vic) Pty Ltd [105] , this Court again considered a submission that the terms of a written agreement were a "sham". It was held that the written agreement, which "substantially set forth the conditions upon which each tiler was employed", was "the real measure of the relationship between the parties" and that "we should not be disposed to ignore it unless it can be said that the evidence establishes quite clearly that the conduct of the parties was inconsistent with it as the basis of their relationship" [106]

55 To the extent that it has been supposed that a departure from the long-standing approach predating, but exemplified in, Chaplin and Narich was required by this Court's decisions in Stevens and Hollis, that understanding is also not correct. In neither Stevens nor Hollis did this Court suggest that, where one person has done work for another pursuant to a comprehensive written contract, the court must perform a multifactorial balancing exercise whereby the history of all the dealings between the parties is to be exhaustively reviewed even though no party disputes the validity of the contract.

56 In Stevens, Mason J said that "it is the totality of the relationship between the parties which must be considered". But this statement was made in the context of a discussion the point of which was to emphasise that the right of one party to control the work of another was "not ... the only relevant factor" [107] It was not an invitation to broaden the inquiry beyond the contractual rights and duties of the parties. Importantly, Stevens was not a case where the parties had committed the terms of their relationship to a written contract [108] In this respect, Stevens stands in obvious contrast to cases like Chaplin and Narich - and the present case.

57 In Hollis, the "contractual relationship" pursuant to which Vabu "imposed" its work practices upon couriers was partly oral and partly in writing [109] The terms of the relationship between the parties had not been committed comprehensively to a written agreement. Moreover, there was no suggestion in any of the judgments in Stevens or Hollis that their Honours entertained any misgivings as to the statements of principle in Chaplin and Narich. Indeed, in Stevens, Mason J (with whom Brennan J agreed) and Wilson and Dawson JJ referred to Chaplin with evident approval [110] It is also noteworthy that Gleeson CJ, who followed Narich in Connelly v Wells, was a party to the plurality judgment in Hollis. As has been correctly observed, Hollis "does not alter or even challenge the orthodox principle that courts are not concerned with what has 'actually occurred' in a relationship, but rather with 'the obligations by which the parties [are] bound'" [111]

58 Uncertainty in relation to whether a relationship is one of employment may sometimes be unavoidable. It is the task of the courts to promote certainty with respect to a relationship of such fundamental importance. Especially is this so where the parties have taken legitimate steps to avoid uncertainty in their relationship. The parties' legitimate freedom to agree upon the rights and duties which constitute their relationship should not be misunderstood. It does not extend to attaching a "label" to describe their relationship which is inconsistent with the rights and duties otherwise set forth. To do so would be to elevate their freedom to a power to alter the operation of statute law to suit themselves or, as is more likely, to suit the interests of the party with the greater bargaining power.

59 Where the parties have comprehensively committed the terms of their relationship to a written contract the validity of which is not in dispute, the characterisation of their relationship as one of employment or otherwise proceeds by reference to the rights and obligations of the parties under that contract. Where no party seeks to challenge the efficacy of the contract as the charter of the parties' rights and duties, on the basis that it is either a sham or otherwise ineffective under the general law or statute [112] , there is no occasion to seek to determine the character of the parties' relationship by a wide-ranging review of the entire history of the parties' dealings. Such a review is neither necessary nor appropriate because the task of the court is to enforce the parties' rights and obligations, not to form a view as to what a fair adjustment of the parties' rights might require [113]

60 In this respect, the principles governing the interpretation of a contract of employment are no different from those that govern the interpretation of contracts generally. The view to the contrary, which has been taken in the United Kingdom [114] , cannot stand with the statements of the law in Chaplin and Narich.

61 The foregoing should not be taken to suggest that it is not appropriate, in the characterisation of a relationship as one of employment or of principal and independent contractor, to consider "the totality of the relationship between the parties" [115] by reference to the various indicia of employment that have been identified in the authorities. What must be appreciated, however, is that in a case such as the present, for a matter to bear upon the ultimate characterisation of a relationship, it must be concerned with the rights and duties established by the parties' contract, and not simply an aspect of how the parties' relationship has come to play out in practice but bearing no necessary connection to the contractual obligations of the parties.

62 WorkPac Pty Ltd v Rossato [116] concerned the question whether a person who was engaged to work under what were indisputably contracts of employment was a casual employee. This Court rejected the argument that this question was to be determined by reference to all the circumstances of the employment, including disparities in the bargaining power of the parties. Hollis [117] had been cited in support of that argument. Kiefel CJ, Keane, Gordon, Edelman, Steward and Gleeson JJ noted that because, in Rossato, the Court was concerned with what was, on any view, a contract of employment, Hollis was not on point. Their Honours went on to say that, "[o]n one view", the resolution of the question whether a person engaged to work for another is an employee or an independent contractor "may depend upon the extent to which it can be shown that one party acts in the business of, and under the control and direction of, the other" [118] But because the issue of present concern did not arise in Rossato, the plurality refrained from expressing a concluded view as to the significance of the observations in Hollis in relation to that issue. The occasion to express a view on that matter has now arrived: the point was squarely raised and fully argued. There is no reason in principle why the approach taken in Rossato should not be applied where the issue is whether the relationship in question is one of employment.

The parties' description of their relationship

63 To say that the legal character of a relationship between persons is to be determined by the rights and obligations which are established by the parties' written contract is distinctly not to say that the "label" which the parties may have chosen to describe their relationship is determinative of, or even relevant to, that characterisation.

64 Subject to statute, under the common law the parties are free to agree upon the rights and obligations by which they are to be bound. But the determination of the character of the relationship constituted by those rights and obligations is a matter for the court [119]

65 In Chaplin [120] , Lord Fraser of Tullybelton said that a provision of a contract, whereby the parties sought to define their relationship as one of "Principal and Agent and not that of Master and Servant", "cannot receive effect according to its terms if they contradict the effect of the agreement as a whole". It was accepted, however, that ambiguity in the character of a relationship might be removed by a provision whereby the parties agreed on terms descriptive of their status or relationship [121]

66 As a matter of principle, however, it is difficult to see how the expression by the parties of their opinion as to the character of their relationship can assist the court, whose task it is to characterise their relationship by reference to their rights and duties. Generally speaking, the opinion of the parties on a matter of law is irrelevant. Even if it be accepted that there may be cases where descriptive language chosen by the parties can shed light on the objective understanding of the operative provisions of their contract, the cases where the parties' description of their status or relationship will be helpful to the court in ascertaining their rights and duties will be rare.

67 Having made these general observations, one may turn now to consider the relationship between the present parties.

Mr McCourt served in the business of Construct

68 In this Court, Construct was content to disavow the notion that Mr McCourt was carrying on his own business. That disavowal might be said to be no more than recognition that any suggestion to that effect was unsustainable. As both the primary judge [122] and the Full Court [123] appreciated, Mr McCourt could not sensibly be said to have been carrying on business on his own account. That was plainly correct, notwithstanding the language used in the ASA to describe Mr McCourt's occupation which suggested otherwise.

69 Lehigh Valley Coal Co v Yensavage [124] concerned the question whether a coal miner working on a mine site was the employer of his "helper", who had been injured in an explosion at the mine, for the purposes of a statute which imposed an obligation upon employers to provide a safe system of work. The mine owner contended that neither the coal miner nor the injured "helper" was its employee. Coxe and Learned Hand JJ ridiculed the mine owner's contention by observing that, if that contention were accepted [125] :

"[t]he [mine owner] is therefore not in the business of coal mining at all, in so far as it uses such miners, but is only engaged in letting out contracts to independent contractors, to whom they owe as little duty as to those firms which set up the pumps in their mines. ...
It is absurd to class such a miner as an independent contractor ... He has no capital, no financial responsibility. He is himself as dependent upon the conditions of his employment as the company fixes them as are his helpers. By him alone is carried on the company's only business; he is their 'hand,' if any one is. Because of the method of his pay one should not class him as though he came to do an adjunctive work, not the business of the company, something whose conduct and management they had not undertaken."

70 This lampooning of the mine owner's argument focussed attention on the nature of the mine owner's business in order to highlight the absurdity of the notion that the mine owner was no more than an introduction agency and that the coal miner was carrying on a business that was separate from the business of the mine owner. That is a useful focus in this case too.

71 Construct submitted that it was "simply a finder of labour". But that ignores the complex suite of rights and obligations of Construct vis-à-vis Mr McCourt that had been established under the ASA. Construct was authorised: to fix Mr McCourt's reward for his work (cl 2(a)); to act as Mr McCourt's paymaster (cll 1(d), 2(d)); and to terminate Mr McCourt's engagement should he fail in any respect to obey the directions of Construct or Hanssen (see cl 4(a), (c)). And, as will be seen, by cl 4(a) Construct retained a right of control over Mr McCourt that was fundamental to its business as a labour-hire agency. There would be no reason for the existence of such obligations if Construct were not in the business of labour hire, but rather in the business of "introducing" suppliers of labour to builders and leaving those parties to sort their own affairs.

72 In terms of the test suggested by Windeyer J in Marshall, it is impossible to say that Mr McCourt was in business on his own account. The core of Mr McCourt's obligation to Construct under the ASA was his promise to work as directed by Construct or by its customer [126] Mr McCourt's obligation to work was meaningful only because the benefit of that promise was ventured by Construct as an asset of its labour-hire business.

Mr McCourt worked subject to the control of Construct

73 Like the "own business/employer's business" dichotomy, the existence of a right of control by a putative employer over the activities of the putative employee serves to sensitise one to the subservient and dependent nature of the work of the employee, so as to assist in an assessment of whether a relationship is properly to be regarded as a contract of service rather than a contract for services.

74 Construct submitted that control was a necessary, though not sufficient, condition of a contract of service, citing Zuijs v Wirth Brothers Pty Ltd [127] It was submitted that Hanssen alone supervised and directed every aspect of Mr McCourt's work, and it was emphasised that Construct was not entitled, under either the LHA or the ASA, to enter Hanssen's site and issue directions to Mr McCourt regarding the performance of his work. So much may be accepted. But this Court in Stevens [128] , and indeed in Zuijs [129] itself, emphasised that it is the right of a person to control the work of the other, rather than the detail of the actual exercise of control, which serves to indicate that a relationship is one of employer and employee.

75 Under the ASA, Construct was entitled to determine for whom Mr McCourt would work [130] Once assigned to a client, Mr McCourt was obliged by cl 4(a) to "[c]o-operate in all respects with Construct and the builder in the supply of labour to the Builder". That obligation must be understood in context. It was not directed towards the carrying out of any particular task, or the effecting of any specific result, for Hanssen. There was no suggestion that the work Mr McCourt agreed to do would involve the exercise of any discretion on his part, either as to what he would do or as to how he would do it. Mr McCourt's obligation to "supply ... labour" in cooperation with Hanssen necessarily meant that he agreed, for the duration of the assignment, to work in accordance with Hanssen's directions. He was simply not permitted to do otherwise. Had Mr McCourt breached cl 4(a), Construct (not Hanssen) would have been entitled to terminate the ASA.

76 Mr McCourt's performance of that obligation was unambiguously central to Construct's business of supplying labour to builders. In referring Mr McCourt to Hanssen, Construct was exercising, and commercialising, its right to control the work that Mr McCourt would do and how he would do it. The marketability of Construct's services as a labour-hire agency turned on its ability to supply compliant labour; without that subservience, that labour would be of no use to Construct's clients. That right of control was therefore the key asset of Construct's business. Its significance was not diminished by the circumstance that the minutiae of Mr McCourt's performance of daily tasks were at the direction of Hanssen. Indeed, the right of control held by Construct over Mr McCourt explains why there was no need for any contractual relationship between Mr McCourt and Hanssen in order to support Hanssen's ability to issue day-to-day directions to Mr McCourt.

77 Mr McCourt had no right to exercise any control over what work he was to do and how that work was to be carried out. That state of affairs was attributable to the ASA, by which Mr McCourt's work was subordinated to Construct's right of control.

78 Contrary to Construct's submissions, and to the observations of Lee J [131] , there is nothing in the tripartite nature of a labour-hire arrangement that precludes recognition of Construct's contractual right to control the provision of Mr McCourt's labour to its customers, and the significance of that right to the relationship between Construct and Mr McCourt. As between Construct, Mr McCourt and Hanssen, it was only by reason of Mr McCourt's promise to Construct that Mr McCourt was bound to work as directed by Hanssen.

Mr McCourt's designation as "the Contractor" is of no moment

79 The ASA described Mr McCourt as "the Contractor". But the effect of the rights and duties created by the ASA was that Mr McCourt was engaged by Construct to serve Construct in its business. The rights and duties agreed between Construct and Mr McCourt leave no room for ambiguity as to the character of that relationship. For the reasons stated above, that the parties have described their relationship a certain way cannot change the character of the relationship established by their rights and obligations. Lee J was right to suggest that it was erroneous in point of principle to use the parties' description of their relationship to resolve uncertainty produced by application of the multifactorial test. There was no occasion to have recourse to the label chosen by the parties, whether as a "tie-breaker" or otherwise.

Policy considerations underpinning vicarious liability

80 Pursuant to a notice of contention, Construct argued that the Full Court ought to have found that none of the policy concerns which underpin the vicarious liability of an employer for the actions of its employees favoured a characterisation of Mr McCourt's engagement as one of employment. In this regard, Construct argued that, as a result of its absence of practical ability or legal authority to influence the actual performance by Mr McCourt of work on site, the imposition of vicarious liability on Construct would have no useful deterrent effect on its willingness to court risks to workplace health and safety. Secondly, Construct submitted that it was Hanssen, as builder, which created any enterprise risk, and therefore Construct should not bear vicarious liability for Mr McCourt's actions in furtherance of Hanssen's enterprise. Thirdly, Construct submitted that because Mr McCourt was not integrated into Construct's business - for example, by the wearing of a uniform or by acting publicly as Construct's representative - it could not be said that Mr McCourt was a public manifestation of Construct's business for whom Construct should be held responsible.

81 The simple answer to these submissions is that these broad appeals to considerations of policy cannot alter the effect of the ASA, any more than Mr McCourt's invocation of the disparity in bargaining power can alter its effect in his favour. In any event, it is important to recognise that Construct was able, by the deployment of its right of control over Mr McCourt, to determine the industrial environment in which he would work; and so there is nothing counter-intuitive about recognising both Construct's non-delegable duty to him and its vicarious liability for his acts or omissions.

82 However, given the confusion that arises from the conflation of questions of vicarious liability of an employer with questions of characterisation of a putative employment relationship, it is necessary to explain the difference. There are two conceptions of vicarious liability of an employer [132] : the traditional "agency" conception, where an employer has a primary liability for the actions of an employee or other agent [133] and the policy-based conception, where an employer has a secondary liability for the liability of the employee [134] On either conception, the relationship of employment is only the first step in ascertaining whether vicarious liability exists. There is a necessary second step which requires consideration of the subsequent conduct of the employee, the event for which the employer is to be held primarily or secondarily liable, and its association with the employment relationship.

83 In many cases involving issues of vicarious liability in either sense above, whether or not the relationship is one of employment, the focus is upon the second step of the inquiry [135] It is essential in such cases to consider the conduct of the parties subsequent to the contract that establishes their relationship, especially the conduct of the person whose actions have caused the injury. Hollis was a case of such vicarious liability. Since the contract between the parties was not entirely in writing, the subsequent conduct of the parties was necessary to establish the terms of their agreement. But it was also separately necessary to establish satisfaction of the second step of the vicarious liability inquiry.

Non-exclusive work is consistent with casual employment

84 For the sake of completeness, it should also be said that the primary judge erred in concluding that the circumstances that Mr McCourt was free to accept or reject any offer of work [136] , and that he was not precluded from working for others [137] , were factors which contraindicated a characterisation of his relationship with Construct as one of employment. It is commonplace that casual employees do not work exclusively for one employer. In addition, Mr McCourt's right pursuant to cl 5(b) of the ASA to accept or reject any offer of work from a builder must be understood subject to his promise to Construct in cl 4(c) of the ASA to "supply labour ... for the duration required by [Hanssen]". His right to reject an offer of work was exercisable at the level of an overall engagement with Hanssen, rather than on the basis of a new engagement each day.

Earlier decisions involving triangular labour-hire arrangements

85 Construct argued that Personnel (No 1) [138] , when viewed alongside the decisions in Building Workers Industrial Union of Australia v Odco Pty Ltd [139] and Young v Tasmanian Contracting Services Pty Ltd [140] , established a body of authority in which "Odco -style" triangular labour-hire arrangements have been held not to create relationships of employment. It was submitted that this Court should not overturn this long-standing position. Many persons, it was said, will have relied on these decisions in arranging their affairs.

86 In this regard, Personnel (No 1) was wrongly decided, the critical error of the reasoning of the majority being the attribution of decisive significance [141] to the parties' description of their relationship in a manner so as to "remove [the] ambiguity" [142] generated by other factors in the analysis pointing in opposite directions. The same error infected the decision in Odco [143] That error involves a departure from principle which should not be perpetuated.

87 Construct also placed reliance on the decision of the Court of Appeal in Bunce v Postworth Ltd [144] In that case, it was held that a labour-hire agency was not in a relationship of employment with its worker because it lacked the requisite power of control, which instead was found to reside in the client to whom the worker was assigned. The Court of Appeal rejected the argument that the client's day-to-day control originated in the contract between the labour-hire agency and the worker. Keene LJ (with whom Gage LJ and Sir Martin Nourse agreed) said that [145] :

"[t]he law has always been concerned with who in reality has the power to control what the worker does and how he does it." (emphasis in original)

88 The decision in Bunce is of little assistance in this case. The reference by Keene LJ to the "reality" of the situation does not accord with the central importance of the rights and duties established by the parties in their written contract. It suggests that the "reality" of the situation is, in some unexplained way, of a significance that transcends the rights and obligations agreed by the parties. To the extent that this involves an assumption that employment contracts are to be interpreted differently from contracts generally, that assumption is not consistent with the law in Australia. Further, the Court of Appeal's emphasis on the exercise of control is inconsistent with the recognition by this Court that the gravamen of the concept of control lies in the authority to exercise control and not its practical exercise [146]

Conclusion

89 Under the ASA, Mr McCourt promised Construct to work as directed by Construct and by Construct's customer, Hanssen. Mr McCourt was entitled to be paid by Construct in return for the work he performed pursuant to that promise. That promise to work for Construct's customer, and his entitlement to be paid for that work, were at the core of Construct's business of providing labour to its customers. The right to control the provision of Mr McCourt's labour was an essential asset of that business. Mr McCourt's performance of work for, and at the direction of, Hanssen was a direct result of the deployment by Construct of this asset in the course of its ongoing relationship with its customer.

90 In these circumstances, it is impossible to conclude other than that Mr McCourt's work was dependent upon, and subservient to, Construct's business. That being so, Mr McCourt's relationship with Construct is rightly characterised as a contract of service rather than a contract for services. Mr McCourt was Construct's employee.

Orders

91 The appeal should be allowed. The respondent should pay the appellants' costs of the appeal to this Court.

92 The order of the Full Court of the Federal Court of Australia made on 17 July 2020 should be set aside and, in its place, it is ordered that:

1.
The appeal be allowed.
2.
The order of the Federal Court of Australia made on 6 November 2019 be set aside.
3.
It be declared and ordered that, between 27 July 2016 and 6 November 2016 and 14 March 2017 and 30 June 2017, the second appellant was employed by the respondent.
4.
The matter be remitted to the primary judge for determination according to law.

There should be no order as to the costs in the Full Court.


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