Australia: Contractors v Employees: The differences and why it matters - Part 2

Industrial and Employment Law
Last Updated: 8 March 2011
This article is part of a series: Click Contractors v Employees: The differences and why it matters - Part 1 for the previous article.

Article by Andrew Tobin, Partner

4. 'Employer' obligations and liabilities in relation to contractors

4.1 PAYG withholding tax

Under the PAYG withholding system, a person who makes certain kinds of payments must withhold amounts from those payments and pay the withheld amounts to the Australian Taxation Office (ATO). Employers must withhold PAYG tax from any salary, wage, commission, allowance or bonus paid to an employee.

Generally, there is no PAYG obligation attached to payments made to contractors, but there can be exceptions.

The limited circumstances in which a principal is required to withhold PAYG tax from payments made to a contractor are where the contractor:

  1. enters into a voluntary agreement with the employer to withhold PAYG tax;
  2. provides their work or services for a client of the principal under a labour hire arrangement; or
  3. has not quoted their Australian Business Number (ABN) to the employer.

Failure to withhold and remit amounts required to be withheld under the PAYG system may result in unexpected tax liabilities, plus associated penal liability. For advisers seeking to help parties structure their affairs, the potential impact of tax laws needs to be considered carefully to ensure that relevant obligations are met.

4.2 Statutory superannuation

Under the Superannuation Guarantee Scheme (SGS), employers are generally required to make compulsory superannuation contributions for their employees at (currently) the minimum rate of nine percent of ordinary time earnings. In this context, the meaning of 'employee' and 'employer' is determined by the common law, with the result that, in many situations, the obligation imposed upon employers to make superannuation contributions for workers does not apply to contracting arrangements.

However, the SGS legislation deems a person to be an employee if a person works under a contract that is wholly or principally for the labour of the person.22 A contract for a person's labour is one where the work must be done by the person engaged to do it, as distinguished from an engagement where, for example, the contractor is free to engage other workers to do the work.

Where the deeming provisions applies, and whether or not the contractor has an ABN and for other purposes can be treated as a contractor, the principal will be liable to make superannuation contributions for the contractor under the SGS.

There are adverse consequences for a principal/employer who fails to make superannuation contributions as required. Employers may incur a non-deductible superannuation guarantee charge and additional costs and penalties for late payment.

4.3 Workers' compensation

The liability to include a worker under statutory workers' compensation insurance arrangements is another area in which those engaging workers as contractors commonly misunderstand their obligations.

The aim of the Workers' Compensation and Rehabilitation Act 2003 (Qld) (WCRA), is to require employers to maintain insurance that covers against legal liability for compensation or damages arising out of injury sustained by their workers during the course of employment. The employer is required to take out insurance under the legislation for each 'worker' employed by the employer.

The definition of 'worker' adopted by the legislation includes not only workers engaged under a contract of service (employees in the usual sense), but also (and among others):

  1. a person who works under a contract, or at piece work rates, for labour only or substantially for labour only; or
  2. a person who works for another person under a contract unless the person performing the work:
    1. is paid to achieve a specific result or outcome;
    2. has to supply the plant and equipment or tools of trade needed to perform the work; and
    3. is, or would be, liable for the cost of rectifying any defect in the work performed.23

In every case it will be necessary to consider whether the terms and nature of a particular contract are such so as to exclude the arrangement from liability to insure under the workers compensation legislation. If a worker suffers an injury where a policy of insurance should have been but was not taken out, WorkCover can recover the premium that should have been paid from the employer, plus a penalty of up to 100 percent, and the entire cost of the claim (ie any damages paid to the worker), plus a penalty of up to 50 percent.24

The risk of injury to a contractor, even where there is no liability to insure, should at least be considered by the parties, particularly an employer, when putting together a contracting arrangement. It will often be appropriate and prudent for the parties to make alternative insurance arrangements. In the absence of insurance cover there will always be a risk, in the event of injury to a worker, that a claim will be made against the employer seeking to establish liability for the injury. The fact that liability might not be established will be of little comfort to an employer who nevertheless has to incur time, trouble and expense in defending such a claim.

The other thing to bear in mind in relation to workers' compensation issues is that workers' compensation legislation is State-based legislation subject to different rules in different States. If a prospective contract will or might involve work outside Queensland, the insurance requirements in each relevant jurisdiction will need to be considered and appropriately managed.

4.4 Payroll tax

Payroll tax is a State/Territory based tax imposed on employers in respect of 'wages'. As such, payroll tax rules also vary between the States and Territories and the requirements of all jurisdictions relevant to any particular contracting engagement will have to be considered.

In Queensland the payroll tax rate is 4.75 percent once total wage payments exceed the tax exemption threshold of $1,000,000 in a financial year. Different rates and thresholds apply in other jurisdictions.

Before 1 July 2008, the Queensland payroll tax legislation did not impose payroll tax on remuneration paid to contractors - rather, it attached to 'wages' paid to 'employees' proper in respect of services performed within Queensland. Because of this, payroll tax was not, at least in Queensland, previously an issue impacting upon genuine contracting engagements.

However, this changed under the payroll tax harmonisation process undertaken by the Queensland Government – to bring the Queensland payroll tax rules into line with those applicable in other States – which took effect from 1 July 2008.

So far as contracting engagements in Queensland are now concerned, the current rules deem parties to a 'relevant contract' to be an employer and employee, and payments made under such a contract to be 'wages'.

Practically speaking, the effect of the contractor provisions now in the legislation will be to rope service fees paid to contractors working in Queensland into the payroll tax system in a wide range of situations (subject to a number of exemptions), when prior to 1 July 2008 most payments to contractors would not have been caught.

Potential exemptions include, among others:

  1. '90-day exemption': A contract may be exempt from payroll tax if a person provides the principal with the same or similar services provided by the principal's business, for a total of not more than 90 days in a financial year. On the 91st day, the entire period becomes liable for payroll tax.
  2. '180-day exemption': This exemption may be applicable where the contract relates to the provision of services of a kind ordinarily required by the principal's business, for less than 180 days in a financial year.
  3. 'Not ordinarily required exemption': This exemption may operate to exempt a contract under which the contractor provides services to the principal not ordinarily required by the principal, and where the contractor provides the same services to the public generally in the relevant financial year.
  4. 'Contractor engages others exemption': This exemption may exempt payments made under a contract where the contractor engages others to provide the services they are contracted to provide, or two or more people are needed to fulfil the purpose of the contract. The exemption does not apply if the contractor is a partnership of persons engaged to do, and who themselves do, the work.

Where payroll tax should have been paid but was not paid and that situation is discovered by the Office of State Revenue, not only will the employer incur the principal liability that should have been discharged, but potentially also an additional penalty of up to 200 percent of the tax due.

4.5 Vicarious liability

As a general rule, employers/principals are not vicariously liable for injuries, or damage caused by, contractors in the course of their work.25 The theoretical underpinnings of this rule are based on the premise that a contractor is in business for him or herself on their own account and the principal employer has no right to control how the contractor's work is done.

Aside from the fact that there are recognised exceptions to the general rule, the classification of a worker as a contractor is not an infallible means by which to avoid the prospect for vicarious liability for the consequences of their negligence or other conduct.

The decision of the High Court in Hollis v Vabu26 demonstrates the potential exposure.

In that case, the facts of which are discussed further below, the principal issue for determination was whether or not the defendant employer, Vabu, was vicariously liable for the negligence of one of the employer's workers, a bicycle courier, which resulted in injury to the plaintiff, Mr Hollis.

Vabu resisted the claim on the basis that their worker was a contractor, while the injured Mr Hollis argued that the worker was an employee. The dispute was ultimately determined in favour of the injured plaintiff, on the basis that the worker was in fact an employee of the employer so that the employer was vicariously liable for the worker's conduct.

Justice McHugh, departing from the majority judgment, found that the worker was neither an independent contractor nor an employee of the employer but that, nevertheless, the employer was vicariously liable for the worker's conduct. He expressed the view that the case was not one in which the definitions of employee or contractor should be stretched to encompass the role the workers/couriers performed. In his view the couriers were clearly not independent contractors but, equally, they were not employees. Instead, His Honour thought that the case provided an opportunity to adapt the doctrine of vicarious liability to better fit with the modern workplace environment, based on policy considerations:

It is true that the couriers employed by Vabu are neither employees nor independent contractors in the strict sense. But there is no reason in policy for upholding the strict classification of employees and non-employees in the law of vicarious liability and depriving Mr Hollis of compensation. Rather than expanding the definition of employee or accepting the employee/independent contractor dichotomy, the preferable cause is to hold that employers can be vicariously liable for the tortious conduct of agents who are neither employees nor independent contractors.

Ultimately His Honour determined that while the defaulting worker was neither an independent contractor nor an employee, but should probably have been characterised as an agent for the employer, the employer was nevertheless vicariously liable for courier's negligence.

Similar considerations arose in the later High Court decision in Sweeney v Boylan Nominees Pty Ltd27, where a majority appeared to reject any wider principle of vicarious liability, of the kind for which McHugh J advocated in Vabu.

In Sweeney, the plaintiff sought to recover damages for personal injury from Boylan, as the result of the negligence of a contract mechanic retained by Boylan, to repair a refrigerator otherwise maintained by Boylan. The door of the refrigerator, which was in use at a convenience store, fell on the plaintiff after the mechanic had serviced it.

The court held, by majority, that Boylan was not vicariously liable for the actions of the mechanic, because he 'did what he did not as an employee... but as a principal pursuing his own business or as an employee of his own company pursuing its business'. In their joint judgment, the majority said that:

The wider proposition that underpinned the argument of the [plaintiff], that if A 'represents' B, B is vicariously liable for the conduct of A, is a proposition of such generality that it goes well beyond the bounds set by notions of control (with old, and now imperfect analogies of servitude) or set by notions of course of employment.

Those bounds should not now be redrawn in the manner asserted by the appellant.

Justice Kirby dissented, saying that the Court had to keep in mind the changing social conditions that affected economic activities of employment, or quasi-employment in contemporary Australia.

He would have found, relying on one of the recognised (and seemingly narrow) exceptions to the general rule described above, Boylan liable to the plaintiff, on the basis that the mechanic was the representative agent of the party sued, performing that party's functions and advancing its economic interests, effectively as part of its enterprise.28

While the decisions in Vabu and Sweeney support the general rule described earlier, the point to be made is that determining whether an employer is vicariously liable for the actions of a contractor will not always be straightforward. In both cases, for different reasons, expensive and protracted litigation took place before the liability of the principal/employer for the conduct of 'their' worker was determined.

There are at least two practical things that employers can do, in planning contracting arrangements, in order to mitigate the prospect for exposure to vicarious liability:

  1. First, relevant risks inherent in the work need to be identified and managed, in much the same way, as far as possible, that those risks are managed for proper employees.
  2. Second, the parties should ensure that, as far as possible, relevant risks are underwritten by appropriate policies of insurance. It may be that the principal will be able to insure for at least some risks of the contractor's activities or, alternatively, is in a position to require the contractor to take out and maintain appropriate insurance coverage.

If appropriate precautions are observed, where a compensable event occurs, hopefully the parties will never have to contribute, through litigation, to developing the law upon the subject of vicarious liability or otherwise be put to the time, trouble and expense associated with managing claims and claims liability.

Other areas in which liability for the activities of contractors and/or a contractor's workers might be 'vicariously' acquired by the employer include breaches of workplace health and safety obligations or discrimination laws.

Depending on the precise circumstances of a particular contracting arrangement, it may be necessary for the principal to seek to manage risks of these kinds in the same way that those risks are managed in the case of the principal's own employees. Risk management processes may include, for example, the necessity to induct workers in relation to occupational health and safety management issues and to train them in relation to discrimination issues. It is simply not possible for the employer to ignore those matters on the basis that the nature of the arrangement between the parties, as a contracting arrangement, exculpates the employer from possible claims.

5. Tax considerations

5.1 Income splitting and tax deductibility of worker expenses

The taxation of 'personal services income' (PSI) is regulated by Australian tax law specifically to prevent individuals from reducing their tax liability by:

  1. seeking to alienate their PSI to an associated company, partnership, trust or individual; or
  2. claiming inappropriate 'business' expense tax deductions.

While the issue of tax liability will predominantly be one for a prospective contractor, a prospective principal, for obvious reasons, also has an interest in the viability of a proposed contracting arrangement. If it is assumed that the profitability of the contracting arrangement depends, among any other considerations, on assumptions about liability for tax, then the parties need to be sure that those assumptions are correct.

An assumption that the PSI regime does not apply, where it does, may result in parties making an arrangement that is not economically viable, particularly if additional tax liabilities and penalties are incurred long after the relevant events.

Where it applies, the PSI regime generally:

  1. ignores income splitting arrangements, and treats the whole of the PSI as assessable income in the hands of a the individual who earned it; and
  2. restricts allowable deductions to those that might legitimately be claimed by 'employees' working as such.

PSI is income mainly earned as a reward for an individual's personal efforts or skills, regardless of whether the income is treated as income of a company, partnership or trust. Outside a typical employer/employee arrangement, PSI will usually apply if the majority (more than 50 percent) of the income received is generated by the skills, knowledge, expertise or efforts of the individual who performs the services. Income is not considered PSI if more than 50 percent of the income received is for the supply of materials and/or tools and equipment used to complete a job.

Whether or not income is PSI is a question of fact depending on the circumstances of each case.

5.2 Exceptions

The PSI tax regime exempts income earned from a genuine 'personal services business' (PSB). An entity may be considered a PSB if the entity can pass either the 'results' test or, alternatively, the '80 percent rule' applies.

To meet the results test in a particular tax year, the tax payer has to meet the following conditions in relation to at least 75 percent of their PSI in that year:

  1. The income received is based upon the achievement of a result or definitive outcome. Services rendered on a time or similar basis do not pass the test.
  2. The tax payer provides their own plant and equipment and/or tools of trade needed to perform the work.
  3. The tax payer is or would be liable for the cost rectifying any defect in the work performed.

If the tax payer cannot meet all the conditions of the results test, they may still be treated as a PSB if the 80 percent rule can be satisfied. The 80 percent rule requires that no more than 80 percent of the tax payer's PSI, in the relevant year, is earned from one client. If the tax payer only received income from one client in a relevant year they will usually be subject to the PSI regime.

If neither the results test nor the 80 percent rule is satisfied, a tax payer will generally be subject to PSI rules unless one or more of the following tests are satisfied:

  1. Unrelated client test
    1. The tax payer generates income by providing services to two or more entities that are neither related to each other nor to the tax payer; and
    2. the services are provided as a direct result of the tax payer's solicitations for that business. An example is where the tax payer advertises, direct to the public at large or to a section of the public.
  2. Employment test
    At least 20 percent (by market value) of the worker's principal work for the year is performed by other independent persons (employees or sub contractors) or entities.
  3. Business premises test
    Business premises are maintained exclusively for use by the business. This requires the tax payer to maintain and use premises from which their PSI is earned, of which there is exclusive use and which is separate from the tax payer's main residence and the premises of any client.

If the parties perceive that their proposed arrangement does not contemplate the conduct by the intending contractor of a PSB, it may be that the entire arrangement will serve no practical purpose. The cautionary tale for advisers to prospective parties to these types of arrangements is to ensure that they are not contracting based on mistaken assumptions as to their tax liabilities.

6. 'Contractor' or 'employee'? Tests for telling the difference

The differences between an employee and a contractor can be complex and are not easily summarised. There is an enormous body of case law devoted to the issue. Furthermore, as previously discussed, some legislation extends the definition of 'employee', treating contractors as employees for some purposes.

The only conclusion to be drawn from the many cases and legal principles in the area is that the nature of an employer's relationship with a worker will depend on the facts of each case, and the legal context in which the determination has to be made. For example, while it may be incumbent on an employer to account for payroll tax on remuneration payments made to a 'contractor', just as if the contractor was an 'employee', that may not necessarily lead to a conclusion that the worker must also be treated as an employee for the purposes of the unfair dismissal laws.

For most purposes, however, an 'employee' is a person employed under a 'contract of service' to provide his or her personal service to the employer, whether indefinitely or for a discrete period of time. Most elements of an employment relationship are significantly controlled by the employer as to where work is done, what work is done, how work is done and so on.

A contractor is engaged under a 'contract for services' to achieve a defined result or to deliver certain outcomes. The focus of a contracting arrangement is on outcomes rather than on the relationship itself or the way in which outcomes are achieved. Unlike employees, contractors are not necessarily engaged to provide services personally and, usually, may delegate tasks to others. Contractors may also be engaged through a corporate vehicle. The existence of these features will generally vitiate an employment relationship.

But these basic statements of principle often provide little practical guidance in assisting parties, courts or administrative authorities to characterise the precise nature of particular relationships. The result is that the various courts and tribunals that have been concerned with the subject from time to time have, over time, developed a range of tests to assist that process. While some enjoy more popularity in some jurisdictions than others, all have the capacity to be useful in particular fact situations.

6.1 The 'control' test

Probably the most recognised test is the 'control test'. The control test is not a rule of law but it has been historically considered to be a commonsense criterion for determining the existence of a legal relationship and its application always turns on the facts of a particular case.

The test was set out by McCardie J in Performing Right Society Ltd v Mitchell & Booker Ltd29:

The......test to be generally applied, lies in the nature and degree of detailed control over the person alleged to be a servant....An independent contractor is one who undertakes to produce a given result, but so that in the actual execution of the work he is not under the order or control of the person for whom he does it, and may use his own discretion in things not specified.

The High Court has, however, made a move away from a singular control test and has showed a preference for considering the totality of the relationship between the parties.30 Control held over the worker, however, still remains a distinctive consideration taken by the courts when considering the classification of the relationship.

Schedule 1 to this paper includes references to cases and judicial statements, including recent cases and statements, demonstrating the ongoing use of the control test.

6.2 The organisation test

The organisation test was developed due to the difficulties posed by the control test in determining the distinction between an independent contractor and an employee. The organisation test was developed as a 'subsidiary check on a conclusion to which an analysis in terms of control was tending in any event'.

The High Court's move away from the control test has also seen a shift in reliance on the organisation test.31 Nevertheless, the organisation test is still recognised as a distinctive consideration in determining the status of the employment relationship.

The organisation test was formulated by Denning LG in Stevenson, Jordan and Harrison Ltd v McDonald and Evans32:

Under a contract of service, a man is employed as part of the business, and his work is done as an integral part of the business [and is 'part and parcel of the organisation']; whereas, under a contract for services, his work, although done for the business, is not integrated into it but only accessory to it.

6.3 The multiple indicia test

The approach currently being adopted by the courts is that it is only by making a balanced evaluation of all the features of a relationship that one can determine whether there is a sufficient quality and quantity of control by one party over another to indicate the existence of an employment relationship.

This test is known as the multiple-indicia test and the High Court of Australia considers it the primary test to be used.

The High Court in Stevens v Brodribb Sawmilling Co Pty Ltd33 outlined the multi-indicia approach:

The existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision of holidays, the deduction of income tax and the delegation of work by the putative employee.

It is 'no longer sufficient to consider only the extent to which the employer may exercise control (whether actual or the authority to do so) over those sought to be characterised as employees'. However, it must be noted that in most cases it is still appropriate to apply the 'control test' in the first instance because it remains the surest guide to whether a person is contracting independently or serving as an employee.

The approach adopted in Stevens was confirmed in the High Court decisions in Vabu and Sweeney.

The facts in Vabu were that the plaintiff, Mr Hollis, was struck by one of Vabu's bicycle couriers and as a result suffered permanent damage to his knee. Mr Hollis sued Vabu, alleging that it was vicariously liable for the negligence of the courier as they had been engaged as an employee. Vabu sought to avoid liability on the basis that its couriers were engaged as independent contractors.

The High Court ultimately decided, overruling the courts below, that the courier was an employee and that Vabu was vicariously liable for the courier's negligence. In the argument before the High Court and the NSW Court of Appeal below, Vabu had relied upon the findings of a previous decision of the NSW Court of Appeal involving the same relationships (ie those between Vabu and its couriers) in litigation with the ATO relating to Vabu's liability to pay statutory superannuation contributions.34 In the earlier decision, the NSW Court of appeal had relied on the following factors to conclude that the couriers were contractors so that superannuation contributions were not payable for them by Vabu:

  1. The couriers supplied and maintained their own vehicles at their own cost.
  2. The couriers described themselves as independent contractors (and they were taxed as contractors, not employees).
  3. The couriers provided the tools necessary to do their work (bicycles, street maps, and so on).
  4. The mode of remuneration was a fixed rate per kilometre rather than a wage or salary.

In determining the claim by Mr Hollis, the High Court disagreed with these conclusions and held that the Court of Appeal in the earlier decision had placed too great an emphasis on the couriers owning and maintaining their own bicycles and providing their own equipment. In deciding that the relationship was one of employer and employee, the court referred to the following indicia:

  1. The couriers had little or no control over the manner in which they performed their work.
  2. The couriers were required to wear a uniform which presented them to the public as emanations of Vabu.
  3. Vabu was aware of the dangers which its couriers presented to pedestrians, yet failed to adopt any means for personal identification of individual couriers by the public.
  4. Vabu administered the couriers' finances and offered no scope for couriers to bargain for their remuneration. In addition, their employment left the couriers with limited scope for undertaking any business enterprise of their own.
  5. The fact that the couriers were required to supply their own transport and equipment was not determinative.

When considered practically, the High Court decided that the couriers were not running their own business, nor did they have any real independence in conducting their work.

The various 'indicators' to which the multiple indicia test is directed can include:

  1. The parties' intention as to the type of relationship they want to have.
  2. The exercise of (or capacity to exercise) control over the work and the manner in which work it is performed. Contractors will often retain a high degree of discretion over how tasks are performed.
  3. Whether work is undertaken for others. An employee may have to work exclusively or primarily for the employer whereas a contractor will generally be free to work for other employers.
  4. Control over the hours worked. An employee is usually required to work a minimum or set number of hours, whereas a contractor may often be free to set their own hours of work provided the tasks for which he or she is engaged are completed.
  5. Supply of tools and equipment. An employee is often required to use the employer's equipment. A contractor will generally provide their own tools and equipment.
  6. Business premises. Employees will generally have to work on the employer's premises, whereas a contractor may have a separate business premises.
  7. Advertising. Independent contractors will generally advertise their services to the public.
  8. Delegation of work. A contractor is usually entitled to delegate work to employees or subcontractors.
  9. Dismissal. An employee will be subject to dismissal at the initiation of the employer. A contractor, however, is usually engaged to complete a given task and the relationship may end once that task is over.
  10. Reimbursement of work expenses. An employee is invariably reimbursed for his or her work related expenses. A contractor will often bear their own expenses.
  11. Presentation. An employee will often be presented to the public as an emanation of the employer's business (eg through work arrangements, clothing or vehicle signage) while a contractor will often present to the public as carrying on business for themselves.
  12. Entitlements. Contractors will not usually be entitled to annual leave, sick leave and long service leave.
  13. Wages. Contractors are generally paid to produce a result, while employees are usually remunerated by reference to hours worked or a piece rate.
  14. Tax arrangements. Contractors will normally quote an ABN and invoice for their services (with or without charging GST).

Schedule 2 of this paper provides a checklist setting out the indicators above and related matters.

6.4 Economic reality/dependence test

Mention should finally be made of the economic dependence test. Although this test has not received considerable support from the courts, it should still be considered when determining whether a person is an independent contractor or not.

What the test requires is 'an examination of the practical realities of the economic relationship between the parties, rather than detailed scrutiny of the terms (whether written or oral) on which the worker is formally engaged'.

A finding that no employment relationship exists should only be found if the worker is 'in business on their own account', or operates as an 'independent economic unit'.

It could be said that the High Court in Hollis v Vabu was casting its mind to this test when it discussed the fact that the couriers' engagement with Vabu left them with limited scope for undertaking any business enterprise of their own.

Gray J's judgement in Re Porter35 provides the clearest example of this approach:

A party may be described as an independent contractor, and the contract may even provide expressly that he or she is at liberty to provide services to other persons, outside of the contract. The reality may be that economic considerations dictate that work will only be accepted from the other party to the contract... In such circumstances, there is no particular reason why a court should ignore the practical circumstances, and cling to the theoretical niceties. The level of economic dependence of one party upon another, and the manner in which that economic dependence may be exploited, will always be relevant factors in the determination whether a particular contract is one of employment.

22. Superannuation Guarantee (Administration) Act 1992 (Cth), s12(3).

23. WCRA, s11 and Schedule 2 Part 1.

24. WCRA, s57(2)(b).

25. Sweeney v Boylan Nominees Pty Ltd [2006] HCA 19 (16 May 2006).

26. (2001) 207 CLR 21.

27. [2006] HCA 19.

28. See Colonial Mutual Life Assurance Society Ltd v The Producers and Citizens Co-operative Assurance Company of Australia Ltd (1931) 46 CLR 41 and Jonathan Burnett, Avoiding Difficult Questions: Vicarious Liability and Independent Contractors in Sweeney v Boylan Nominees (2007) 129 Sydney Law Review 162 available online at as accessed 27 February 2011.

29. [1924] 1 KB 762.

30. Sweeney v Boylan Nominees Pty Ltd [2006] HCA 19; and Hollis v Vabu (2001) 207 CLR 21. See also Roy Morgan Research Centre v Commissioner for Taxation [2003] SASC 342.

31. Op cit.

32. [1952] TLR 101. For a further statement of the test by Denning L J see Bank Voor Handel en Scheepvaart NV v Slatford [1953] 1 QB 248.

33. (1986) 160 CLR 16.

34. Vabu v Federal Commissioner of Taxation (1996) 33 ATR 537.

35. (1989) 34IR 179.

© HopgoodGanim Lawyers

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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This article is part of a series: Click Contractors v Employees: The differences and why it matters - Part 1 for the previous article.
This article is part of a series: Click Contractors v Employees: The differences and why it matters - Part 3 for the next article.
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    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions