The prospect of workers engaged as independent contractors,
claiming employee entitlements has been raised in the case of ACE
Insurance Ltd v Trifunovski (2011) (No 1) 200 FCR 532 and ACE
Insurance Ltd v Trifunovski  (No 2) FCA 793. Five insurance
agents found last year to be employees and not independent
contractors, were recently awarded around half a million dollars in
accrued annual and long-service leave, with one agent receiving
In the first proceeding, the agents successfully claimed that
they were employees, despite being engaged as independent
contractors.This meant that they were entitled to outstanding
annual and long-service leave payments. The factors which pointed
towards a contracting arrangement included:
each agent was paid commission on premiums they collected;
no income was deducted from their earnings;
the agents used their own vehicles;
tax invoices were issued to the insurer;
they had the ability to engage secretarial support; and
the parties acknowledged it was not an employment
However, the Federal Court considered the following factors to
be indicative of an employment relationship:
the insurer gave the agents sales leads and training;
the insurer encouraged the agents to behave as though they were
part of the insurer's organisation;
the tax invoices were generated by the insurer and issued to
practically, the agents were unable to work for any other
agents sold only the insurer's policies to the
agents were trained by the insurer in the business system
designed and maintained by the insurer; and
the agents accrued no goodwill in their own business.
The key reason for the finding that the agents were employees
was that the Court found there was only one business being
conducted, that of the insurer's business.
The Court ordered payment of $490,388 to the agents for unpaid
annual and long-service leave.
Justice Perram also found that the agents were owed interest on
those payments, calculated from when they each left the
Two separate penalties of $5,000 were imposed out of the maximum
available of $33,000, treating the annual leave and long service
leave breaches as two separate breaches.These were imposed
'largely for general deterrence' and not to punish the
Payment of legal costs is yet to be determined.
What does this mean?
This decision demonstrates that even were a person is engaged as
an independent contractor, and in some respects works as such, they
may still be an employee at law.
This can have the following implications:
entitlements to employment benefits under legislation (such as
annual leave, long-service leave and sick leave);
access to the unfair dismissal jurisdiction;
obligation to insure under workers' compensation
breach of PAYG withholding laws; and
vicarious liability for actions of the person.
How can we help?
We can review your independent contractor and employment
arrangements to assist you in complying with your obligations.
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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