In a case involving ACE Insurance Limited, the Full Federal
Court has re-affirmed that just because parties enter into an
agreement under which they expressly agree that the relationship is
not one of employer and employee, the Courts can still intervene to
confer employee status with related benefits and entitlements.
ACE hired 5 insurance sales agents as independent contractors.
After the termination of their various engagements, the agents
successfully claimed they were actually employees. Kaching! ACE was
ordered to pay over $500,000 in accrued annual and long service
leave entitlements. This was notwithstanding that the agents had
signed contracts stating that they were independent
The Court asked whether the agents were employed (and had
therefore entered into contracts of services, (requiring personal
service by the agents themselves), or, whether ACE had engaged the
agents as contractors pursuant to contracts for services (which do
not necessarily require personal service by the agents themselves).
Confused? Read on.
ACE argued that each agent was paid commission on the premiums
they collected, used their own vehicle, did not have income tax
deducted from their earnings, issued tax invoices to ACE for their
services, and at least two of them had the ability to contract
through a corporation.
However, the Court noted that the contracts were made with the
individual agents only and the agents were required to personally
perform the services, the tax invoices were actually generated by
ACE and issued to itself, the agents accrued no goodwill in their
own businesses, they were in practical terms unable to work for
another insurer, they sold only ACE's policies to its
customers, and were trained by ACE in a system of business devised
and maintained by ACE. Importantly, the Court found that the agents
"had no real independence of action or true independence of
organisation". In other words, they were under ACE's
We do not disclaim anything about this article. We're
quite proud of it really.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).