High Court of Australia · [2015] HCA 45
Quest moved two employed housekeepers into a labour-hire arrangement and told them they were independent contractors, even though they kept...
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Ms Best and Ms Roden had worked for years as Quest housekeepers. The proposed new arrangement had two documents: Contracting Solutions would engage them as independent contractors, then supply their housekeeping services to Quest under a labour-hire agreement.
Quest told the women that they were now performing work for Quest as independent contractors of Contracting Solutions. That representation put a third company between the workers and the business that had always employed them.
Section 357 prohibits an employer from representing to an employee that the contract under which the employee performs work is a contract for services rather than employment. The lower courts had read that language as addressing only a direct contract between the same two parties.
The High Court rejected that narrow reading. The statutory language also reached a representation that the employee was working as an independent contractor under a contract with the labour-hire company. Otherwise, a business could sidestep the protection simply by inserting another entity into the paperwork.
| Paper description | Practical reality |
|---|---|
| Contractor of Contracting Solutions | Continued employee of Quest |
| Services supplied through labour hire | Same housekeeping work for the same business |
| New contract label | No meaningful change to how the work was performed |
The decision does not make every labour-hire worker an employee of the host business. Nor does it say a genuine employee can never leave and later provide services under a genuinely different contractor model.
It does show that a third-party contract cannot be used to make a false statement about an existing employment relationship. The whole arrangement needs to change in substance, and any description given to the worker must be accurate.
What the court focused on
Start with the rights and obligations the proposed contract creates. Then test whether the business will actually operate that way. A contractor arrangement is not a payroll choice; it is a different commercial relationship.
For a conversion, document what will materially change. Consider control over hours and methods, delegation, equipment, financial risk, ability to work for others, responsibility for rectification and how the worker presents to customers. Also check tax, superannuation, workers compensation and award exposure separately.
Key points
Yes. Labour-hire arrangements can be lawful. The problem here was the false representation about workers who remained Quest's employees despite the triangular paperwork.
No. An ABN, invoice or contractor label is only part of the evidence. The legal character of the relationship depends on the rights and obligations created by the contract, read against the genuine arrangement.
The lower courts had read section 357 narrowly. The High Court held that the provision also covers a representation that an employee is performing the work as a contractor under a contract with someone else.