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Selected cases

High Court of Australia · [2022] HCA 1

Personnel Contracting

A leading High Court case on employee vs contractor classification, especially where a written contractor agreement does not match the...

High Court of Australia9 Feb 2022

Plain-English explainers, not legal advice. Check the linked official source before you rely on a specific section, and get advice for your situation.

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Quick read

  • A contractor label will not save a labour-hire or contractor model where the legal rights and obligations point to employment.
  • A leading High Court case on employee vs contractor classification, especially where a written contractor agreement does not match the legal substance of the work model.

Use this to check

  • Worker classification starts with the legal rights and obligations, not the heading on the contract.
  • Labour-hire and platform models need special care because control can sit in the contractual structure.
  • A contractor agreement should not be used to dress up an employment relationship.

Decision snapshot

  1. 1

    What happened

    • Mr McCourt, a backpacker with limited construction experience, signed an administrative services agreement with a labour-hire company.
    • The paperwork described him as a self-employed contractor, but the company assigned him to work on a construction site operated by its client.
    • He had no direct contract with the client, was paid by the labour-hire company and was required to cooperate with the client's directions on site.
  2. 2

    What the court had to decide

    • The Court had to decide whether Mr McCourt was working as an employee of the labour-hire company or running his own independent business.
    • That required looking at the legal rights and obligations in the agreement, including control, labour supply and whether the worker was really serving in the employer's business.
  3. 3

    What the court decided

    • The High Court held Mr McCourt was an employee of the labour-hire company.
    • The written agreement mattered, but its substance showed a labour-hire employee relationship rather than an independent business providing services.

Practical impact

Practical read

  • A contractor label will not save a labour-hire or contractor model where the legal rights and obligations point to employment.
  • Businesses should draft for the real relationship and run classification checks before scaling a workforce model.

Useful next steps

  • Worker classification starts with the legal rights and obligations, not the heading on the contract.
  • Labour-hire and platform models need special care because control can sit in the contractual structure.
  • A contractor agreement should not be used to dress up an employment relationship.
  • Check whether the business controls how the work is performed.
  • Review whether the worker is really working in their own business or yours.

Practical read

Personnel Contracting is the story of a worker who was called a contractor on paper, but whose legal role looked much more like labour supplied into someone else's business. Mr McCourt did not build a separate construction business, negotiate a job with the builder, or carry the commercial risk of the work. He signed with the labour-hire company and was sent where the labour-hire arrangement required him to go.

The High Court's point was not that written contracts magically solve classification. It was that, where the contract is genuine and complete, the legal rights and obligations in that contract are the starting point. If those rights put the worker inside the business rather than in business for themselves, the contractor label can fall away.

Checks to run

Key points

  • Check whether the business controls how the work is performed.
  • Review whether the worker is really working in their own business or yours.
  • Keep contractor terms consistent with invoicing, insurance, tools, delegation and actual work practices.
  • Recheck old contractor arrangements after workplace law changes.

Key takeaways

  • Worker classification starts with the legal rights and obligations, not the heading on the contract.
  • Labour-hire and platform models need special care because control can sit in the contractual structure.
  • A contractor agreement should not be used to dress up an employment relationship.

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