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Employment Law – Background

Putland v Royans Wagga Pty Limited is a clear example of sham contracting. In this case, the Federal Court of Australia decided that a husband and wife who performed largely home-based clerical work for one company were employees, not independent contractors.

Employment Law – Facts

In essence:

  • The couple were employed by a truck repair company, Royans Wagga Pty Ltd
  • The couple’s relationship with Royans began in 2005, when the wife worked in the business’ offices monitoring accidents
  • In 2008, the husband helped provide the 24 hour, 7 days a week ‘accident reporting service’ which was based either at their home or in a demountable shed on the business’ premises at various times
  • However in 2015, Royans outsourced the service to an independent call centre
  • Since 2007, any contract between the parties was described as “partly oral and partly in writing”. However, Royans argued that the couple had been independent contractors at all times

Employment Law – Decision:

The Federal Court of Australia:

  • determined that the couple were not independent contractors, and had an employment relationship with Royans
  • found that the couple were employed under the Clerks Award as ‘call centre principal customer contact specialists’ on a permanent, full-time basis and that Royans breached ss 45, s357 and 536 of the Fair Work Act
  • noted there were 10 “indices” supporting the view that the couple were employees. These included the exclusive nature of their service, Royans’ payment of phone lines and bills at their home, deferential emails to the company’s managing director, provision of scanners and telephone systems and the lack of true autonomy
  • suggested that the most significant indicator was the authority to control, as the managing director has extensive and far-reaching actual control over the work done and work was only done for Royans Wagga.
  • rejected indicators in favour of an independent contractor relationship, including the possession of ABNS, the issuing of tax invoices, the couple working from home and not wearing uniforms, on the basis that these features were “largely reflective of the [couple’s] subjective understanding of the position they were in according to the wishes of Royans”, rather than “supporting an objective assessment of the true nature of the relationship”
  • held that Royans must compensate the couple for underpayments, unpaid overtime, superannuation and leave. However amounts payable and penalties for sham contracting have not yet been determined.

The decision is available for you to read through the hyperlink:

Putland v Royans Wagga Pty Limited [2017] FCA 910 (9 August 2017)

Employment Law – Tips for Employers

Our Matthews Folbigg Workplace Solutions employment law team recommends employers:

  • review this case decision
  • seek the assistance of an employment lawyer to understand the impacts of this decision
  • prepare new employment contracts as required
  • ensure compliance with all employment laws including Fair Work Commission decisions, Awards and enterprise agreements

Employment Law – More Information

Please call the leading employment lawyers in Parramatta, the Matthews Folbigg Workplace Solutions employment law team on 9635-7966 to speak with one of our employment lawyers.