I FACTS

The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) and Mr McCourt commenced proceedings under s 545(1) of the Fair Work Act 2009 (Cth),[1] against Personnel Contracting Pty Ltd (trading as Construct), seeking compensation for alleged breaches of the Building and Construction General On-Site Award 2010.[2] They also sought compensation from Hanssen on the basis that it was accessorily liable for Construct’s alleged breaches.[3]

Construct was a Perth-based labour hire company that engaged workers and supplied them to builders, including Hanssen, a builder of high-rise residential apartments and some office buildings. At the relevant time, Construct had about 1,000 workers on its books, with approximately 300 to 350 working at client sites.[4]

In 2017, Hanssen was Construct’s major client, accounting for between 70 and 75 per cent of all workers supplied. Under their arrangement, Hanssen placed orders for workers with Construct, which then arranged for registered workers to attend site and work under Hanssen’s supervision. Hanssen paid Construct, and Construct paid workers for their hours worked, with pay rates capable of being negotiated between workers and Hanssen. Their relationship was governed by a Labour Hire Agreement.[5]

Mr McCourt worked under an Administrative Services Agreement with Construct. The applicants accepted that Construct intended to engage him as an independent contractor and did not allege that the agreement was a sham or pretence.[6]

The central issue in the proceedings was whether Mr McCourt was, in fact, an employee of Construct.[7] At trial, the applicants conceded that there was no express or implied contract between Hanssen and Mr McCourt, and that claim was abandoned. The matter was heard in Perth in June 2019 and was dismissed.[8]

II PROCEDURAL HISTORY

Following the dismissal of the proceedings at first instance in the Federal Court, the applicants appealed to the Full Court of the Federal Court of Australia.[9]

The Full Court as majority allowed the appeal, holding that Mr McCourt was an employee of Construct.[10] The multifactorial approach was applied, examining the “totality of the relationship” and concluding that the degree of control exercised, and the practical reality of the arrangement indicated employment rather than independent contracting.

Construct appealed to the High Court of Australia. Hence raising questions concerning the correct approach to determining whether a worker is an employee or an independent contractor.

III FULL COURT OF THE FEDERAL COURTS FINDINGS

On appeal, the majority of the Full Court held that the primary judge had erred.

The majority applied the orthodox multifactorial approach,[11] and gave weight to the practical reality that Mr McCourt performed work personally, under direction, and as part of Hanssen’s business operations.[12]

They concluded that, notwithstanding the written agreement describing him as an independent contractor, the substance of the relationship pointed toward employment.[13]

IV THE HIGH COURTS DECISION

The High Court (Kiefel CJ, Keane and Edelman JJ; Gageler and Gleeson JJ agreeing for separate reasons) unanimously allowed the appeal.[14]

The Court explained that where parties have comprehensively committed the terms of their relationship to a valid written contract, and there is no allegation of sham, variation or unconscionability, the characterisation of the relationship must be determined by reference to the rights and obligations established by that contract.[15] This reasoning led to the High Court rejecting the approach of assessing the “totality of the relationship” by reference to post-contractual conduct where the contract itself was not in dispute.[16]

As the proper construction of the Administrative Services Agreement, the rights and obligations created were consistent with an independent contractor relationship.[17] Therefore, Mr McCourt was not an employee of Construct.

The High Court emphasised that characterisation is a question of law based on the legal rights and duties created by the contract, not a free-ranging inquiry into the practical realities of the working relationship.

V IMPLICATIONS OF THESE FINDINGS

The High Court’s decision significantly reshaped the approach to determining employment status in Australia.

Not only clarifying that where a written contract comprehensively sets out the parties’ rights and obligations, courts must determine employment status by reference to the contract itself, unless there is a challenge to its validity. But also, that the decision reduces the weight given to subsequent conduct and practical reality in such cases. The ruling increases certainty for businesses, particularly labour hire companies and organisations using contractor models. By prioritising contractual rights and obligations, the Court reinforced freedom of contract and reduced unpredictability arising from multifactorial factual assessments.

This decision also allowed for determining how to apply the “totality of the relationship” test. While the multifactorial approach remains relevant where contracts are oral, partly oral, varied, or alleged to be sham, it does not override a comprehensive written agreement.

VI CONCLUSION

The precedent set by Personnel Contracting signals a doctrinal shift toward a more formal, contract-focused methodology in employment classification disputes. The High Court confirmed that where a valid written contract comprehensively defines the parties’ rights and obligations, courts will determine status by reference to those contractual terms. If the agreement clearly grants the worker autonomy, courts will primarily examine those rights and will not look beyond the contract to practical reality unless its validity is challenged. This has significant implications for gig economy arrangements, labour hire structures, and contractor engagement models under the Fair Work Act 2009 (Cth), as it elevates the importance of contractual drafting in determining employment status.

VII REFERENCES

[1] Fair Work Act 2009 (Cth) s 545(1).

[2] Building and Construction General On-Site Award 2010 (Cth).

[3] Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 [5]–[10] (‘Personnel Contracting’).

[4] Ibid [12]–[18].

[5] Ibid.

[6] Ibid [9].

[7] Ibid [1].

[8] Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2020] FCA 330 (‘Union v Personnel 2020’).

[9] Ibid.

[10] Ibid [172]–[178].

[11] Hollis v Vabu Pty Ltd (2001) 207 CLR 21.

[12] Union v Personnel 2020 (n 8).

[13] Ibid [291]–[298] .

[14] Personnel Contracting (n 3).

[15] Ibid [59]–[61], [172].

[16] Ibid [34], [58].

[17] Ibid [173].