ZG Operations Australia Pty Ltd & Anor v Jamsek & Ors

ZG Operations Australia Pty Ltd and ZG Lighting Australia Pty Ltd (the applicants) sought special leave to appeal from a decision of the Federal Court of Australia. The dispute concerned the classification of individuals as employees or independent contractors. The applicants argued that the Federal Court had erred in its application of the multifactorial test for distinguishing between employees and independent contractors, particularly in relation to whether an individual must be carrying on their own business to be considered an independent contractor.

The central legal issue before the High Court was the correct application of the multifactorial test in determining whether a person is an employee or an independent contractor. Specifically, the applicants contended that a person classified as an independent contractor must, as a matter of law, be carrying on their own business. This proposition was contested by the respondents, who argued that while the ultimate conclusion of employee or independent contractor is a dichotomy, the process of applying the multifactorial test may reveal indicia of business activity in individuals who are nonetheless found to be employees.

The High Court considered the established principle that the distinction between an employee and an independent contractor hinges on whether the person serves in the business of the employer or carries on a business of their own. This was framed as the "focal point" of the inquiry. However, the Court also acknowledged that applying the multifactorial test can be difficult at the margins, and that the presence of some indicia of business activity does not automatically preclude a finding of employment. The Court noted that the substance of the relationship, viewed in its totality, is paramount, and that contractual structures or the formation of partnerships may be outweighed by other factors demonstrating an employment relationship, such as a lack of real independence, dictated hours, and remuneration. The Court also considered whether the Federal Court had blurred the concepts by suggesting that an individual could be working in their own business and yet still be an employee, a proposition that was seen as potentially problematic.