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  • Print publication year: 2017
  • Online publication date: August 2018

Chapter 1 - Settling the contract: essentials of formation and characterisation



This book commences with a discussion about the relationship between employer and employee. Whether a contractual relationship pursuant to which a person works for remuneration for the benefit of another is one of employment is of fundamental importance in Australian employment law. This is because many rights and obligations, principally rights under legislation, depend on the work relationship being one of employer and employee as opposed to some other relationship, such as that of principal and independent contractor. This chapter explains how the courts go about determining whether an individual is an employee. It then goes on to examine the difficulties that can arise in identifying an employee's employer where there are complex corporate arrangements, labour hire arrangements and labour supply chains. Consideration is then given to how the law deals with arrangements in which an employer seeks to disguise an employment relationship as an independent contractor relationship; in particular, by examining the sham contracting provisions in the Fair Work Act. The chapter then concludes with a summary of the federal legislation on independent contractors.

The significance of the employment Relationship

There are a number of relationships within which work might be performed by one person for the benefit of another for remuneration. Whether the relationship is one of employer and employee is important in determining what rights and obligations, both at common law and pursuant to legislation, are conferred upon the parties. Indeed, many (although, not all) of the rights and obligations that are the focus of this book depend upon determining whether or not the relationship is one of employment.

Vicarious liability

At common law, perhaps the most significant remaining reason for determining whether or not the relationship is one of employer and employee is vicarious liability. At common law, an employer will be vicariously liable for the negligent acts of its employee carried out in the course of the employment. By contrast, a principal will generally not be vicariously liable for the negligent acts of an independent contractor that it has engaged to perform work. The distinction between employees and independent contractors remains critical to the ambit of vicarious liability.

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