Court applies new contractor vs employee test – case note on Pruessner v Caelli Constructions Pty Ltd

By Chao Ni, Principal, MST lawyers

The decision of Pruessner v Caelli Constructions Pty Ltd [2022] FedCFamC2G 206 involved the Federal Circuit and Family Court applying the new contractor versus employee test that was recently revised by the High Court in the PCP and Jamsek decisions.

In Pruessner, Judge McNab had reserved his decision pending the High Court judgments in PCP and Jamsek “in case they ha[d] some impact on the analysis”.  As it turned out, they did.  Judge McNab observed that he was “fundamentally…bound to follow the approach taken by the High Court”.

Facts and findings

Through the evidence given in the case, the Court found and accepted that:

  • There was no written contract between Pruessner and Caelli Constructions.
  • Pruessner:
    • had worked exclusively for Caelli Constructions averaging 38 hours a week over eight years;
    • had a supervisory role over Caelli Constructions employees and with subcontractors’ onsite;
    • was given authority to engage labour for Caelli Constructions and he may have attended in the livery of the company; and
    • was authorised to purchase goods and supplies for Caelli Constructions

on the basis that Pruessner would render invoices to Caelli Construction which accounted his labour.

  • Invoices issued by Pruessner showed that he charged Caelli Constructions $65.00 plus GST per hour for services between 2012 and April 2015 and thereafter at $75.00 per hour plus GST to July 2020. This was around double the Award rate of $35.00 per hour for employee labourers.
  • The oral evidence of both parties clearly indicates that they understood the distinction between an employee and a subcontractor and they proceeded on the basis that by Pruessner rendering invoices, he was not an employee of Caelli Constructions.
  • Pruessner had managed his own income in terms of taxation and the allocation of revenue in excess of expenses.
  • For all of the above reasons, Preussner was not an employee of Caelli Constructions.

What to take away

Prior to the High Court decisions in PCP and Jamsek, a court could find that an employment relationship existed without either of the parties ever asserting one had existed – that is, until the worker brings a claim post the engagement.

Now and going forward, as can see from the Pruessner decision, a court must accept the parties’ own characterisation of their contract as at the time when the contract was formed.

The MST Lawyers’ Employment Law team can assist with any questions you may have about this article or its subject matter.  Please contact us today by email at workplace@mst.com.au or by phone +61 3 8540 0200.