A full bench of the Fair Work Commission (FWC) confirmed a ruling that a disability support worker was an employee, not an independent contractor. This ruling enables her to file a general protections dismissal application. This decision will affect businesses involved in providing or arranging NDIS and similar community services.

What happened?

  • Aspire 2 Life Pty Ltd (Aspire) offered support services to elderly and disabled individuals and engaged contractors to deliver these services based on a case plan agreed upon with the client.
  • Jessica Tidmarsh was engaged by Aspire as a disability support worker. The terms of her engagement were outlined in a document titled ‘HR003 Contractors Work Opportunity’ and a written agreement between Aspire and Ms Tidmarsh.
  • In October 2023, Ms Tidmarsh lodged an application with the FWC under section 365 of the Fair Work Act 2009 (FW Act), alleging dismissal by Aspire in violation of the general protections provisions in Part 3-1.
  • Aspire challenged the application on jurisdictional grounds, arguing that Ms Tidmarsh was an independent contractor, not an employee, and thus no dismissal had occurred.

Decision at first instance

  • Deputy President Roberts dismissed the jurisdictional objection, determining that Ms Tidmarsh was an employee who had been integrated into Aspire’s business.
  • Aspire appealed this decision to the full bench of the FWC.

Decision of the full bench

  • The full bench upheld the Deputy President’s decision, finding that Aspire was negotiating with clients about services and fees and managing the services provided. Consequently, Ms Tidmarsh was delivering services that Aspire had committed to, rather than running her own business.
  • Although various aspects of the written agreement suggested a contractor relationship—such as Ms Tidmarsh being described as operating an independent business, needing an ABN, handling her own tax and superannuation, maintaining her own insurance, providing equipment, and managing her driver’s license and car insurance—the full bench concluded these were not definitive.
  • The following elements indicated Ms Tidmarsh was an employee integrated into Aspire’s business:
    • she was required to deliver care services as per the care plans managed by Aspire, which were central to Aspire’s business
    • she was paid hourly rather than based on outcomes
    • she was prohibited from discussing her pay rate with clients
    • she had to submit weekly timesheets
    • she was paid directly by Aspire, not by the client
    • her working hours were restricted, and changes to her availability required two weeks’ notice.
    • Aspire exercised significant control over how Ms Tidmarsh performed her duties:
      • she had to adhere to the care plan
      • she did not have the discretion to decide the nature or method of the work
      • she was restricted in her ability to refuse work and was controlled in terms of when the work would be completed.
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Change to the test from 26 August 2024

  • This decision was made before changes regarding independent contractors under the new ‘Closing Loopholes’ laws come into effect on 26 August 2024. These laws will shift the focus from the terms of the written agreement, to the real substance and practical reality of the working relationship.
  • From this date, determining whether a worker is an employee or an independent contractor will involve evaluating the actual nature of the working relationship and all relevant aspects of the contract and its execution.
  • Despite this change, the full bench’s decision remains relevant for understanding how to characterize a worker as an employee or contractor.

Take-aways for employers

Employers should:

  • ensure accurate classification of contractors
  • have a written contract that truly reflects the arrangement
  • assess liability for superannuation guarantee contributions
  • evaluate the need for workers’ compensation insurance
  • be aware of upcoming changes from 26 August 2024 regarding independent contractors and seek legal advice as needed.

The information contained in this update is intended as a guide only. You should seek professional advice before applying any of the information to particular circumstances. Whilst reasonable care has been taken in the preparation of this update, EmploySafe Legal does not accept liability for any errors it may contain.

Kate Simpson
Managing Director – Employment & Safety Lawyer
+61 420 972 497
kate.simpson@employsafelegal.com.au

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