Working From Home Not Enough to Support Independent Contracting Relationship

The scrutiny by the courts of independent contracting relationships continues with the recent case of Putland v Royans Wagga Pty Limited [2017] FCA 910. The Federal Court found that a husband and wife who were providing home-based clerical work, exclusively to one company, were employees rather than independent contractors.

In this case, Royans Wagga Pty Limited (RW), a company whose business involved the repair of trucks, engaged the services of a husband and wife (the Putlands) to obtain, receive and pass on information regarding accidents resulting in damage to trucks. The Putlands had their own ABNs, issued tax invoices to RW, split their income and did not wear an RW company uniform. Of particular interest in this case was that the work conducted by the Putlands was largely provided from their home.

Despite there being multiple factors favouring an independent contractor relationship, the court still found an employment relationship existed. The court considered the control RW and its managing director had the authority to exercise, and at times did exercise, over the Putlands, as well as the exclusive service provided by the Putlands to RW, left it with no doubt as to the true nature of this relationship.

The court considered that the Putlands were "subordinate to the managing director's wishes, even if he did not always get his way." This included the fact that RW gave their approval for Mr Putland to begin providing his services (previously only his wife was engaged), as well as determining increases in their remuneration. RW would also often provide written directions to the Putlands of expected standards.

In relation to the fact that the work was conducted at home, it was noted that with advancements in modern technology, working from home is not inherently inconsistent with an employment relationship. This is because, these days, the work that can be produced at home can largely be the same as what was previously only possible from the workplace.

This case serves as a reminder to companies who use independent contractors that even if the contractor has their own ABN, issues their own tax invoices and works remotely, these factors will not be determinative of a contractor relationship. The Courts will assess a range of factors, including (but not limited to), whether the principal will be perceived to have the "authority to control" the contractor (i.e. to determine how, when and where the services will be performed) as well as whether the contractor is providing services to the principal exclusively.

This article was written by Leah O’Connell