A recent case (CFMMEU v Personnel Contracting Pty Ltd  FCAFC 122) heard by the Full Court of the Federal Court of Australia has led two of the justices to criticise the practice of allowing unskilled workers to be paid as contractors at less than industry minimum wages. However, their Honours concluded they were bound by previous judgments to find the arrangements valid.
The case was an appeal from the Federal Court's decision in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd  FCA 1806 to determine whether Daniel McCourt (a 22-year-old from Britain, who came to Australia on a working holiday visa) was an employee of Personnel Contracting (“Personnel”) or an independent contractor retained by Personnel and supplied to Hanssen Pty Ltd.
The Sydney Morning Herald reports the CFMMEU brought the case on behalf of Mr McCourt who worked on two construction sites in Perth as a general labourer under the supervision and control of workers of a builder, Hanssen Pty Ltd (“Hanssen”), during 2016 and 2017.
Mr McCourt had eight months experience as a part-time brick-layer whilst in his teens. He obtained a “white card” which enabled him work on construction sites. Looking for work, he contacted a labour hire company, Personnel Contracting ("Personnel") and successfully gained work with Hanssen.
According to the Sydney Morning Herald:
But as a contractor, Mr McCourt was paid at a rate that worked out as being about 25 per cent less than the award, which is the minimum for workers in the construction industry.
That is because Mr McCourt was neither an employee of Hanssen, the building company, or Personnel Contracting, the labour hire company that found him work. Instead, he worked as an "independent contractor", a status that has historically mostly applied to professionals, but is also now often used for labour hire workers and drivers at gig economy companies like Uber."
In handing down the decision, Justice Allsop commented at [para 28]:
The court, however, concluded it was bound by past rulings which had held independent contracts were valid because companies had relied on their legality.
The CFFMEU's West Australian Construction State Secretary, Mick Buchan, said Australia's award system was supposed to provide workers with a base level of pay that was fair and dignified. He commented:
In the judgment, their Honours made reference to the "Odco-style of contracting" [para 30]:
And further at [para 118]:
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Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd  FCAFC 122 (17 July 2020)
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