There is lot at stake for an employer who incorrectly identifies a relationship as one between contractors when in fact the relationship is properly defined as one between employer and employee. An improper assessment of the relationship can lead to the financial ruin of a business. The improper assessment may result in a requirement for the unexpected payment of many years of award payments, sick leave, holiday leave, long service entitlements and superannuation. It is essential to get this right.
It is necessary to note at the outset that you cannot agree that a person is a contractor if in fact that person is an employee. An agreement between the parties of this kind is of no effect. The payments due to employees are required by statute and cannot be waived by anyone, not even the employee.
If it looks like a duck and quacks like a duck it is probably a duck. It should be no surprise that the courts don't place any weight upon the "title" given to a worker. To assess whether a worker is an employee or a contractor the whole of the relationship must be examined.
Since the High Court decision in Hollis V Vabu (2001) 207 CLR 21 the common law distinguishes employees and contractors by considering various indicators under seven headings: