Woopi News - Law Learnings

Is Mr Bunny an independent contractor or an employee?

It’s that time of year again; the hot cross buns are on the shelves, and there is a muchanticipated return of Mr E. Bunny delivering his usual cargo of chocolate eggs. The Easter Egg Corporation (EEC) have, however, encountered a problem this year and need to reconsider their contracting arrangement with Mr Bunny. Mr Bunny has done some research and believes he should be paid as an employee. The EEC have made the common mistake of thinking that as their contract with Mr Bunny clearly refers to him as an independent contractor, they do not have to pay him overtime for all the after hours work or sick leave if he comes down with Covid before the big delivery day. Unfortunately, the wording of a contract does not define whether someone is an independent contractor or an employee for the purposes of any Fair Work or Workers Compensation dispute. There are a number of indicators that need to be considered, such as the amount of control Mr Bunny has over how the work is performed, who bears the financial responsibility and risk, whether the EEC supplies all the tools and equipment, whether Mr Bunny has the ability to delegate or subcontract his work to another party, who determines the hours of work, and whether Mr Bunny has a reasonable expectation of the work continuing. After considering all these issues and getting appropriate legal advice, the EEC have realised they have been paying Mr Bunny as an independent contractor when he should actually be paid as an employee. Mr Bunny performs the egg delivery work under the direction and control of the EEC, including his hours of work on specific dates, where deliveries are to be performed and the manner in which the work is to be performed (dusty footprints left behind aside).

Mr Bunny has no financial risk as he gets paid the same amount regardless of the number of deliveries he makes (or might forget to make!). His egg basket and uniform are supplied by EEC. Mr Bunny is required to do the delivery work himself, he cannot contract it out to his friend Mr Claus, and he has an ongoing expectation of work, which includes working in the EEC chocolate manufacturing plant in the off-season.

This means that Mr Bunny should be paid the usual employee entitlements such as annual leave, sick leave, overtime and the minimum rates of pay per the National Minimum Wage if he is not covered by an award or registered agreement. The EEC should also be deducting tax from Mr Bunny’s wages, paying superannuation contributions and ensure that he is covered under their worker’s compensation policy.

The EEC has corrected their records and will ensure that Mr Bunny receives his employee entitlements moving forward. As there is now no pending litigation to resolve the issue, it is anticipated that Mr Bunny can concentrate on getting those egg deliveries out on time.

K.C. Hilton, WNB Legal