Contract of Services or Contract For Services

By Peter Punch

The distinction between a contract of service (employment) and a contract for services (not employment) remains important. Modern legislative trends are moving away from a distinction.

Workers' compensation statutes deem relationships to be ones of employment, when at common law they wouldn't be. The law of negligence has developed to affix vicarious liability automatically where there is employment and the notion of proximity can render a principal vicariously liable on given facts even when in common law there is no employment relationship. Recent cases have shown that the distinction is unclear. Employment lawyers and unions involved with labour hire companies and cases face the problems of this distinction repeatedly. In a recent case a labour hire agency argued that they had no contractual relationship as an employer with a worker who had signed a contract with it. They argued that the third party who actually had the work done, were the employer. The labour hire company argued that the worker was working in her own business. The judge (Gilchrist) disagreed. Again the duck test came into play. If it walks like a duck and talks like a duck, it probably is. The case is under appeal.

Slater v WorkCover/Allianz Aust (Chiquita Brands Adelaide Pty Ltd/CGU & Anor [2002] SAWCT 27

(CCH Industrial Law News, issue 11, December 2002)