Buy your own truck or lose your job: decades later, still contractors

Mr Jamsek and Mr Whitby left school at 14 and 15. In 1977 they started with a lighting company, and from 1980 they drove its delivery trucks. Until late 1985 or early 1986, everyone agreed, they were employees.

In late 1985 Mr Jamsek and another driver asked for a pay rise. The company refused, and offered its drivers the chance to "become contractors" by buying their own trucks. They were told: "If you don't agree to become contractors, we can't guarantee you a job going forward." On their accountant's advice each man set up a partnership with his wife. The partnerships bought trucks for $15,000 and $21,000, signed delivery contracts and invoiced the company, later charging GST.

They delivered for the company until the arrangement ended in 2017, then sued for the entitlements of employees, including under the Fair Work Act and for long service leave. The trial judge held they were contractors. The Full Court of the Federal Court disagreed. It looked at how the relationship had worked over the decades and at the company's superior bargaining power.

The High Court allowed the company's appeal. No one claimed the contracts were a sham, so their written terms decided the character of the relationship. That the company had the upper hand when they were made "did not alter the meaning and effect of the contract". The contracts were with the partnerships, which owned the trucks, paid their running costs and operated them. As two judges put it, where the work depends on "a substantial item of mechanical equipment" supplied by the worker, "the personal is overshadowed by the mechanical".

A separate question, whether the drivers counted as employees under a wider definition in the superannuation guarantee law, was sent back to the Full Court. In March 2023 it held that they were not employees under that definition either. For Fair Work Act claims, Parliament has since changed the test.