From 26 February 2024, the Closing Loopholes No.2 legislation began making changes to casual employee conversion rights, protections for gig economy and road transport workers, intractable bargaining determinations, union rights of entry, and introduced the ‘right to disconnect’. Central to the legislation was also the introduction of a definition of ’employees’ and ‘independent contractors’ which took effect from 26 August 2024.

These definitions provide clarity around how a business should engage a person for work, whether as an employee or an independent contractor, and their rights and employment conditions once engaged. As the Fair Work Commission does not have jurisdiction to hear a claim of unfair dismissal where a person is not an employee, these definitions have a significant impact on the industrial rights of businesses and individuals.

A recent Fair Work Commission case explored the ordinary meaning of employer and employee under the new legislation, identifying a number of factors that contribute to this definition. This case offers employers an opportunity to understand what elements should be considered when comparing the difference between an employee and an independent contractor.

Inside the Fair Work Commission case: 

In November 2024, a worker brought an unfair dismissal application against her former employer. The employer contended the worker was not eligible to make such a claim, on the basis that they were engaged as an independent contractor rather than an employee.

The Fair Work Commission found the worker was, in fact, an employee, and therefore had the right to pursue an unfair dismissal claim under the Fair Work Act.

When determining whether this worker was an employee or a contractor, the Commissioner considered the following:

The degree of control over duties and tasks  

The worker was engaged as an Executive Director, performed all their work in Australia, and reported to a manager who was based in the USA. The worker had weekly meetings with their reporting manager who provided them with specific instructions and directives about their duties. The worker was not free to refuse work or delegate tasks at will. They worked autonomously, similar to many remote working arrangements.

The Commissioner found the worker “was plainly not entitled to refuse to undertake the work arising from her interactions with [the manager] – she was required to follow instructions”.

Integration into the business 

The worker’s duties as the Executive Director required them to undertake core operations of the employer, such as fundraising, volunteer onboarding, and online infrastructure management. They were entrusted with significant internal and external responsibilities.

The Commissioner found there was no evidence of the worker carrying out business on their own behalf.

Remuneration and invoicing  

The worker issued monthly invoices using an ABN and was paid initially in AUD, later in USD. This was an arrangement insisted upon by the employer, not chosen by the worker for their own business purposes.

The Commissioner found:

“The absence of trappings more consistent with an employment relationship such as the remittance of tax the provision of leave entitlements and superannuation could be said to add weight to a conclusion this was an independent contract. I note however that these features of their relationship are also absent largely because [the employer] refused to provide them.”

Provisions of equipment and financial risk  

The employer submitted that the worker bore the financial responsibility and risk. The worker provided their own computer and equipment. However, they did not invest in any business infrastructure nor carry any financial risk for their own work beyond that of a normal employee. The manager owned the work carried out by the worker and would bear responsibility for actions taken in the business’s name, such as actions engaged in by the worker, as its Executive Director.

Employment Contract, role commencement and termination  

The worker had a prior relationship with the employer that was best described as a causal employment contract basis. They were later offered the role of Executive Director by the manager which required full-time employment hours with a structured pay arrangement. It was a complete departure from any work they had done for the employer prior. There was no employment contract or independent contract that set the terms of offer. When the manager made the decision to terminate the worker, they did so via email and insisted the worker complete a comprehensive handover. This reflected ’employer-like’ control.

The overall decision

When considering the available evidence, the Commissioner determined the worker was an employee and as such the Commissioner had jurisdiction to deal with their unfair dismissal application.

Read more about this case here.

How can Business Chamber Queensland help businesses navigate legislative changes, employment definitions and employee relations?

Navigating recent legislative changes, such as the Closing Loopholes No.2 reforms and the Fair Work Commission’s approach to determining the true nature of employment relationships, can be complex and overwhelming for small and medium-sized businesses – and can expose them to significant legal and financial risk.

Business Chamber Queensland is here to help. We provide expert industrial relations (IR) and employee relations (ER) support to ensure your business remains compliant and protected. Our services include:

• Clear guidance on how to determine employment terms, whether for employees or independent contractors.
• Tailored advice on employment contracts, termination processes, and best-practice HR procedures.
• Representation and support in matters before the Fair Work Commission.
• Practical resources and training to empower business owners and managers.

Whether you’re employing staff for the first time or leading a growing team, Business Chamber Queensland is your trusted partner in navigating Queensland’s IR and ER landscape. Contact us today for local, expert support tailored to the needs of your business.