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Is having employees work from home a risk for your business?

Is having employees work from home a risk for your business?

Is having employees work from home a risk for your business – how much is your degree of control over your offsite workers?

In this 2017 Federal Court case (Putland v Royans Wagga Pty Ltd) the Federal Court was tasked with determining whether services delivered from a private home were provided by an employee or a contractor.

The employment law dispute arose between a husband and wife (the Putlands) and Royans Wagga Pty Ltd (Royans Wagga) who were in the principal business of providing accident reporting services.

Operating as a call centre, Royans Wagga did not require any face-to-face time with their employees or clients and as such the Putlands were able to fulfill their duties as call-centre providers obtaining or passing on information about vehicular incidents from their own home. The Putlands were employed in this capacity from 2012 to early May 2015.

However in May 2015, Royans Wagga outsourced the service normally provided by the Putlands, thereby terminating their contract. Royans Wagga was of the belief that the Putlands were contractors, whereas the Putlands believed there was an employment contract in place which was “partly in writing.”

The Putlands commenced proceedings claiming back pay under the Clerks-Private Sector Award 2010 and civil penalties under the Fair Work Act 2009 for alleged contravention of sections 45, 357(1) and 536. Royans Wagga defended the proceedings by claiming that the Putlands were employed in the capacity as independent contractors.

Justice Bromwich held that the Putlands were in fact employees of Royans Wagga upon application of the control test: “what is the degree of control which the person who engages another to perform work can exercise over the person so engaged”.

The control test is not intended to provide a conclusive answer as to the nature of the relationship that existed between parties, and as such the Court took into consideration the following factors:

  • The Putlands did not advertise their own business
  • Royans Wagga paid the monthly fees for internet and telephone services at the Putlands home
  • The equipment required to work from home (printers, scanners, etc) was supplied by Royans Wagga to the Putlands
  • The Putlands only worked for Royans Wagga during the time period of 2012 to early May 2015
  • The Putlands were monitored by a Royans Wagga director who frequently made visits to their private home

The prominent factor was the degree of control Royans Wagga held over the Putlands. The Court found that the Putlands were “by a comfortable margin” considered employees as the only service they were providing was for Royans Wagga and as such they were not running or operating their own separate business.

If you are concerned about the rights of yourself or your employees in the workplace, please do not hesitate to contact our litigation team at (07) 3345 4388 or litigation@hatzis.com.au

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