ACE Insurance Limited v Trifunovski: the weight of contractor labels in general protections disputes

Why is ACE Insurance Limited v Trifunovski relevant to workplace disputes in Australia?

ACE Insurance Limited v Trifunovski [2013] FCAFC 3 is cited on whether a worker is an employee or an independent contractor. The point drawn from it comes from the reasons of Buchanan J at [37], with whom Lander and Robertson JJ agreed. The parties’ own understanding of the legal character of their relationship is not conclusive. Taxation and similar arrangements may carry little weight where they merely reflect the contractor structure the parties chose. The relationship is assessed objectively.

In the decisions OnNotice has reported, the Fair Work Commission has applied it in general protections dismissal applications, and a Full Bench has applied it on appeal. The Federal Court has cited it in deciding whether an applicant was engaged as an independent contractor or employee. The High Court referred to it in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd.

How the Commission and the courts use it

Type of matter	What the decision said	What it means
General protections, dismissal (s.365) [2026] FWC 2908	“these arrangements were largely a consequence of the labelling adopted by the parties. I consider this reduces the weight that should be afforded to these matters in the overall assessment.” (the Commission)	The Commission cited the case in giving reduced weight to arrangements that flowed from the contractor label the parties had adopted.
Appeal (s.604) [2026] FWCFB 168	“The subjective understanding of the parties as to the legal character of their relationship is not conclusive and will frequently not assist at all in determining whether the relationship is one of employment or an independent contractor relationship” (the Full Bench)	The Full Bench relied on the case for that point, but held the Deputy President could still weigh the worker’s lack of protest during the engagement where the parties were sophisticated business people.
Whether applicant was engaged as an independent contractor or employee [2026] FCA 831	“it has been reasoned that the taxation arrangements agreed between the parties are of little weight because they merely reflect the contractual structure that the parties have elected to adopt” (the Federal Court)	The Federal Court cited the case as an example of that reasoning and contrasted it with cases where the contractor sought out the arrangement from the outset and benefited from it.
Employee or independent contractor Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1	“But no decision of this Court has ever adopted or endorsed such a departure from Chaplin and Narich.” (Kiefel CJ, Keane and Edelman JJ)	The High Court plurality listed the case, at [107], among examples of an approach treating the terms of a written contract as only factors alongside other circumstances, an approach the plurality said the High Court had never adopted.

Key principles and takeaways

• The Full Bench in [2026] FWCFB 168, citing Buchanan J at [37], said the parties’ subjective understanding of the legal character of their relationship is not conclusive and that the character of the relationship is assessed objectively.
• In [2026] FWC 2908 the Commission reduced the weight of arrangements that were largely a consequence of the parties’ labelling, while still weighing other features of how the work was arranged.
• The Full Bench in [2026] FWCFB 168 held that a worker’s absence of protest during the engagement can be relevant to the totality of the relationship where the parties are sophisticated business people and the arrangements cannot be regarded as one-sided or unilaterally imposed.
• In [2026] FCA 831 the Federal Court said the reasoning that taxation arrangements carry little weight is to be contrasted with cases where the contractor specifically sought out the arrangement from the outset and benefited from it.

What the Court decided

Five insurance sales agents who signed contracts declaring them independent contractors were employees of the insurer that engaged them. A trial judge reached that conclusion, and in ACE Insurance Limited v Trifunovski [2013] FCAFC 3 the Full Court of the Federal Court declined to disturb it. Buchanan J, who gave the principal reasons, found that “None of the indicia which would stand positively against a relationship of employment was truly established.”

The insurer was Combined Insurance Company of America, trading as Combined Insurance Company of Australia (Combined). The agents sold its insurance or supervised others who did, and their only pay was commission. The proceedings began in 2008. ACE Insurance Limited took over Combined’s business on 1 October 2010 and replaced it as a party, so it was ACE Insurance that appealed.

Each agent claimed payment for untaken annual leave. Three, Mr Perez, Mr Peries and Mr Trifunovski, also claimed untaken long service leave. Most claims rested on the Insurance Industry Award 1998. Mr Perez’s claim was brought under the Workplace Relations Act 1996. The parties agreed that, if the award applied, it could be enforced under s 179 of that Act.

Commission, door-to-door sales and a three-tier pyramid

Buchanan J set out the trial judge’s findings at [109] to [124], noting at [115] that there was “no serious challenge” to them. The sales force had three levels: sales representatives at the bottom, then territory representatives, then sub-regional representatives. Above them sat a regional manager who, it was not disputed, was a Combined employee. Combined had 301 sales representatives on 20 March 2009, with 83 territory and 26 sub-regional representatives above them.

Sales representatives went door to door, renewing existing policies and seeking new customers. They earned no trailing commission on renewals of policies they had written, so on leaving they were entitled to nothing further, and a sales representative’s “business” could not be sold. The trial judge found “there was nothing to sell”. Combined had 140,000 customers, most of them in rural areas. Each territory was divided into six “route months”, and teams worked through every territory once every six months.

Combined ran a two-week training course, followed by field training by territory representatives. Combined issued leads, which territory representatives allocated down to particular streets. Turnover among sales representatives ran at 300%-400% per annum, and recruiting replacements was a significant part of the sub-regional representatives’ role, although every recruit contracted directly with Combined. Cold calling was prohibited from 11 March 2002. There was never a uniform.

The trial judge rejected Combined’s submission that its training manuals were optional, and its witnesses’ evidence that it never told sub-regional representatives how to run their businesses. Correspondence to sub-regional representatives, he found, “shows a relationship of direction”. He described much of Combined’s witness evidence as “wishful thinking”. The power to dismiss, he found, ultimately “rested with Combined in whom it was vested by every contract with every representative.”

What the contracts said, and why it was not enough

Every agent’s contract stated that the agent was not an employee. Buchanan J listed at [32] reasons a worker might prefer to be a contractor, including freedom to incorporate, different tax obligations and the ability to work for others. He then said that “The parties may agree the terms of their contract, but any statement by them about the character of their relationship, or of their contract, has consistently been held not to be decisive of the true legal character of either.”

At [36] he acknowledged “the potential difficulties of attempting to retrospectively undo what parties have chosen to adopt as the basis of their relationship”, but added: “In many cases, a decision by the parties about how to characterise the relationship merely accords with what is thought to be the characterisation of greatest convenience to one party, or both.”

He returned to the point at [148], after finding the agents at all three levels “worked under close direction, supervision and organisation with a view to selling insurance products in a way determined by Combined.” He said: “Once the mutual representation, that the agents were not employees, was set to one side there was no adequate foundation for a conclusion that the relationship was anything other than one of employment. The representation did not suffice to make it one.”

Lander J made the same point at [11]: the parties “may intend to enter into a contract for services and even, as in this case, declare that to be the case, but that is not determinative of their relationship.”

Tax returns and ABNs follow the label, they do not make it

Buchanan J said at [37] that it is “difficult, in my view, to give much independent weight to arrangements about taxation, or even matters such as insurance cover or superannuation”. Those arrangements, he said, reflect one or both parties’ view of the relationship and sit “in the same category as declarations by the parties in their contract”. They are “less important than the adoption by the parties (where this occurs) of rights and obligations which are fundamentally inconsistent with basic requirements of a contract of employment, such as the ability to delegate the discharge of obligations under a contract to another person, or where there is a lack of control over how work is done.”

He applied that reasoning to the agents. At [122] he described the way they had organised their affairs as non-employees as “One of the strongest arguments in favour of the appellant’s position”, but said such arrangements “follow the prior assumption about employment (or more correctly non-employment)”. At [130] he said the business expense claims, the motor cars the agents provided themselves and their financial statements were matters “which follow, rather than dictate, a conclusion about whether a relationship involves employment or not.” The trial judge gave reduced weight to the agents’ cars because they were available for personal use.

Personal service, and a power to incorporate that went nowhere

Buchanan J said at [25] that contracts of employment are contracts for personal service, so “a contract which truly permits discharge in another fashion or by another person, is not a contract of employment.” He identified four kinds of contract that are each “prima facie not contracts of the necessary quality”: a contract with a company, a contract with a partnership, a contract allowing unlimited delegation, and a contract that pays only on results without actually requiring work to be done. He described that last kind as “more contestable than the first three”.

At [38] he called personal service “a basic (but often unstated) premise” of a contract of service. On the facts he said at [120]: “Critically, in my view, the selling of insurance was an activity which was required to be carried out through the personal efforts of individual agents and only by them.” He continued: “The requirement for personal service to discharge the obligations under the contract which each agent had made is a strong indicator in favour of a contract of employment”, although “not decisive”.

ACE Insurance listed 13 contractual terms at [131] as evidence of non-employment. They included the description of each agent as “engaged in the business of selling insurance on his own account as an independent contractor”, a power to advertise, a power to conduct business through a corporation, a power to engage secretarial and administrative staff, a requirement to bear all expenses, payment by commission only and termination on 7 or 10 days’ notice.

Buchanan J identified three as the strongest: the corporation power, the staff power and the expenses term. The staff power covered secretarial and administrative help, not anyone to sell insurance for the agent. For sales representatives, the main expense was a car of their own choosing.

He called the “nominal power of incorporation” “The strongest indicator of a truly separate business”, but said its precise terms required attention. The standard contract allowed an agent to conduct business through a corporation of which the agent was a director, and to assign to it the agent’s “rights and benefits” on 45 days’ written notice. He said at [135]: “The agent was the authorised seller, no-one else.” What could be assigned was the benefit, not the burden. At [137] he did not regard the terms, “or the contracts as a whole, as indicative of that level of independence which would be necessary to displace the indications that the true relationship was one of employment.”

Whose business the agents were working in

ACE Insurance mounted two challenges to the trial judge’s approach. Buchanan J summarised them at [126].

Lander J identified at [16] “the most compelling argument” for ACE Insurance: that the respondents thought of themselves as, and organised their affairs as, independent contractors. At [17] he agreed with the trial judge that, absent that belief and the structuring of their financial affairs, “there were no other indicia to support the appellant’s contention”.

The authorities surveyed

Before turning to the facts, Buchanan J reviewed the authorities. At [26] to [31] he distinguished cases about vicarious liability, where the focus is on the alleged employer’s liability to a third party, from cases where a worker claims an obligation owed to him or her as an employee. In the second kind, he said at [28], “the focus is different”. The basic question is the same, but where third parties are concerned “the focus of the examination may sometimes produce subtle influences on the outcome.”

From Stevens v Brodribb Sawmilling he drew Mason J’s statement that control, “whilst significant, is not the sole criterion”, but one of a number of indicia, including the mode of remuneration, provision of equipment, hours of work, the deduction of income tax and delegation. He noted Mason J’s view that legal authority to control is “the more relevant and the more cogent” than the organisation test. He said Hollis v Vabu was where “a real emphasis was authoritatively placed on the notion of working in the business of another”, and that its confinement to bicycle couriers “seems to suggest that questions of scale may be important, and even decisive.” He quoted the High Court in Sweeney v Boylan Nominees that the distinction between independent contractors and employees is “now too deeply rooted to be pulled out.”

On the evidence to be examined, Buchanan J noted at [91] that Gleeson CJ in Connelly v Wells, and the Privy Council in Chaplin and Narich, treated post-contract conduct as irrelevant. The present case had proceeded on the opposite assumption without dispute. At [107] he said that in characterising a relationship “it now seems established in Australian law that all the circumstances should be taken into account.” At [108] he noted that many of the agents’ contracts were renewed and turnover was high, so it was legitimate to consider actual work practices.

On commission salesmen, he said at [66] that the contention, made in their contracts, that such salesmen were not employees had been “frequently disapproved”. He cited R v Foster, where the High Court said clauses of that kind were “more likely to arouse misgivings as to what the practical situation of the agent may be in fact than to prevent a relation of master and servant being formed.” In Australian Mutual Provident Society v Chaplin the Privy Council found an insurance salesman claiming long service leave was not an employee. It relied on his right to enter a partnership, his power of unlimited delegation to sub-agents, his right to incorporate and his substantial business expense claims. At [75] Buchanan J described the salesman cases overall as “inconclusive”.

At [141] to [146] he said Chaplin gave the appellant the greatest support by general analogy, but none of its conclusive factors applied here. The agents had no right to contract in partnership or appoint sub-agents, there was “no effective right of incorporation”, and there was no demonstrated history of Chaplin-style business expenses beyond motor vehicles. “Any comfort from Chaplin is therefore meagre”, he said.

His general conclusions, at [102] to [104], were these. Features that “tend strongly against” employment are, principally, “contractual terms which deny any requirement for personal service or represent clear indications of the pursuit of an independent business.” Control remains important, and “may be found in a right of organisation and allocation of work, as much as in some theoretical right to say how actual work should be done.” On the trial judge’s findings there were “no features decisively, or strongly, against a characterisation of employment”.

“The appeal cannot succeed on the principal matter argued unless these findings are set aside or disapproved. In my view they should not be.” Buchanan J, at [125]

The companies interposed by two sub-regional representatives

ACE Insurance argued that Mr Trifunovski and Mr Peries, both sub-regional representatives, were not employees at times when they provided services through companies of which they were directors. A March 2004 contract named Heraclea Pty Ltd “in trust for Heraclea Trust” as a party. It was in the standard form, and Mr Trifunovski signed it personally as the sub-regional representative. It was not executed under Heraclea’s seal.

Buchanan J said at [151] it was “not clear” that Heraclea was in fact a party, but there could be no doubt Mr Trifunovski had to provide his services personally. He agreed with the trial judge that the arrangements, “whilst perhaps made to enable money to be channelled through Heraclea”, did not amount to Heraclea supplying Mr Trifunovski as its employee. “In my view the trial judge correctly found that he was” an employee of Combined, he said at [152].

Mr Peries’s arrangements involved Renham Pty Ltd, which Buchanan J described at [140] as “a corporate reflection of Mr Peries”. Four contracts were purportedly made with that company over the period from November 1990 to December 2001. Buchanan J said at [153] that only Mr Peries could discharge the duties, and described the contracts as “an apparent device to divert funds to a corporate vehicle.”

ACE Insurance also claimed an indemnity from Heraclea. Buchanan J gave two answers at [154]: it had not been established that the contract was with Heraclea rather than Mr Trifunovski, and in any event Combined’s liability was owed directly to Mr Trifunovski as its employee, so “No question of an indemnity could arise.”

How the leave was to be paid

For annual leave, clause 22.9.2 of the award required payment at the “actual salary rate the employee was receiving immediately prior to termination”. The agents had no salary, only commission. Buchanan J found no error in the trial judge calculating a rate from commissions received over a period before termination.

Long service leave was different. Clause 25.5 excluded commissions.

Buchanan J said at [164] that long service leave was therefore payable at the award’s minimum rates for a normal working week, which appears to have been Combined’s own submission at first instance. He rejected the argument that the annual leave clause should be read the same way, saying the two clauses “are directed to different objectives”.

Two points were raised about Mr Perez. Combined argued he had not shown an entitlement to annual leave before 3 June 1998. Buchanan J rejected this: Combined had not pleaded the award’s non-existence against Mr Perez, and the trial judge was entitled to rely on the pleadings. Combined also said Mr Perez had been demoted from Grade 5 to Grade 4 before his services ended on 12 October 2006. The respondent pointed out that the submission cited no evidence, and Buchanan J made no adjustment to the long service leave calculation. He upheld the use of earnings in the twelve months to 30 June 2006 for annual leave, because Mr Perez had stopped doing effective work for Combined roughly three months before his employment formally ended and had started work with another business in April or May 2006.

Three judges, one set of principal reasons

The Full Court, Lander, Buchanan and Robertson JJ, heard the matter in Sydney on 12 to 13 November 2012 and delivered judgment on 25 January 2013. There were six appeals, file numbers NSD 1295 to NSD 1300 of 2012. They came from the trial judgments ACE Insurance Limited v Trifunovski [2011] FCA 1204, ACE Insurance Limited v Trifunovski (No 2) [2012] FCA 793 and Trifunovski v ACE Insurance Limited [2012] FCA 858.

Lander J agreed with Buchanan J’s reasons and conclusions. He wrote separately, he said at [2], “out of deference to the appellant’s argument and in view of the importance of the primary judge’s decision for the conduct of the appellant’s business”. At [9] he summarised the authorities: “There is no one single criterion that will necessarily be determinative of the issue. The issue will be decided by weighing all the relevant factors.” At [18] he agreed with Buchanan J on the other issues. Robertson J said at [172]: “I agree with the judgment and orders of Buchanan J.”

Buchanan J and Lander J each concluded that the appeal should be dismissed. By agreement between the parties, no costs order was made.

Source: [2013] FCAFC 3

General information only. OnNotice reports developments in Australian industrial relations, human resources and workplace law. This article is for education purposes only and is not intended to form professional advice. Always confirm against the primary source and seek specific advice relating to your circumstances.