ZG Operations Australia Pty Ltd v Jamsek: cited on employee or contractor disputes and the reach of s 15AA

Why is ZG Operations Australia Pty Ltd v Jamsek relevant to workplace disputes in Australia?

The High Court decided ZG Operations Australia Pty Ltd v Jamsek alongside CFMMEU v Personnel Contracting Pty Ltd. In [2026] FWC 3388 the Commission said both decisions concerned whether individuals were employees or independent contractors. It said they rejected the move towards always deciding disputed relationships by a multifactorial analysis in favour of the terms of a contract that is entirely in writing.

Parliament then inserted s 15AA into the Fair Work Act 2009 (Cth). The statutory note, set out in several Commission decisions, says the section “was enacted as a response to the decisions of the High Court of Australia in CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2.” The case now appears in unfair dismissal jurisdiction disputes over contractor status, labour hire arrangements, Federal Court sham contracting and costs proceedings, and South Australian workers compensation claims.

How the Commission and the courts use it

Type of matter	What the decision said	What it means
Contractor or employee: NDIS support worker [2026] FWC 3866	“a consideration of the totality of the relationship under s 15AA is guided by the common law principles established by cases such as Stevens v. Brodribb Sawmilling Co. Pty Ltd” (the Commission)	The Commission set out s 15AA and its note naming Jamsek, then applied a multifactorial approach to decide whether the applicant worked as an employee or a contractor.
Labour hire: whether the host was the employer [2026] FWC 3388	“clarified that the long creep by courts and tribunals towards always assessing disputed employment relationships by reference to a multifactorial analysis was not only wrong, but bad at law” (the Commission)	The Commission described what Jamsek and Personnel Contracting decided and noted earlier decisions holding that s 15AA did not operate where there was no contract between the worker and the host business.
Sham contracting: identifying the engaging entity [2026] FCA 1452	“applicable test for determining engaging entity following WorkPac Pty Ltd v Rossato [2021] HCA 23; 271 CLR 456, Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1; 275 CLR 165 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2; 275 CLR 254” (Meagher J, catchwords)	The Federal Court sought further submissions on identifying the engaging entity after these decisions, found the company was not the engaging entity and dismissed the Fair Work Ombudsman’s application.
Costs appeal: change in pleaded case [2026] FCA 1411	“the appellant requested the respondent’s consent to filing an amended statement of claim in the Substantive Proceeding in light of the recent decisions” (the Federal Court, recounting the history)	The Court recorded that Jamsek and Personnel Contracting prompted a party to seek leave to amend its pleadings, as part of the background to a costs dispute.
State workers compensation: working director [2026] SAET 110	“Both parties (correctly) accept that the effect of those decisions for the present purposes is that it is necessary to consider the totality of the relationship between the deceased and Mingbool.” (the South Australian Employment Tribunal)	The Tribunal treated Jamsek and Personnel Contracting as the most recent High Court statement on what is a contract of service under the Return to Work Act 2014 (SA) and found the deceased was not a worker.

Key principles and takeaways

• The note to s 15AA of the Fair Work Act states that the section was enacted in response to Personnel Contracting and Jamsek, and Commission decisions including [2026] FWC 3866, [2026] FWC 3690 and [2026] FWC 3388 set out that note before applying the section.
• Under s 15AA, regard must be had to the terms of the contract and to how the contract is performed in practice. In [2026] FWC 3866 the Commission described this as a reversion to the multifactorial test applied before the High Court decisions.
• In [2026] FWC 3388 the Commission said s 15AA applies to relationships entered into before 26 August 2024, but not to applications already on foot at that date.
• Decisions quoted in [2026] FWC 3388 hold that s 15AA does not operate where there is no contractual relationship between the worker and the business said to be the employer, as in a standard three-way labour hire arrangement.
• Outside the Fair Work Act, the South Australian Employment Tribunal in [2026] SAET 110 treated Jamsek and Personnel Contracting as the governing common law statement, and the Federal Court in [2026] FCA 1452 treated them as bearing on how the engaging entity is identified.

What the High Court decided

In late 1985 a lighting company told its five delivery drivers it would not give them a pay rise. It offered them the chance to “become contractors” and buy their own trucks instead. The drivers were told: “If you don’t agree to become contractors, we can’t guarantee you a job going forward”. Two of those drivers kept delivering the company’s goods until 2017. In ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2 the High Court found that, after 1986, they were not its employees.

The written contract decided it

The drivers sued after the company ended its arrangements with their partnerships on 20 January 2017. They sought declarations about entitlements they said they were owed as employees under the Fair Work Act 2009 (Cth), the Superannuation Guarantee (Administration) Act 1992 (Cth) and the Long Service Leave Act 1955 (NSW). The question was whether they were “employees” under the first two Acts or “workers” under the third. The one exception the parties identified was s 12(2)-(11) of the superannuation Act, which gives “employee” an expanded meaning. Otherwise no party suggested the terms meant anything different from employment at common law.

Gordon and Steward JJ framed the central question as whether the drivers were “employed, or usually employed” by a “national system employer” so as to be national system employees under ss 13 and 14 of the Fair Work Act. They said the answer decided the claims for contraventions of ss 44, 45 and 357 of that Act. It was common ground that it also decided the long service leave claim.

Kiefel CJ, Keane and Edelman JJ, the plurality (the group of judges writing the main joint reasons), noted that nobody alleged the contract was a sham (an arrangement dressed up as something it is not). Nobody claimed conduct had varied or displaced it, and the drivers did not ask for it to be set aside under statute or on equitable grounds such as unconscionable conduct. In those circumstances, they said at [8], the character of the relationship was “determined by reference to the rights and duties created by the written agreement which comprehensively regulated that relationship”. They added that the company’s possible use of superior bargaining power to bring about the contract “did not alter the meaning and effect of the contract”.

The appeal was heard with Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1. The plurality applied the reasons given in that case.

From employees to partnerships

The two drivers left school at 14 and 15 and had no formal qualifications. They joined the company in 1977 and moved into delivery driving in 1980. It was not disputed that they were employees until late 1985 or early 1986, driving trucks the company provided.

All five drivers accepted the 1985 offer. On his accountant’s advice, each of the two drivers set up a partnership with his wife. No copy of the 1986 contract could be located when the case began, so the document was never before the trial court. The primary judge inferred that each driver signed it on behalf of his partnership. It paid a minimum “carton rate” of $120 per day, or $600 per week. Before then the second driver earned about $410 per week, and his accrued annual leave was paid out when he entered the contract.

The drivers bought four-tonne trucks from the company for $15,000 (Mr Jamsek) and $21,000 (the second driver), both on borrowed money. The partnerships paid registration, maintenance and interest. Newer trucks followed in 1989, 1990 and 1993. The choice of truck was not something the drivers negotiated with the company.

In July 1993, after the drivers negotiated an hourly rate based on a nine-hour day, the partnerships signed a “Contract Carriers Arrangement”. It described the contractors as “Separate legal entities” who were “Able to work for other parties” if the work was not detrimental to the company or its customers. It required them to “Undertake carriage of goods as reasonably directed” (cl 2.1(a)). They could not use another driver without the company’s “prior and continuing approval” (cl 2.1(g)). They had to hold public liability cover of $2,000,000 or more and third party property cover of $5,000,000 or more. The contract provided four weeks’ annual leave without pay and recorded that leave, public holiday and sick day allowances were built into the hourly rate. Further contracts followed in 1998 and 2001, and a rate increase in 2008, each prompted by the drivers’ concerns about rising costs.

Three decades of deliveries

The plurality summarised how the arrangement worked in practice. The drivers usually arrived at the warehouse between 6.00 am and 7.00 am and finished around 3.00 pm. From around 2001 they filled out run sheets recording their deliveries. They divided delivery areas among themselves and planned their own routes. Mr Jamsek took six or seven weeks off in 2000, when a friend drove his truck and was paid by the partnership. The partnerships split income between husband and wife, claimed truck expenses as tax deductions and charged GST after 2000.

Trucks carried tarpaulins with the company logo at various times. The drivers were given branded uniforms but were not told to wear them, although from 2014 high-visibility vests were required inside the warehouse. From around 2012 they scanned run sheets daily, a task estimated at 15 minutes per day, after Mr Jamsek was told he had to do the clerical work. In 2012 the second driver’s partnership was dissolved and he kept working for the company as a sole trader with his own ABN.

The plurality explained at [9] why it set this history out at all. It said “the task of raking over the day-to-day workings of a relationship spanning several decades is an exercise not to be undertaken without good reason”, given the cost and “drain on judicial time”. The claims did not call for that exercise, the plurality said, because the drivers never argued that the way the work was done in practice had overtaken the contract’s terms. It set out the history only to make the lower courts’ reasoning and the parties’ arguments easier to follow.

• 1977 Both drivers begin work for the company.
• Late 1985 Company offers the drivers the chance to “become contractors”.
• 1986 Partnerships sign the 1986 contract and buy trucks.
• Jul 1993 Contract Carriers Arrangement signed, with an hourly rate.
• 2012 Second driver’s partnership dissolved.
• 20 Jan 2017 Arrangements with the partnerships terminated.
• 16 Jul 2020 Full Court of the Federal Court finds the drivers were employees.
• 1 Sep 2021 High Court hearing.
• 9 Feb 2022 High Court judgment delivered.

Two courts, two answers

The primary judge, Thawley J ([2018] FCA 1934), looked at the totality of the relationship. He found the drivers were neither employees nor workers. In his view the case was one of partnerships “running businesses of their own”, and he gave weight to the trucks, the partnerships and the business risk they carried. He treated length of service and regular hours as pointing the other way.

The Full Court of the Federal Court (Perram, Wigney and Anderson JJ) allowed the drivers’ appeal in Jamsek v ZG Operations Australia Pty Ltd (2020) 279 FCR 114. It asked about the “substance and reality” of the relationship as a “matter of impression”. It found the drivers faced “an effective ultimatum” in 1986, called them and their wives “partners in name only” and found the partnerships generated no goodwill. Perram J described the absence of goodwill as the “most important element”.

Where the plurality found error

The plurality identified two “errors of approach” at [6]. The first was “the significant attention devoted by that Court (and indeed the primary judge) to the manner in which the parties actually conducted themselves over the decades of their relationship”. The second was reasoning that the disparity in bargaining power affected the contract, so that the “reality” of the relationship was employment.

On the second error, the plurality said at [51] that the Full Court’s “expansive approach” to “substance and reality” accorded with the approach taken in the United Kingdom. It said that approach “involves an unjustified departure from orthodox contractual analysis”.

At [61] the plurality said the 1986 contract arose from the company’s refusal to keep employing the drivers and their “evident acceptance of that refusal”. At [62] it said the company’s superior bargaining power “has no bearing on the meaning and effect of the bargains that were struck” between the partnerships and the company. It added that this “is not to suggest that disparities in bargaining power may not give rise to injustices that call for a legal remedy”. Australian law offers such remedies under both the general law and statute, but “Those remedies were not invoked in this case”. The drivers had not claimed the contracts were shams. The plurality said: “In Australia, claims of sham cannot be made by stealth under the obscurantist guise of a search for the ‘reality’ of the situation.”

Partnerships, logos and goodwill

On the partnerships, the plurality said at [49] that it was “no part of the respondents’ case that the partnerships were shams”, and that “partnerships in which one partner does not contribute his or her service to the partnership business are commonplace”. At [63] it said that, even if a disguised claim of sham were entertained, the partnerships owned and operated the trucks, contracted with the company and took the tax benefits of the structure. It said the drivers’ case could not be squared with their having “enjoyed the advantages of splitting the income” with their partners for many years.

The plurality called the “multiplicity” argument a “strained interpretation” of the 1993 contract. At [66] it said “the ownership of the trucks alone was of no use to anyone unless they were operated by drivers with the skills of the respondents”. At [68] it said the drivers’ reading “has no appeal as a reasonable commercial arrangement”.

At [52] to [58] the plurality addressed the factors the Full Court relied on. The company’s “expectations” about logos and branded clothing did not alter the contractual rights and obligations. Displaying the company’s branding was “quite consistent with a sensible, self-interested response of an independent contractor to legitimate commercial pressure from its best customer”. That the drivers devoted their working lives to the company meant little more than that its demand left the partnerships no capacity for other customers: “Such a state of affairs is not inconsistent with the independent status of the partnerships.” On goodwill (the saleable value of a business beyond its physical assets), each partnership could still introduce a buyer to the company as an established customer. Many businesses that make products for a single customer generate no goodwill, which the plurality said “is not a circumstance which denies the independence of such businesses from their customers”.

Control over what, not how

At [69] the plurality said the obligation to undertake carriage “as reasonably directed” was not akin to a power to “micromanage” deliveries. Read with the provisions placing responsibility for deliveries on the partnerships, it created “an obligation as to what carriage was to be undertaken rather than how it was to be carried out”. The word “reasonably” ensured the company could not over-stretch the partnerships’ capacity.

At [70] the plurality said the services combined the drivers’ truck-driving skills with trucks owned by the partnerships. “The provision of such services has consistently been held, both in Australia and in England, to have been characteristic of independent contractors, not employees.” It cited Humberstone v Northern Timber Mills (1949) 79 CLR 389, Barro Group Pty Ltd v Fraser [1985] VR 577 and Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497.

The same result by a different route

Gageler and Gleeson JJ described a scenario “well known in an earlier industrial age”. In that scenario, a company wants “to turn them into independent contractors”, workers sign written contracts, and day-to-day operations change very little. They traced how courts had looked for the true relationship that existed once such contracts were signed. In their view the primary judge and the Full Court approached the ultimate question in essentially the same way and “were correct to do so”.

They qualified this in one respect: the Full Court appeared willing to contemplate that a single relationship could be both employment and independent contracting at once. They said “the distinction between an employee and an independent contractor is and has always been a true dichotomy”. They disagreed with the Full Court’s evaluative conclusion. They explained why by reference to the relationship between Mr Jamsek and the company during the period of the 1993 contract.

Two features decided it for them. First, the Jamsek partnership was responsible for maintaining the truck used under the 1993 contract, and it did so. Where work involves “a substantial item of mechanical equipment” for which the provider is wholly responsible, they said, “the personal is overshadowed by the mechanical”. Second, it was the partnership that contracted, invoiced and was paid. “What was contracted for, provided, and paid for, under the contract was the carriage of goods by means of a truck, not the truck and separately Mr Jamsek as an individual to drive it.”

Gordon and Steward JJ assessed the 1993 contract itself. At [99] they said a partnership “cannot, with respect to the activities of the partnership, be contracted to work in another’s business or enterprise”. They pointed to the partnerships’ obligations to supply, insure and maintain the trucks, their freedom to work for others and the invoicing arrangements. They said cl 2.1(a) did confer control, but “control of a particular kind: a power to give directions to make deliveries rather than to direct how that should be done”. A standard nine-hour day under cl 7(b) “may tend slightly” towards employment, but cl 9(a) provided for extra work to be offered at mutually agreed rates.

For the second driver after his partnership was dissolved in 2012, Gordon and Steward JJ held that evidence was admissible to show the 2008 contract had been discharged and a new contract formed on identical terms between him alone and the company. That relationship was not employment either. They said agreed pay rate increases could also be proved. By contrast, how the parties “exercised their rights, performed their duties or unilaterally conducted themselves” during the claim period “was not relevant”.

The superannuation question goes back to the Full Court

The drivers filed a notice of cross-appeal arguing they fell within the expanded definition of employee in s 12(3) of the superannuation guarantee legislation.

The primary judge had rejected that argument because the contracts were with the partnerships, not the drivers, and “were plainly for the provision of substantial equipment”. The Full Court did not deal with it. The plurality said the drivers’ arguments “are not insubstantial” and that accepting them “would have substantial consequences for the revenue”. It said it would be inappropriate for the High Court to decide the issues while the Commissioner of Taxation was not a party and the Full Court had not addressed them. Gordon and Steward JJ noted the parties accepted the s 12(3) question should be remitted (sent back for decision). They described it as a separate question requiring separate characterisation of the contracts.

The Court allowed the appeal and set aside the Full Court’s orders of 16 July 2020. It remitted the issues raised by the notice of cross-appeal to the Full Court of the Federal Court for determination, and directed the Full Court to otherwise make orders in accordance with the High Court’s reasons. The plurality said remitting the issues would allow them to be determined once the Commissioner of Taxation was joined. Kiefel CJ, Keane and Edelman JJ proposed the orders. Gageler and Gleeson JJ, and Gordon and Steward JJ, agreed with them. The bench was Kiefel CJ, Gageler, Keane, Gordon, Edelman, Steward and Gleeson JJ. The appeal was heard on 1 September 2021 and judgment was delivered on 9 February 2022. The New South Wales Business Chamber appeared as amicus curiae (a non-party permitted to assist the Court), limited to written submissions.

Source: [2022] HCA 2

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