COVID-19 - Updates, Webinars and Resources

Do you need help with Probate?

Our expert legal team is ready to take your call

Mitchell is the Managing Principal of Sharrock Pitman Legal. He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:


CALL: (03) 8561 3318

The question of whether a worker is an employee or a contractor is sometimes unclear, but can have significant legal and financial consequences.

In two recent decisions, the High Court has reframed how to determine whether a worker is an independent contractor or employee.

The courts apply a ‘multifactorial test’ to the question, which involves a court assessing whether the worker (who has usually already been treated as an independent contractor) is in fact a contractor or whether they are, legally speaking, an employee. This is assessed by considering the totality of the relationship of the parties. In doing so, a court considers a range of factors, such as the level of control the principal has over the worker, whether the worker is only providing labour or their own equipment, whether the worker can delegate work to others, whether they can work for other businesses, their method of remuneration, their hours of work, the allocation of risk and how the parties classified the relationship.

The High Court in CFMMEU v Personnel Contracting Pty Ltd (‘Personnel Contracting’) and ZG Operations Australia Pty Ltd v Jamsek (‘Jamsek’) affirmed the multifactorial test but made three significant alterations to the usual approach:

  1. Firstly, the High Court said that the relevant time at which to assess the relationship is the time at which the parties enter the relationship. In Jamsek, in particular, the Court was critical of approaching the question by looking at the entirety of the relationship between the parties across time. The High Court said that such an approach was a departure from the ordinary principals of contract law, which require the terms of a contract to be a ssessed at the time that it was entered into. The High Court was evidently concerned that taking a holistic approach across time was anachronistic, because it makes it difficult to determine ahead of time the nature of the relationship.
  2. Secondly, the High Court said that where the parties had comprehensively committed the terms of the arrangement to a written contract (which has not been subsequently varied), the written contract will generally be determinative unless the contract can be shown to have been a sham. (Read our article on sham contacting.)
  3. Thirdly, in Jamsek, the High Court said that it was not relevant that the parties had different bargaining strengths, provided that the arrangement entered into was a genuine arrangement (i.e. not a sham).

The application of these principals resulted in two different outcomes in these cases:

1. Jamsek involved workers who had originally been employed as truck drivers, but were subsequently advised by the employer that it would no longer employ them.  Instead, they were offered roles (through their partnership entities) as independent contractors on the condition that they purchased and supplied their own trucks. They agreed to this arrangement and it continued for many years.

In this case, the High Court said that at the time the contractor relationship was entered into, it was a genuine contractor relationship. The fact that the arrangement had continued for many years did not alter the nature of the relationship, nor was it relevant that, at the time, that the workers had less negotiating power than the company engaging them. The arrangement was a genuine commercial arrangement and the Court did not need to look any further than the terms of the written contract.

2. Personnel Contracting involved Personnel Contracting engaging a worker and placing the worker with a host company as part of a labour hire arrangement. Personnel Contracting had a written contract with the worker, which called the worker a ‘Contractor’. However, the High Court found that the actual written terms of the contract, notwithstanding the label, were those of an employment relationship. In particular, the contract required the worker to provide his labour as directed by Personnel Contracting and the host company, meaning that contractually the worker was completely under the control of Personnel Contracting in the performance of his duties.

Businesses that engage independent contractors can take comfort that the High Court has taken an orthodox contractual approach to the question of whether a worker is a contractor or employee. However, the cases do highlight the importance of ensuring that the arrangement is properly recorded in a comprehensive written contract, and that the contract accurately reflects the arrangement of the parties, including accurately labelling the relationship as a contractor or employment relationship.

Further, it remains essential to ensure that any contractor relationship is not a sham established to avoid a business’s obligation as an employer. Sham contracting is prohibited under the Fair Work Act 2009 (Cth) and can attract civil penalties.

It is also important to remember that businesses may have obligations for their contractors under superannuation and workers compensation legislation, notwithstanding that their workers are genuine contractors not employees.

Following the High Court’s decisions, we recommend reviewing your written independent contractor agreements to ensure that they are comprehensive, accurate and tailored to the particular work that your contractors are completing. Having a comprehensive, accurate and tailored contract should provide significant protection in the event of a future claim.

How Sharrock Pitman Legal can help?

As the recent High Court decision has shown, it is important for employers and their HR team to accurately distinguish between a contractor relationship and an employee engagement, and fulfil allobligations to both.

If we can assist you please contact us by email sp@sharrockpitman.com.au or call 1300 205 506. The author an also be contacted directly at samuel@sharrockpitman.com.au.  

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.

Written by a member of our Legal Team

,

.

Samuel Ellemor

For further information contact

Samuel Ellemor

Samuel Ellemor is a Senior Associate at Sharrock Pitman Legal practising in Employment Law, Commercial Law, and Charities & Not-for-Profit Law. For further information, contact Samuel on his direct line (03) 8561 3316.

More on

Employment Law

The question of whether a worker is an employee or a contractor is sometimes unclear, but can have significant legal and financial consequences.

However, in this article we will set out the factors that influence how long it will take to obtain a Grant of Probate and to administer an estate in Victoria.

The basics

First things first: what is a Grant of Probate? A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will. Without Probate, the asset holders (say a bank or share registry) cannot be satisfied as who has the correct authority to receive the deceased's assets and may refuse to pay out.

Sometimes, for smaller estates or if assets are mostly jointly owned with a surviving spouse, asset holders might agree to release payment without requiring a Grant of Probate. This is usually on the basis that the person who receives payment promises to repay (or Indemnify) the asset holder if it turns out they paid to the wrong person.

If there is no Will, then you cannot obtain a Grant of Probate. Instead you obtain Letters of Administration. This is effectively the same, in terms of authorising someone to administer the estate, and would usually be obtained by the person who is the closest next-of-kin to the deceased.

“A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will.”

Timeframes for Probate in Victoria

In order to obtain a Grant of Probate, the Supreme Court needs to be given information about the assets and liabilities of the estate, the deceased person, the witnesses to the Will, the executors and the Will itself. An advertisement of your intention to apply for Probate must also be published on the Supreme Court website for at least 14 days prior to any application being lodged.

Often, making enquires to obtain all the necessary information can take a number of weeks. Also, you will need the Death Certificate for the application for Grant of Probate and possibly for making proper enquires regarding the assets and liabilities. Waiting for the Death Certificate to issue can therefore add a few more weeks to the process. Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.

The Court itself usually does not take long to process the application (maybe another 1 to 2 weeks) and this is completed using the electronic Supreme Court filing system. This means you do not have to go to a Court hearing. The timeframe for processing applications for Letters of Administration is even less, given that there is no Will document for the Court to consider. There is also a general discretion for the Court to raise a 'Requisition' asking for more information before they review the application - this can sometimes delay matters.

“Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.”

So, here we are a few months after death and you finally have a Grant of Probate or Letters of Administration. It is important to remember that this is the start of the estate administration and not the end. For a very simple estate, you might only need a further month or so to cash the assets and pay them to the correct beneficiaries. However, it can often be more complex than that. Factors that determine the timeframe to administer the estate include:-

  • Some assets will take time to cash or transfer. For example, if selling a property, final settlement might be 60/90/120 days from the day of sale.
  • There is a 6 month period for challenges to be brought against the estate and executors must wait until this period expires before distributing the estate, if there is any risk that a disgruntled family member might come forward.
  • There might need to be final tax returns for the deceased or for the estate. Failing to wait for the ATO to process these could leave the executor personally liable for a tax bill.
  • You might need to advertise for creditors to come forward and wait for a period of months while this advertising timeframe expires. This protects the executor if they are unsure of all of the deceased's financial dealings and creditors.
  • It might not always be a good time to immediately cash estate assets. For example, the shares just took a nose-dive, do you still sell regardless of available price?

There is a general rule that executors have an 'executor's year' to complete the estate administration. This means that you should be aiming to have the estate finalised and distributed within 12 months from the date of death.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.

Need help with Probate?

Our expert legal team is ready to take your call!

Mitchell is the Managing Principal of Sharrock Pitman Legal. He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:

DIRECT LINE: 
(03) 8561 3318

Download our FREE handbook "Managing the Dismissal of an Employee"

GET YOUR FREE DOWNLOAD

Enter your details

Thanks for your interest! 

Here's your download:
DOWNLOAD PDF
Oops! Something went wrong while submitting the form.

Download our FREE legal guide to starting a charity in Australia

GET YOUR FREE DOWNLOAD

Enter your details

Thanks for your interest! 

Here's your download:
DOWNLOAD PDF
Oops! Something went wrong while submitting the form.

Download our FREE legal guide to Probates & Estates in Australia

GET YOUR FREE DOWNLOAD

Enter your details

Thanks for your interest! 

Here's your download:
DOWNLOAD PDF
Oops! Something went wrong while submitting the form.

Could your business do with a “health check”?

Fill in our survey about the legal health of your business and get 30 minutes FREE legal advice!

FILL OUT SURVEY NOW

Could your Not for Profit organisation do with a "health check"?

Fill in our survey about the legal health of your organisation and get 30 minutes FREE legal advice!

FILL OUT SURVEY NOW

About Sharrock Pitman Legal

For fifty years Sharrock Pitman Legal has made a significant and long term contribution to meeting the legal needs of business owners and residents in the City of Monash and greater Melbourne area.