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A small, independent operator has crashed into a concrete barrier to avoid hitting a stationary traffic management vehicle while on a long-distance run from Queensland to drop off trailers at Ryde.
He was employed for the job using his ABN by a transport company he’d previously worked for as an employee for a number of years. This was an established pattern for short-term work between the parties for some time, with the driver in question never supplying tools of trade, or being asked to furnish his own insurance.
But the driver has now been issued with a statement of claim for the damages sustained in the crash, which now amounts to almost $100,000 with costs attached.
Is he liable, even though he was driving the plaintiff’s truck and on the understanding that he was covered by the employer’s insurance? The central legal issue raised in this case is the nature of the legal relationship between the driver and the company for whom he is driving the truck.
Vicarious liability is a legal term that describes the employer’s responsibility to cover an employee against loss or damage caused by that employee in the course of their employment. In general terms, however, employers are not vicariously liable for damage caused by contractors.
The reason for this is that a contractor runs his or her own business and is accountable only to themselves. The employer does not, in such a relationship, determine how the contractor conducts his business.
But this distinction, even where the contractor operates under their own ABN, is not an impenetrable shield by which the employer can avoid liability for the contractor’s actions.
In some cases, workers will be considered employees no matter what they are called because, on examination of the relevant indicia, it is apparent that independent contractor status cannot be sustained.
In the particular facts at hand, the employing company contends that the driver is an independent contractor (not an employee) and therefore accountable for the loss and damage incurred in an accident. In doing so, they appear to be relying heavily on the fact that the driver has an ABN.
This will be of little weight in the analysis if other factors indicate an employee/employer relationship.
There is no single indicator that will demonstrate employee or independent contractor status, but a number of important factors will determine the nature of the relationship. Some examples include:
- The degree of control exercised over the work by the principal.
- Whether there are regular and predictable hours or periods of work, and specified methods.
- Whether the employee services a number of other clients and provides his own equipment in executing each job.
- Any ongoing expectation of work based on a pattern of provision.
- Whether the worker determines the manner and method by which the task will be completed.
- Whether the worker is financially independent.
- Whether the worker can subcontract the work.
- Whether the worker is pricing a job maximising his own profit margin rather than simply accepting payment for hours worked.
- The offer of services by the person to more than one business.
Applying these criterion to the facts as they are presented, and in the absence of any written agreement between the parties, (which may also affect the interpretation of the relationship) it becomes apparent that there are a number of indications that there is an employee/employer relationship which would give rise to vicarious liability in the ordinary course of the law.
An established pattern of short-term work is in place, which could underpin an expectation of patterns of availability for the driver’s labour. The driver does not supply his own tools of trade and has not been asked to provide evidence of his insurance and this again weighs in favour of the employee/employer relationship.
The driver was labouring on “ … the understanding” that he was covered by the employer’s insurance and it is important to understand the basis on which that understanding was reached.
An analysis of the entire relationship between the two parties would be necessary to determine the question of liability and evidentiary issues may also arise, especially if verbal assurances have been provided by either party in relation to insurances or other matters.
The above is not in the nature of legal advice. To determine the legal position of the contractual relationship between any parties, advice will be need to be provided on each set of circumstances following a careful review of all the circumstances.
Source Big Rigs