Where complexity meets clarity - Visual Legal

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Many business owners in Adelaide and across South Australia come to us at Visual Legal with the same questions: “Is this person really my employee?” or “Am I sure I’m meeting my obligations?” It’s surprising how often even experienced employers aren’t clear on the fundamentals of the employment relationship — and getting it wrong can lead to back-pay claims, penalties, tax issues, or disputes.

That’s why we are writing this brief article on the essentials of employment law. Let's examine who is legally an employee?

The Employment Relationship – What Makes It Different?

Australian workplaces include all kinds of people: employees, independent contractors, volunteers, interns, apprentices, work experience students, and visitors. Each category carries different legal rights and obligations.

The employment relationship stands out because the employee works in the employer’s business — under its direction and control — and provides labour for the employer’s benefit in return for wages. 

By contrast, independent contractors typically run their own business, provide services to multiple clients, and take on commercial risk.

For many years, courts looked at a multi-factor test to decide employee vs contractor status, including:

• Degree of control the employer has over how, when, and where work is done
• Ability to refuse or delegate work
• Payment of leave entitlements
• Whether the worker has an ABN
• Integration into the business (e.g., uniforms, branding, exclusive work)

However, two landmark High Court decisions in 2022 changed the approach significantly:

• ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2
• Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1

The High Court ruled that the terms of the written contract are the primary focus — how the relationship is structured on paper, and how it is actually performed in practice. 

Labels like “contractor” don’t decide the issue; the substance of the arrangement does. 

If the contract and conduct show the worker is working in the business (not running their own), they are likely an employee.

Why Correct Classification Matters

Getting this wrong has serious consequences:

• Employers must pay minimum wages, superannuation, leave entitlements (annual, personal, long service), notice or redundancy pay, and provide a safe workplace. They’re also vicariously liable for employees’ actions in the course of employment.
• Employees owe duties of care, fidelity, confidentiality, and obedience to lawful directions.
• Contractors generally don’t get these entitlements or protections — but misclassification can trigger back-pay claims, Fair Work Ombudsman penalties (up to $18,780 per contravention for individuals, $93,900 for companies as of 2026), and tax liabilities (e.g., unpaid PAYG withholding).

In the gig economy, courts and the Fair Work Commission continue to scrutinise arrangements closely — recent cases have reclassified some “independent” delivery drivers and ride-share workers as employees or casual employees with entitlements.

Types of Employment in Australia

If someone is an employee, they fall into one of three categories under the Fair Work Act 2009 (Cth):

• Full-time — typically 38 hours per week (or less by agreement), with regular hours and full entitlements (annual leave, personal leave, etc.).
• Part-time — fewer than 38 hours per week, regular and predictable hours, pro-rata entitlements.
• Casual — no firm advance commitment to ongoing work, irregular hours, no paid leave, but entitled to a 25% casual loading (and, since 2021 amendments, casual conversion rights after 12 months if regularly working a pattern of hours).
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Important note: Labelling someone “casual” doesn’t make them casual if there is a regular, systematic pattern of work and a reasonable expectation of continuing employment. Courts look at the reality of the arrangement, not the label (WorkPac Pty Ltd v Skene [2018] FCAFC 131; WorkPac Pty Ltd v Rossato [2021] HCA 23).

Practical Steps for Employers

To stay compliant and avoid costly surprises:

• Review your workforce — are workers correctly classified as employees or contractors?
• If unsure, seek advice before issues arise.
• Check unpaid workers (volunteers, interns) — ensure they are genuinely not entitled to pay (Fair Work Act defines “volunteer” narrowly).
• For casuals: monitor patterns of work; consider offering permanent roles under casual conversion provisions (after 12 months for small businesses, 6 months for others).
• Use clear employment contracts outlining terms, classification, and entitlements.
• Have proper independent contractor agreements where appropriate, reflecting the High Court’s focus on contractual substance.
• Keep documentation of agreements, pay records, and communications.

At Visual Legal, we help Adelaide businesses get these foundations right — from drafting compliant contracts to reviewing workforce arrangements and advising on classification risks. 

If you're unsure about your employees, contractors, or casuals, book a free consultation. 

We’ll meet (in our central Adelaide office or via secure teleconference), review your setup confidentially, explain your obligations in plain terms, and help you put strong systems in place — no pressure, just practical support.

Questions about your workforce? Get in touch — let’s make sure everything is classified correctly and compliant from the start.