ACE Insurance Ltd v Trifunovski: Independent Contractor or Employee?

The full court of the Federal Court has handed down its decision in ACE Insurance Ltd v Trifunovski [2013] FCAFC 3 (25 January 2013) where the central issue in the appeal was whether five insurance sales agents were in fact properly characterised as the employees of a general insurer known as Combined Insurance Company of America (“Combined”). 

Background

In their role the agents sold or oversaw the selling of Combined's  insurance products and were rewarded by way of commission for this work. Each was engaged under a contract which stipulated that they were not employees of Combined.  At trial the trial judge, however, found that they were employees.

The proceedings now under appeal were commenced in 2008. In the proceedings before the trial judge each of the sales agents claimed to be entitled to payment for periods of untaken annual leave they earned while in the service of Combined. Three of the agents claimed also to be entitled to payment for periods of untaken long service leave. The claims were primarily based on entitlements arising under the Insurance Industry Award 1998 (Cth) and in one case under the Workplace Relations Act 1996 (Cth).

Key Issues in the Case

• Whether there was an entitlement to annual leave and long service leave?

• Whether the insurance agents were properly described as employees or independent contractors and the test to be applied in deciding, and noting that the agents regarded themselves as independent contractors, that personal service were required and their contract allowed for a nominal power of incorporation.

The Result

Dismissing appeal the court through Buchanan J expressed the following conclusions with regard to the issues raised:

Whether the facts as found by the trial judge are tested against the analysis by the Privy Council in Chaplin, or the High Court in Hollis, or whether they are tested more generally against the jurisprudence which developed over a long period, in my respectful view the trial judge was correct to conclude that the agents in the present case lacked the independence to be regarded as not the employees of Combined. None of the indicia which would stand positively against a relationship of employment was truly established.

and

The overwhelming impression from the evidence is that the agents at each of the three levels were specifically trained by Combined in particular techniques of selling which Combined had adopted as its own, and the training was constantly reinforced. They then worked under close direction, supervision and organisation with a view to selling insurance products in a way determined by Combined. They had no real independence of action or true independence of organisation. 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.

For those reasons I would reject the principal challenge advanced by the appeal.

Previous decisions leading to the appeal

ACE Insurance Ltd v Trifunovski [2011] FCA 1204; (2011) 200 FCR 532
ACE Insurance Ltd v Trifunovski (No 2) [2012] FCA 793; (2012) 215 IR 206
Trifunovski v ACE Insurance Ltd [2012] FCA 858

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