The Full Federal Court, in the decision of JMC Pty Ltd v Commissioner of Taxation [2023] FCAFC 76, has effectively found that a right to delegate (unless such right is a sham) means a person will be a contractor (and not an employee) and won’t be engaged principally for their labour. That is, if a contractor has a right to delegate, there is no obligation to make super contributions in relation to the contract. In doing so, the Court overturned the decision at first instance – discussed here.

This is so, as in the case here, even where the right to delegate is subject to the consent of the other party. The Court noted:

“if a person engaged to perform work has a contractual right to have someone else perform that work, that is a matter which at the very least tends against a conclusion that the person is an employee. The existence of the right is inherently inconsistent with an employee relationship. In the absence of significant countervailing considerations, how can you be an employee if, within the scope of the contract, you can lawfully get someone else to perform the entirety of your contractual obligations, whether for a short period, or for a longer period?”

The Court also found that JMC also did not control the contracting lecturer as he could decide how to deliver his lectures within JMC’s guidelines and he had input in relation to when his lectures would be held.

Phil Broderick
Principal
M +61 419 512 801 | T +61 3 9611 0163
E: pbroderick@sladen.com.au

Jan Harnischmacher
Lawyer
T +61 3 9611 0158
E jharnischmacher@sladen.com.au