In determining whether an individual is an employee or an independent contractor, courts and tribunals are required to assess the “real substance, practical reality and true nature” of the relationship, per s 15AA of the Fair Work Act 2009 (Cth) (the FW Act).
One of the indicia that will be considered in such assessment is the degree to which the company had “control” over the individual and how the work was to be performed.
A recent decision of the Fair Work Commission (FWC) has affirmed the position that principals are still able to exercise some level of control over the work performed by an independent contractor without affecting the substance of the relationship.
In the decision of Williams v Mind Matters Sydney Pty Ltd [2026] FWC 1163, the FWC heard an application from a psychologist that he had been dismissed from employment with Mind Matters Sydney Pty Ltd (the Respondent) in February 2025, in breach of the general protections provisions of the FW Act.
The Respondent raised a jurisdictional objection that the Applicant was not dismissed because he was not an employee. Rather, the Applicant was an independent contractor and his engagement had been terminated on the basis that he was not the “right fit”.
The FWC heard that the Applicant had started working for the Respondent as a psychologist in March 2024, in accordance with an Independent Contract Agreement (the Agreement) signed in December 2023. The Agreement stated that the Applicant was to be engaged as an independent contractor.
Around the same time, the Applicant commenced work as an independent contractor for another psychology practice. As at the time of the FWC application, he was still engaged at that practice.
During the Applicant’s engagement with the Respondent, he requested that his sessions be conducted over three days of the week. The Respondent provided him with a room at its psychology practice for those three days, pursuant to a fee splitting arrangement (in lieu of paying rent or a fee).
The Applicant was also paid by the Respondent in accordance with tax invoices issued as a sole trader, with his ABN. He remitted GST amounts, paid input tax credits as well as other expense deductions. The Respondent did not deduct income tax on his behalf.
One of the main arguments put forward by the Applicant was that he was an employee because the work he performed was subject to the “day-to-day” control of the Respondent. In this regard, he claimed:
The FWC did not consider that these factors indicated an employment relationship. Notably, it found:
As to the level of control that the Respondent had over the Applicant’s work, the FWC commented that principals are still able to exercise some level of control over how work is performed by an independent contractor and that such exercise does not necessarily result in an employment relationship.
While the Respondent did exercise some control over the work to be performed, this did not extend to how the core service that were provided by the Applicant to his clients (i.e., how he diagnosed them or provided advice).
The FWC also rejected any suggestion that a ‘true’ independent contractor ought to be able to perform work free from any direction or control from a principal. Rather, principals can require an independent contractor to perform work at a certain time or place, to document the completion of such work, or demand that a particular standard be met (albeit to a lesser degree than employees).
In all, the FWC considered that the practical reality of the relationship was wholly consistent with the terms of the Agreement, which set out an independent contractor relationship.
On this basis, the FWC found that the Applicant was not an employee capable of being dismissed. It therefore did not have jurisdiction to hear the application and the application was dismissed.
The FWC’s comments in this decision should reassure principals or employers that engagement of an independent contractor does not mean that the contractor must be given complete autonomy or freedom over the work that is to be performed. Independent contractors must also be able to ‘fit in’ to the way in which a principal requires the work to be done or the service to be provided, and this does not automatically equate to an employment relationship.
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