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The Collaborative Clearinghouse for Lawsuits and Other Claims Against ACE Group Insurance Companies

ACE “Agents” Are Actually Employees, Australian Court Rules

May 4, 2012 - Australia’s Federal Court has determined that independent contractors of ACE Insurance Ltd. operating in that country were in fact employees.

Five agents brought a claim against ACE for unpaid long service and vacation time. Some of them had worked for the insurer for 30 years, and according to Australian legal affairs website Mondaq.com they contended that they had wrongly been treated as contractors but were in fact employees.

In the case, ACE Australia Ltd. v Trifunovski, ACE stated that the contractor status was indicated by written contracts that described them as independent contractors. Further, they were paid according to the number of policies they sold, and used their own vehicles in the course of their work. And some hired other workers on their own - including wives - to serve as administrative assistants.

But Mondaq wrote that the court weighed in in favor of the agents due to at least four arguments:

-The agents did not generate goodwill for their own business but instead for ACE

-The agents were not working for other insurers. (In practice, they worked very long hours on ACE products and had no time for others)

-ACE provided training, including scripts for use with potential buyers, and so exercised control over the agents

-The company encouraged the agents to hold themselves out as representatives of ACE

ACE had argued that the agents had engaged in misleading and deceptive conduct by signing contracts in which they described themselves as independent contractors. But the court rejected that defense, said Mondaq, writing that at most the agent understood himself or herself to be an independent contractor at that time, which was not deceptive.

The ACE ruling follows other Federal Court decisions in the same vein, said Mondaq, and indicates that it is becoming increasingly difficult in Australia to maintain a true independent contractor status.

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