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

Australian High Court Turns Back ACE Jobs Suit

July 9th, 2013 - The Full Court of the Federal Court of Australia has turned down an appeal of ACE Insurance Ltd.’s challenge of employment rights regarding insurance sales agents.

The Association of General Counsel disclosed on its website that the insurer had appealed a decision of the Federal Court that had found that five sales agents were in fact employees of the ACE. This came despite written contracts they had with the insurer that stated they were independent contractors..

The Association said that two of the agents were hired by ACE through their personal companies. They were specified as people who would provide services but they were not a party to the contracts. The other three agents had contracts that included an option to assign their rights and benefits under the contract to a corporate entity.

The Full Court reviewed the relationship by how it operated in practice, and not by the labels that were applied to the parties or the written contracts. The court decided that all of the agents lacked sufficient independence to be considered as truly genuine contractors. In fact, it said they really were employees of ACE.

The Association article, provided by attorneys Penny Brooke and Elise Jenkin with the Australian law firm Pipe Alderman, noted that the decision means that businesses that engage contractors through personal companies can expect greater scrutiny. And it shows that there may be a danger in requiring contractors to closely follow the company’s policies and procedures, as the court noted that the agents were required to be trained to ACE training manuals and it found this to be an example of the insurer exercising direct control.

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