Update on Contactors vs Employees

For as long as I can remember there has always been confusion around whether a person engaged via an “independent contractor” agreement was in fact a contractor or an employee.

Some of you may say why does it matter?

Well it can have significant impact on your business costs.  An employee is entitled to various leave under the National Employment Standards (NES).  Contractors are not covered under the NES.

So if you have been paying a person as an independent contractor and they are deemed to actually be an employee, then your business may be liable for unpaid leave.  Which, depending on how long they were working for your business, could be a lot of money.

So how do you determine if a person working for you under an independent contractor agreement is actually a contractor and not an employee?

You have to turn to the courts, and 2 recent High Court decisions give some further guidance.

Important factors that need to be taken into account include:

• That a formal written contract or agreement setting out the relationship at the start of the relationship is essential. It is the terms in this contract or agreement that will form one of the factors considered by the courts.
• If the worker invests in a significant asset, and maintains that asset to deliver the work, there is strong indicator of a contractor relationship.
• It does not matter what you call the relationship.
• The level of control you exercise over the worker has a bearing on how the relationship is determined. But this is not 100% defining as you may have a lot of control over an owner operator truck driver but because you are paying for the labour and the truck, it may not be a employee relationship.  But the worker under a high degree of control that is not using any substantial assets they own and operate is likely to be an employee.  For example, a pizza delivery worker who supplies their own vehicle, may be viewed differently to a pizza delivery worker who uses company owned transport.

If you want a confidential discussion on your business situation, contact me below

Contact Wayne Wanders for your FREE Business Survival Session

To ensure I help your business specifically, the best approach I have found is to have an obligation free session with you.  In this session we will review your current business in a factual and objective manner, to better understand the challenges that you face.  And this session does not need to be face to face.

At the end of this session, you will have multiple ideas on how your business can survive and thrive in these uncertain times.

Simply fill in the contact form below or email me at wayne@aRealCFO.com.au or call me on 0412 227 052 to organise one of these obligation free sessions.

To get help you successfully navigate your way through your financial challenges so your business can survive and thrive in these uncertain times, simply use the contact form on the left to email Wayne or call him on 0412 227 052.

Let Wayne Wanders, a fully qualified and experienced CFO, help you successfully navigate your way through your financial challenges so your business can survive and thrive in these uncertain times.

Wayne Wanders, A Real CFO

wayne@aRealCFO.com.au