Recent results of a lawsuit in a major Fitness chain in Australia has created quite a stir in relation to employer/employee responsibility, moreso of who wears it…
As small business owners, we often find ourselves growing at a rate where we need to cover more shifts, open longer hours, do more work….
This growth is essential to our success, and our success is majorly attributed to this , and often we need to leverage off other like-minded and skilled individuals to help us do so.
So, whats the difference between an employee and an independent contractor?
The difference between an employee and independent contractor is based on many different factors. No single factor determines whether a person is an employee or contractor. Instead, courts will look at each case and make a decision based on the totality of the relationship between the parties when determining the status of a person’s employment.
There are some common factors that may contribute to determining whether a person is an employee or independent contractor these are :
Degree of control over how work is performed
Performs work, under the direction and control of their employer, on an ongoing basis.
Has a high level of control in how the work is done.
Hours of work
Generally works standard or set hours (note: a casual employee’s hours may vary from week to week).
Under agreement, decides what hours to work to complete the specific task.
Expectation of work
Usually has an ongoing expectation of work (note: some employees may be engaged for a specific task or specific period).
Usually engaged for a specific task.
Bears no financial risk (this is the responsibility of their employer).
Bears the risk for making a profit or loss on each task. Usually bears responsibility and liability for poor work or injury sustained while performing the task. As such, contractors generally have their own insurance policy.
Entitled to have superannuation contributions paid into a nominated superannuation fund by their employer.
Pays their own superannuation (note: in some circumstances independent contractors may be entitled to be paid superannuation contributions).
Tools and equipment
Tools and equipment are generally provided by the employer, or a tool allowance is provided.
Uses their own tools and equipment (note: alternative arrangements may be made within a contract for services).
Has income tax deducted by their employer.
Pays their own tax and GST to the Australian Taxation Office.
Method of payment
Paid regularly (for example, weekly/fortnightly/monthly).
Has obtained an ABN and submits an invoice for work completed or is paid at the end of the contract or project.
Entitled to receive paid leave (for example, annual leave, personal/carers’ leave, long service leave) or receive a loading in lieu of leave entitlements in the case of casual employees.
Does not receive paid leave.