Thursday, 3 November 2016

Am I an employee or a contractor?

You see your dream job advertised, go for the interview, they offer you the job.. hooray! And then they ask you to provide an ABN and your rates.

This recently happened to Simon* who was left feeling a little confused. The Company told him they would provide him with training (which they said was worth $4000), they would provide him with the clients, hours and days to work and all the tools required. So, is he an employee or a self employed contractor?

Photo credit: bark via Visual hunt / CC BY

The Fair Work Act provides a list of indicators that can help to determine if you are an employee or a contractor. These are:

  • Degree of control over how the work is performed
  • Hours of work 
  • Expectation of work
  • Risk
  • Superannuation
  • Tools and Equipment
  • Tax
  • Method of Payment
  • Leave
There are also penalties for any employer trying to disguise an employment relationship as a contracting one (this is called "Sham Contracting"). It is not enough to simply state that someone is not your employee.
In Simon's case, as the Company would be providing the clients, directing his hours and how his work is performed and providing tools and equipment, this would more than likely be seen by the Fair Work Comission to be an employment relationship.

The ATO also has a very good tool to be able to determine if you are an employee for Tax purposes (which is one of the Fair Work indicators above). You can find this tool here.

As I write this, I received a notification about a case in the UK where two Uber drivers have been found to be employees, and not contractors. Naturally, Uber is playing down the potential ramifications of this decision, but it is an interesting one where Uber drivers in Australia are currently considered contractors, but Taxi drivers are employees. As the "share economy" continues to grow, there are likely to be more of these cases brought before the Fair Work Comission for a ruling. You can read about the British decision here.

What to do if you feel you are an employee and not a contractor?
You should seek advice from an employment lawyer before agreeing to anything, or if you are already working in this scenario, then you can still seek advice and claim for back-pay of Superannuation, long service leave etc.

More workplace tips
Whether you are an employee or run your own business, we'd love for you to join us at Savvy Business Women, our Facebook group dedicated to information, collaboration and support.

*Simon is not his real name

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