Businesses that engage workers as an “independent contractor” when they are really an “employee” can face serious consequences and it can be costly.
The distinction between who is a contractor and who is an employee can be a very grey area at times, however it is extremely important that the right distinction is made as different legal and tax obligations apply. Do you know if you are liable for?
- Payroll Tax
- Superannuation Guarantee Payment
- WorkCover Obligations
- Long Service Leave
- Award Obligations
How do you determine the difference?
There are a number of factors to consider when determining whether a worker is an employee or an independent contractor. Generally a worker is an employee if they:
- Are paid for time worked
- Receive paid leave (annual, sick or long service leave)
- Are not responsible for providing the materials or equipment required to do their job
- Must perform the duties of their position
- Agree to provide their personal services
- Work hours set by an agreement or award
- Are recognised as part of the payer’s business
- Take no commercial risks and cannot make a profit or los from the work performed.
In most cases an independent contractor:
- Is paid for results
- Provides all or most of the necessary materials and equipment to complete the work
- Is free to delegate work to other entities
- Has freedom in the way the work is done
- Provides services to the general public and other businesses
- Is free to accept or refuse work
- Is in a position to make a profit or loss
At times even if the worker is deemed an independent contractor, you may still be liable to pay the 9% super guarantee payments, especially if it is a contract job is labour only. WorkCover obligations may also apply in this situation.
McMahon Osborne Group and Baguley and Associates in conjunction with Gallagher Basset are running a special breakfast seminar focusing on Contractor v Employee guidelines. Limited space is available, don’t miss out!
When: 7:00am, Thursday 21st February 2013
Where: Sunbury Football Social Club, Riddell Road, Sunbury
To register contact Lynda or Kristie on 03 9744 7144 or email firstname.lastname@example.org