The question of who is an employee and who is a contractor appears simple enough on the surface. However, in some circumstances the line between being an employee and a contractor can become blurred. It is important to know which category a person falls into because it can significantly alter their entitlements and obligations.
Employees are entitled to a range of protections and other entitlements under various Awards and the National Employment Standards. Employees are also required to be paid superannuation. For contractors, the situation is slightly different. Contractors’ entitlements are largely governed by the agreement that they have with the people who they are providing their services too. Superannuation is not generally payable.
Due to some relatively recent court decisions, determining the difference between a contractor and an employee has become a bit more complex. However, the following factors are influential in determining if the person is an employee or contractor:
- Is there a written agreement in place? (Note: just calling someone an “employee or a “contractor” alone will not be sufficient)
- Who exerts control in the relationship (e.g. who sets the working conditions and hours of work?)
- Who bears the commercial risk?
- How is the person paid? (e.g. for hours worked or by pre-arranged quote?)
- Can work be delegated or subcontracted out?
It is important to consider all these factors (along with the totality of the parties’ relationship) to ascertain whether the individual is an employee or a contractor. The most important factors are whether there is a written agreement and who exerts control in the relationship. These factors must be carefully considered.
At McNamara Law we can assist both businesses and workers with this determination. If you are unsure of your position and legal rights contact us today on 1300 285 888 to learn where you stand.
