Employee or Contractor?
It’s an age-old question and if you’re incorrectly defined as a contractor or employee, serious implications could apply.
If you work for a business you’re entitled to leave, superannuation, workers compensation, and tax arrangements.
If you’re a contractor you’re required to manage your own superannuation, tax and workers compensation policy. In recent years the legal classification of contract workers has evolved as the ‘gig’ economy (abandonment of 9-5 work) has grown in popularity.
What constitutes an ’employee’?
In order to be deemed an employee by the Fair Work Ombudsman (FWO) in Australia, there must be an obligation for the employee to perform work when required by the employer.
In recent years an intensive investigation was undertaken in regards to Uber Drivers. After two years, FWO declared Uber Drivers were in fact independent contractors as they have control over when, where and how long they choose to perform work on any given day.
Foodora, a food delivery company however, was found to have employees due to the amount of control they have over their bicycle delivery riders. The main deciding factor for FWO in recent years has been, ‘control’ and how much control they have over workers / the requirements they have of workers.
Workers Compensation| Who Is Covered?
Employees are covered, however, coverage can also extend to include ‘sub-contractors’. If you’re an employer you need to ascertain whether your workforce is operating under a ‘contract of service’ or ‘for service’.
In order to help you discern if you do in fact have employees, we’ve prepared a list of statements below; please note that no one or combination of factors certainly defines an ’employee’, but it should serve as a likely guide.
If you answer yes to one or more of the following statements, there is a good chance that an individual is employed within a ‘contract of service’ and therefore is an employee.
- work hours which are set by the employer/ under an agreement & at the award rate
- work under (the business owner’s) control
- perform the duties of the position
- paid for the time they work
- has income tax deducted by their employer
- have agreed to provide their personal services
- receives paid leave (sick, annual, long service, and so on)
- bears no financial risk
- uses materials or equipment provided by the business to do their job
For further clarity, use the official Independent Contractors Decision Tool, designed by the Australian Government to help you better understand your own classification and the workforce.
The world of independent contractors and legal classification around workers is evolving. Gym Insurance HQ is one of Australia’s leading fitness & sports insurance specialist and we make it our job to keep up to date with the latest classifications and implications around you and your workforce.
If you would like some assistance or further clarity around employee-contractor classification, feel free to give us a call on 1300 815 344.
We also offer business, management, professional indemnity, liability & workers compensation cover tailored to you, your needs, and your industry.
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