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EMPLOYEE V’S CONTRACTOR – How can I tell the difference?

As an Employer, you may be one day faced with the question as to whether to engage the services of individual as an Employee or a Contractor.

You may even have an individual that requests to be engaged as a Contractor, rather than an Employee.

Under the Fair Work Act 2009 (Cth), the employer must not tell an employee that they are being hired as a contractor if they are really an employee.

As an employer, you cannot try and avoid adding to your overheads by engaging a contractor, if the job is really an ongoing role.

On the other hand, sometimes individuals can get pretty eager about preferring to be a contractor rather than an employee (maybe it works better for them financially or they have other reasons)

If they really should be an employee, don’t fall for it.  Protect your business and make sure that you know the rules.

In addition to civil liabilities, penalties for a breach of these obligations are up to $51,000 for a corporation and $10,200 for an individual for knowingly being involved in a contravention.

So, what should you do to make sure you keep things in a line and do not add risk to your business?

Firstly, it is really important to familiarise yourself with the common factors that contribute to determining whether a person is an employee or independent contractor and know of the legislation that applies.

The Independent Contractors Act 2006 (IC Act) and the Fair Work Act 2009 (FW Act) are the pieces of legislation that we need to refer to in this situation.

Check out the following table and make sure you have got it right!

Remember, if you are in doubt and need to talk through things to set your mind at ease, call HR Gurus and we can gladly help you.

Written by resident HR Guru Danielle Turner.

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