If your work contract (or your boss) claims that you are a ‘contractor’ but you are in fact an employee, your employer could be subject to a heavy penalty under the Fair Work Act 2009 (Cth) (‘the Act’).
The Act prohibits an employer from saying or implying that a staff member is an independent contractor when they are in fact an employee. The Act also prevents employers from dismissing their employees in order to hire them again to perform the same work as independent contractors.
Whether or not you are in fact a contractor or an employee depends upon the circumstances of each case. The relevant factors include:
- Tools, equipment and uniform – in most cases an independent contractor uses their own tools and equipment, and will not generally wear a company uniform. On the other hand, an employee generally uses the tools provided by their employer;
- Invoices and ABN – independent contractors will have an ABN and provide invoices to the company to be paid for work performed. Employees are paid on a regular basis without needing to invoice;
- Leave – employees are entitled to take paid annual, personal and long service leave, while contractors do not receive paid leave;
- Control over work tasks – an employee will generally perform work under direction, while an independent contractor will have more control over how they work;
- Work hours – unless he or she is a casual, an employee will usually have set hours, but an independent contractor will often be able to decide their hours of work; and
- Superannuation and tax – most contractors need to make their own super contributions. They must also organise the payment of tax to the ATO.
Even if one or more of these factors suggest that you could be an independent contractor, it is still possible that when all of the factors are considered, you are actually an employee. A court will look past the language used in the contract and instead examine the substance of the relationship.
If you are being paid as an independent contractor but think that you could be an employee you may wish to contact one of McDonald Murholme’s lawyers to receive legal advice.