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TAHLIA FRANKS Senior Commercial Lawyer Jenkins Legal Services
As a business owner, it is important that you know whether the workers you have engaged are employees or independent contractors. This is because it determines workers’ entitlements and your legal obligations, including long service leave, workers compensation, the superannuation guarantee, and the deduction of tax. Determining whether a worker is an employee or independent contractor involves the “multi-factor” test, which considers a number of elements of the relationship between the business and worker. The following table is summarised from the case Abdalla v Viewdaze (2003). In this case, the court held that there are many factors that should potentially be considered when determining if a worker is an employee or independent contractor. The more factors that are met in one category, the more likely a worker will be regarded as falling within it. Please note that this table is not exhaustive, and each relationship is considered on a caseby-case basis:
Employee vs Independent Contractor Factors to be considered
Generally considered an employee
Generally considered an independent contractor
✓
Worker’s right to exercise control over the manner in which work is performed, location, and hours. Worker solely works for the employer
✓
Worker advertises services to the world at large
✓
Worker provides and maintains significant tools or equipment
✓ ✓
Worker’s ability to delegate or subcontract work to other persons Employer provides a uniform or business cards
✓
Employer deducts income tax from remuneration
✓ ✓
Worker provides invoices after completion of tasks Worker is paid holiday and sick leave
✓
The Fair Work Ombudsman’s website (www.fairwork.gov.au/find-help-for/independent-contractors) has further information on this distinction between employees and independent contractors. If you require assistance with assessing whether your workers (or prospective workers) are employees or independent contractors, please contact our office on 02 4929 2000 or email us at office@jenkinslegal.com.au.
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