Workplace relations legal expert Paul O’Halloran looks at the important difference between being classified an employee or an independent contractor.
It is important to carefully review contractual documents when entering into professional employment or engagement opportunities in the industry, to ensure the nature of the working arrangement is lawfully characterised.
When individuals are incorrectly classified as independent contractors, as opposed to employees, they can lose out on employment entitlements such as annual leave, personal leave, overtime, penalty rates, superannuation guarantee contributions and other benefits.
So what is the difference? There is currently no single legal definition in Australia for whether a worker is a contractor or an employee. Instead, if the true nature of a working arrangement is challenged by a worker, the courts or a tribunal will consider a ‘multi-factor’ test.
The test is based on the fundamental fact that when services are being provided by the independent contractor to another business, an independent contractor provides those services whilst working in and for his/her own business.
By contrast an employee provides personal services whilst working in and for the employer’s business.
There are six key factors you can consider to determine if what is being offered is an employment arrangement or an independent contractor consultancy arrangement:
To read more about the important differences between Contractors and Employees click here.
Paul O’Halloran is partner and accredited specialist (workplace relations) at Colin Biggers & Paisley. We would like to thank HR expert Vicki Crowe of the PGA for her contribution to our articles. This article was originally published in volume 21.3 of the ATM.