Kate Bell reports that, in a past edition of BDAV News, we provided an overview of sham contracts. We have had some queries at the BDAV Help Desk over the last month – both from employers seeking guidance on employee/independent contractors and also recent graduates who have been offered contracts, – so we thought we would remind employers, employees and independent contractors of their responsibilities.
The following information is available on the Fair Work website:
Independent contractors run their own business. They usually negotiate their own fees and working arrangements and can work for more than one client at a time. Independent contractors are often called contractors or subcontractors.
Independent contractors have different obligations and rights to employees because they are running their own business. This means it’s important to understand the difference between the two.
There are a number of things that can help you tell the difference between an employee and a contractor. There isn’t one that makes a difference on its own – you need to consider everything together.
The factors that are indicative of an employee are that they:
The factors that are indicative of independent contractors are that they:
You need to consider all of these factors when working out whether you are an employee or an independent contractor. There won’t be one thing on its own that decides whether you are an employee or an independent contractor. Just because you have an ABN or issue invoices doesn’t automatically make you an independent contractor.
Independent contractors can also do the same type of work as an employee of the business they are doing work for and still be an independent contractor. A person won’t automatically be an employee or an independent contractor because of the type of work they do.
Sham contracting is where a person working as an employee is told they are an independent contractor when they’re not. They will also be treated like an independent contractor in some ways, for example they may be required to have an ABN and submit invoices.
Sham contracting is illegal. It’s illegal to:
Sham contracting can be done intentionally or carelessly by an employer. These types of arrangements are sometimes set up by employers who are seeking to avoid responsibility for paying legal entitlements to employees.
For more information, go to the Fairwork website, by CLICKING HERE.