We come across a number of businesses in our travels which still grapple with whether the people who work for them are employees or subcontractors. Just because a person states they are a contractor, they have their own ABN (or ACN), a registered business name, and sends an invoice, does not always mean they are a contractor. As a business employing the person you need to look at the whole working arrangement. The Australia Tax Offices asks 6 key questions which help businesses establish whether the person is a contractor or an employee. In summary the person is considered an employee if:
- They cannot delegate or contract the work to another party
- Payment of wages is set under an industrial instrument and for a period of time
- The employer provides the necessary equipment, tools or other assets to perform the job
- They do not bear any legal risk or have to repair or pay for the repair of any defect
- The employer controls, what, where, how and when the work is to be performed.
- The person is not operating independently of your business.