When it comes to the law, what is an employee? And who can be a contractor?
We’ve googled to bring you the important bits from various government departments.
To follow the law, businesses need to make sure they aren’t treating employees as contractors – it’s not as simple as whether or not they have an ABN or send invoices.
Contractors work for themselves and are their own boss.
Employees work in someone else’s business. The employer controls how, where and when they do their work.
If someone is legally an employee, having a written agreement that says they are a contractor doesn’t override the employment relationship or make the worker a contractor or remove an employer’s tax and super obligations.
says business . gov. au
ATO says:
Some workers are always employees
– Apprentices
– Trainees
– Labourers
– Trades assistants
You are responsible for classifying your worker for tax and super purposes and you need to get it right. If you make an incorrect decision, you may face penalties.
To check if your worker is an employee or independent contractor, you need to review the whole working arrangement.
The critical differences between an employee and independent contractor are:
– an employee serves in your business, and performs their work as a representative of your business
– an independent contractor provides services to your business and performs work to further their own business.
It is crucial that you accurately characterise the nature of the business that you carry out. You should examine the essential activities of the business that you operate and compare them with the legal rights and obligations contained in the contract you entered into with the worker.
An employee must be a natural person. If you’ve hired a company, trust, or partnership to do the work, this is the contracting relationship for tax and super purposes. The people who do the work may be directors, partners, or employees of the contractor but they’re not your employees.
Source info can be found here:
https://business.gov.au/people/contractors/employee-or-contractor
https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/employee-or-independent-contractor/difference-between-employees-and-independent-contractors
