Employee V Contractor Demystified

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Employee V Contractor Demystified

Doug Balcam • January 28, 2014

Some factors that characterise an individual as an employee include:

Control over work â€" Does the organisation control the way the work is performed?

Work unable to be subcontracted â€" does the individual have the ability to subcontract or delegate work?

Commercial risk â€" Is the individual exempt from commercial risk? ie. is not responsible to rectify any defect in work or pay to have any defect rectified.

Independence â€" Does the individual work within the organisation or are they considered separate to it?

Equipment & tools â€" Is the individual supplied with the tools required to carry out their duties?

An organisation may choose to engage individuals as contractors to save on such things as payroll tax and work cover. Once deemed as an employee however these individuals may be eligible for all entitlements reserved for wage-earners. The organisation may be required to foot the bill for the individual's superannuation guarantee payments, PAYG tax and annual & sick leave (if applicable).

The good news is that the ATO has provided a calculator to help in determining the basis of an individual's engagement Click Here For Access

From the desk of Doug Balcam.

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