The question of who is a ‘contractor’ (business services contract) and who is an employee (employment contract) has been tossed around in the Courts system for many decades with the definition evolving over time. It has now been clarified in legislation.
The issues around these two distinctions relate to taxation, superannuation, wages and conditions and work-related injuries.
The Government has recently legislated with the intention of clarifying the employee versus contractor distinction.
The intention is that the terms ‘employer’ and ‘employee’ would be determined by assessing the real substance, practical reality and true nature of the working relationship - by considering the ‘totality’ of the relationship.
This means that the practical aspects of the ‘engagement’ will be given greater importance than what the parties state is the relationship in the contract. The contract cannot state that the arrangement is one of principal and contractor when all the facts indicate there is actually an employment relationship.
Put into plain English - if it looks, smells and tastes like an employment relationship it cannot be called a business-contractor relationship no matter what the parties state it is.
Yes, it may still be possible to engage a contractor, but careful consideration must be given to how this is achieved – in a practical sense and a written contract.
These changes commence 26 August 2024.
If you have an existing contractor arrangement to review or if you are looking to set up a new contractor ‘engagement’, please do not hesitate to contact me.
Give me a call anytime to talk it through.
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Kind Regards
Michael Schmidt
M 0438 129 728
www.hunteremployeerelations.com.au
Industrial Relations - Employment Law - Workplace Performance
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