There’s a crackdown going on and contracting arrangements are in the spotlight.
The Fair Work Ombudsman, which oversees workplace laws in Australia, recently released a report which says that many employers who use contractors are actually operating sham contract arrangements.
Contractors are great for giving a business flexibility. True contractors are self-employed and so employers don’t have to pay many employment costs associated with standard workers, such as tax, annual leave and sick leave
But a true contractor can become a sham contactor when they start effectively acting as an employee.
What are the difference? The FWO site has a great description and case studies, but here are few key points.
- Perform work, under the direction and control of their employer, on an ongoing basis. Generally work standard or set hours.
- Are entitled to have superannuation contributions paid into a nominated superannuation fund by their employer.
- Have income tax deducted by their employer.
- Are generally entitled to get paid leave.
- Decide how to carry out the work and what expertise is needed to do so Bear the risk for making a profit or loss on each job.
- Generally pay their own superannuation and tax, including GST Generally have their own insurance.
- Are contracted to work for a set period of time (for example, two months), or to do a set task.
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