Legal, Management

Perform your own sham contracting crackdown

StartupSmart /

TaskmasterThere’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.

 

Employees

  • 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.

 

Independent contractors

  • 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.

 

Stay on the right side of these laws – the penalties can be huge.

 

Get it done – today!

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