Managing the Workplace – Employee or Contractor
Useful for: Business, Not for Profit
In Brief
- It is important to make the distinction between employees and independent contractors, because:
- Employees come with tax and other legislative obligations on the employer that do not apply to contractors; and
- Employees, (and independent contractors if they are “workers” for the purpose of workers compensation legislation) have rights under workers compensation and fair work laws that independent contractors don’t have.
- The legal obligation to pay superannuation contributions applies to some contractors notwithstanding that they are clearly independent and not employees, and this obligation cannot be contracted out of.
- Companies and labour firm hires are not employees, but note that:
- the obligations on employers not to discriminate apply to independent contractors as well as employees and are not limited to contractors who are individuals; and
- the obligations of the employer to “workers” for the purpose of workers compensation legislation may include responsibility for persons (either individual or “working directors”) who are engaged as independent contracts but nonetheless are deemed to be workers for the purposes of the legislation.
- As the gig economy ramps up, there is ever increasing awareness of the effects of discrimination, hostility and bullying in the workplace. Organisations should put in place detailed workplace policies to deal with the behaviour of both employees/contractors and the employer to avoid disputes and give all employees and some contractors a clear pathway to make and resolve complaints.
- It will be discriminatory and therefore illegal to take “adverse action” against someone because of the person’s race, colour, sex (including intersex status), sexual preference, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin so frame interview questions carefully and limit them to enquiries that go directly to the ability of the person to do the job.
- Adverse action includes refusing to hire or dismissing a person, offering employment on different grounds than the employer is prepared to offer others and treating a person differently to other persons within the organisation
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