Are your workers Employees or Independent Contractors?

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Is your worker an employee or a contractor?

Here is a simple to understand and interpret table that may help….. it came from the  Australian Taxation Office

Enjoy!


Factors to consider Employee Contractor
Control over work The employer has an implied right within industrial law to direct and control the work of an employee. The employee works in the business of the employer and the employer is free to manage their business as they see fit. A payer has a right to specify how the contracted services are to be performed. However, such control must be specified in the terms of the contract, otherwise the contractor is free to exercise their own discretion
Independence An employee performs work for the employer in accordance with an employment contract. A contractor performs services as specified in a contract with the payer and provides additional services only by agreement.
Payment Payment is often based on the period of time worked, but an employee can also work on ‘piece rates’ or commission Payment is dependent on the performance of the contract services
Commercial risks An employee generally bears no legal risks in respect of the work; since the employee works in the business of the employer, the employer is legally responsible for any work performed by the employee. A contractor bears legal risk in respect of the work. They have the potential to make a profit or loss, and must remedy any defective work at their own expense.
Ability to delegate An employee performs the work personally and generally cannot subcontract the work to someone else. Unless otherwise specified in the contract, a contractor can subcontract or delegate the work.
Tools and equipment The employer, except when specifically agreed otherwise, usually provides tools and equipment. Generally, a contractor provides their own tools and equipment

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