Norton Rose Fulbright’s ContactorCheck provides a preliminary assessment of whether your Australian worker(s) should be characterised as employees or independent contractors. The tool also points out the risks associated with incorrect characterisation.
Importance of the issue
Independent contractors comprise between 9% and 17% of the Australian workforce. The Australian Bureau of Statistics “Forms of Employment” survey November 2013 identified the number of independent contractors at just under 1 million (9%) of the total workforce, with a further 1 million (9%) other business operators. Independent Contractors Australia identifies 17 % of the Australian workforce as self-employed, which equates to 2 million persons.
There may be many workers identified and not identified in these statistics who are borderline employee/contractor. On this basis, many Australian businesses are at risk of exposing themselves to fines and penalties if they improperly appoint an independent contractor, who is actually classified as an employee at law.
There are also taxation implications for businesses who don’t get this right. The Australian Taxation Office (ATO) Corporate Plan 2014-18 states the ATO will be focussing on “reviewing employers who do not meet their pay as you go withholding and superannuation guarantee obligations, as well as employers who incorrectly treat employees as contractors.”
The Federal Government has flagged that it will introduce reforms to simplify the definition of or approaches to independent contracting. It is anticipated that this will ease the current level of confusion for business and workers. However, the issue of the legal definition, and how government agencies enforce it means this remains a prominent issue.
The Productivity Commission has also been tasked with reviewing the workplace relations framework which will consider, among other things, “appropriate scope for independent contracting”.
The tool assists companies in determining whether the workers they are engaging are correctly characterised as independent contractors (or alternatively whether they should be engaged as employees).
The benefit of using our online survey is that results are weighed to give particular importance to key characteristics of the employee v independent contractor dichotomy, synthesising the case law. The online nature means that this is kept up to date.
The outcome of completing the test is:
- an immediate screen result indicating level of risk; and
- an analysis email sent to you revealing where problems lie.
The ContractorCheck is an innovative tool which can assist you in identifying risk factors relevant to your contractors. Norton Rose Fulbright’s unique global coverage means the tool provides tailored surveys for most jurisdictions.
So, take the test! – Are your contractors genuinely independent?
This post was also contributed by Riley Gay (Lawyer)