Incorrectly engaging a person as an independent contractor instead of an employee is unlawful and can have significant financial consequences.
In the building and construction industry, there is a common misconception that engaging a person “on an ABN” means that the person is a genuine independent contractor. The question of whether a person is a contractor or employee (at law) is complex, and involves a consideration of numerous elements of the relationship, and how these operate in practice. The question of whether a person has an ABN is not a relevant consideration.
An employment relationship is more likely to exist where the worker:
A contractor relationship is more likely to exist where the worker:
There can be significant consequences for incorrectly engaging a person as a contractor, including financial penalties for breaching the “sham contracting” provisions in the Fair Work Act 2009. There can also be liability arising from:
We can provide assistance to your business to minimise the risk arising from the engagement of independent contractors. This includes helping to identify the true nature of the relationship and preparing a written contract to minimise risks. We can also assist with the defence of claims or investigations where it is alleged that a contractor is or was an employee.
Whether it be reviewing, developing or negotiating your enterprise agreement we can help.
We offer a free evaluations to members to assist your business to comply with workplace laws.