Legal update

Is my worker an employee or Headline a contractor?

By Chris Cooper, CANEGROWERS Legal Advisor

This is a fundamental question that every grower who has people working on their farm needs to answer. Similarly, anyone employed by a business should be aware of their employment status.

EMPLOYEE

• Employees are individuals who work for someone else’s business. • Employees may be employed full time, part time or casually. • Employees are entitled to be paid wages and other employment benefits and entitlements such as annual leave, personal and careers leave. INDEPENDENT CONTRACTORS

• Contractors are individuals or entities that work for themselves, in their own business, and provide services to other businesses. • Contractors are paid fees for services without any leave or wage or other entitlements.

WHO CARES?

Very different obligations, including legal and financial, apply depending on whether the worker is an employee or independent contractor. EMPLOYER’S OBLIGATION TO EMPLOYEES

• Pay wages and all other entitlements under the Fair Work regime. • Pay amounts to Australian Taxation Office. • Pay superannuation entitlements. • Pay workers’ compensation premium.

• Generally, businesses that are employers are legally responsible or liable for acts of employees caused or performed in course of employment. • Work health and safety obligations. EMPLOYER’S OBLIGATIONS TO CONTRACTORS

• Pay fee for service. • Generally, businesses are not legally liable for the acts of independent contractors. • Reduced work health and safety obligations. CONSEQUENCES

If any employer makes a mistake in the proper categorisation of a worker as an employee or contractor, there are substantial penalties and liabilities that can be imposed. There have been many prominent media reports recently about wage theft. Many of these cases arise because the employer thought the worker was a contractor and not an employee, so the employer wasn’t paying employee entitlements or superannuation payments. STEPS TO TAKE

1. If you want to engage a contractor and not an employee, the safest way is to engage a company because a company entity cannot be employed. 2. Look at the whole relationship and how much control you want over the worker’s day-to-day tasks. The more control you have, the more it looks like the worker is working in

your business and not their own and therefore more likely an employee. 3. Discuss and document the arrangement with the worker.

Remember, just because you and the worker might both agree that the worker is a contractor and not an employee, that self-assessment is not binding on Fair Work, the

Australia Taxation Office or other authorities.

4. Some workers might strongly prefer to be contractors, but sometimes there is a falling out in the relationship and workers have been known to change their minds and seek back payment for employment benefits when they preferred to be contractors initially. 5. Ensure all relevant insurances are held by the employer business. Depending on the circumstances it may be wise to have public liability and WorkCover insurance. 6. Take advice and look at the information available from Fair

Work, Australian Taxation Office and your own professional advisers.

(This article contains general advice only. The particular facts and circumstances of each case always need to be taken into account). FURTHER INFORMATION

Any CANEGROWERS member wishing to discuss any aspect of legal matters should contact their local CANEGROWERS district office or call me on Free Call 1800 177 159, for free initial legal advice. 