Contractor or Employee? Be Prepared to Justify Your Position

Contractor or employee? The issue of whether a worker is a contractor or an employee is an old one. In fact, it can be traced right back to the genesis of the labour movement. From a conceptual point of view, an independent contractor operates, and is subject to the risk of running, his or her own business. Independent contractors are engaged by businesses on a limited basis. In contrast, an employee is engaged to perform services for the betterment of the employer’s business. They generally work on a regular basis and are subject to the control of the employer.

However, several government agencies are putting businesses that engage contractors under the microscope. The agencies’ primary objective is to ensure businesses are complying with their obligations in relation to their workers, in particular, ensuring that workers are being correctly classified as employees or contractors.

Leading the charge is the Tax Office. Its 2012 Compliance Program devotes a complete section to “promoting a level-playing field for Australian Business.

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