With the changing face of work, in an era of outsourcing, voluntary labour, internships, sub-contracting, to name a few, the lines between the employee, or other types of worker, are becoming harder to discern. According to the law, classification as an employee impacts on a range of diverse matters including someone’s ability to bring a claim for unfair dismissal, receiving superannuation guarantee payments, and management of the tax affairs of both employer and employee. There are numerous legal cases that consider how to determine whether a person is an employee or some other type of worker.

An Employee Checklist

Some of the factors to consider include:

  • Is there any written agreement evidencing the relationship, and what does that agreement state?
  • Can the employer “control” the work of the person, such as directing when and where the person will work, how the person should work, and with whom the person will work?
  • Does the person provide their own “tools of the trade” be it a drilling machine, transport van, or a laptop?
  • Does the person wear the uniform of the organisation?
  • Does the person have business cards badged with the organisation’s logo?
  • Does the person issue tax invoices for payment to them, or does the organisation pay them as part of their payroll system?
  • Does the person operate under an ABN, and or  charge, report and remit GST?
  • How are payments made to the person classified in the organisation’s accounts – for example, salary, honorarium payment, expense reimbursement, payment of a supplier’s invoice?
  • Does any payment predominantly reimburse the person for their labour, or for expenses incurred?
  • Does the organisation deduct income tax from payments made to the person?
  • Does the organisation contribute superannuation guarantee payments on behalf of the person?
  • Is the person entitled to leave (such as personal or bereavement leave), even if unpaid?
  • Does the person work only for one or two organisations, or do they obtain income from several different sources?
  • Can the person delegate their work to others, without seeking the approval of anyone else?
  • Is any intellectual property, moral rights or similar, in work created by the person owned by the person or the organisation?

The above list is not exhaustive, and the combination of several factors is considered when determining whether a person is an employee or another type of worker. Some factors will be more influential than others in deciding whether a person is an employee – for example, if the person provides an invoice for their labour, and charges, collects and remits GST for providing labour to several organisations, it is less likely that person will be an employee, versus someone who only provides labour to one organisation, and that organisation makes superannuation guarantee payments on behalf of that person.

If you would like advice on whether a particular individual is an employee or another form of a worker, or assistance in how to structure your workforce for the maximum organisational benefit, contact Faileen James for a confidential consultation.

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