It can be difficult to tell if an employee is a contractor or an employee and there’s no single thing that makes it obvious. It’s important to make sure that everyone who works within your business is employed correctly as it can have an impact on whether they get paid Superannuation, are entitled to Leave, have Tax implications. There are also penalties that will be imposed if you are found to be employing people as contractors when they are in fact, employees. Here’s an infographic that should help you understand the difference between a contractor and an employee. If you have any concerns about any of your working relationships, talk to your accountant, the Australian Taxation Office or the Fair Work Ombudsman.
Hopefully that has helped you to understand some of the differences between a contractor and an employee. Remember, that it is by no means a definitive guide and there are many nuanced factors to decide whether someone is a contractor or an employee. The ATO Employee/contractor decision tool can also help guide you through the decision making process.
