Help! Am I a Contractor or Employee?16-February-2021 Commercial Disputes By Jamal Bakalian
You may think that you have entered into a ‘contractor relationship’ to provide your services or expertise to an individual or a Company and that therefore you are not entitled to the same protections as regular employees. The good news is that in some circumstances this is not the case.
Five Signs that you may actually be an employee and not a contractor
1. You have no freedom with respect to the work you do
- You are likely an employee if the person or business you work for controls the type of work you do and the way in which you do your work.
- On the other hand, a contractor will generally have freedom over the way in which they get the work done. The work done by a contractor is usually subject to specific terms in a contractor agreement.
2: Your ‘boss’ has exclusive control over the manner and performance of the work you do
- If you have no ability to sub-contract or delegate work to others, then it is likely you are an employee.
- Generally speaking, contractors have the ability to sub-contract or delegate their work to others. They can also work for multiple individuals or companies at the same time and they make their own hours.
- However, if the person or business you work for has exclusive control over the hours and days you work it is more than likely that you are an employee.\
3: Your ‘boss’ provides you with equipment and is responsible for maintaining that equipment
- A contractor generally provides all of their own tools, equipment and any other assets required to complete the work. They will ordinarily not receive any allowance or reimbursement for the cost of the equipment, tools or other assets.
- On the other hand, an employee will be provided with most of the equipment, tools or other assets required to complete their work.
- Grey Area: What if you have obtained all of the tools, equipment or other assets required to do the work but you have been reimbursed for the cost of these things? Not to worry, this is still a sign that you are being engaged as an employee rather than a contractor.
4: You are being paid for the time worked, a price per time or activity or a commission
- Generally, in contractor relationships, a contractor is paid for a result achieved based on the quote they provided.
- On the other hand, employees are paid for their time (for example in the form of a regular salary), or for a price per item or activity, or on a commission basis.
5: You are not liable for any commercial risk
- For employees, your ‘boss’ takes on all of the legal responsibility for the work you do, and they are liable for the cost of rectifying any defect in the work.
- On the other hand, contractors will be required to obtain their own insurance policies, including for example public liability insurance and professional indemnity insurance because they are responsible for any losses incurred as a result of their own negligence or mistake.
Why does any of this matter?
It is important at the outset of any business relationship, to ensure that both parties enter into the relationship with the same intention. If the respective intentions are different this can cause major problems in the future. For example, employees are afforded certain rights and protections such as being paid superannuation and being protected against unfair dismissal. Someone who is under a false presumption that they are a contractor may potentially miss out on protections that are safely contained in the employment law legislation and case law in New South Wales.
If you are unsure where you stand in your current arrangement with your employer or an individual or business you provide services to, speak to one of our Business & Contract lawyers today at Streeterlaw. We will guide you in the right direction with our expertise, diligence and precision. Call 02 8197 0105 today to find out more about how we can help.
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