Contractor vs Employee
There are a number of things that can help tell the difference between an employee and a contractor. There isn't one thing that makes the difference on its own - you need to consider everything together.
- do ongoing work that is controlled by their employer
- work hours they're told to work by their employer
- are not responsible for financial risk
- are entitled to superannuation from their employer
- are entitled to minimum wages
- have income tax taken out of their pay
- are paid regularly (weekly / fortnightly / monthly)
- are generally entitled to paid leave if they are permanent employees.
Independent contractors usually
- decide how to do their work and what skills they need to do it
- decide whether to employ someone else to do the work
- carry the risk of making a profit or loss
- pay their own superannuation and tax, including GST
- have their own insurance
- are contracted to work for a set time or do a set task
- decide what hours to work
- invoice for their work or get paid at the end of the contract or project
- don't get paid leave.
How do I tell the difference?
There isn't one thing that makes the difference on its own - you need to consider all the points above.
Need help with HR?