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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.

Employees usually

  • 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.

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