• Ability to subcontract/delegate

    When working out whether a worker is an employee or contractor for tax and super purposes, one of the factors to consider is whether the agreement or contract gives the worker the right to pay another person to do the work instead of them.

    The agreement or contract your business has with the worker can be written or oral.

    Worker can't subcontract/delegate the work

    This is a characteristic of an employee.

    A worker can't subcontract/delegate the work if either:

    • the contract requires them to personally do the work, or
    • where the worker cannot do the work, they can organise for another person to do it, but your business pays the other person – this is substitution, not delegation.

    Example

    A commercial cleaning business has a contract to clean several small office buildings. The business has several cleaners who do the cleaning work, including Ann and Ben.

    Ann cannot do her shift and organises Ben to cover her shift. The business pays Ben for his extra cleaning shift.

    As Ann only organised for Ben to complete her shift and did not pay him, she has not subcontracted/delegated the work.

    End of example

    Worker can subcontract/delegate the work

    This is a characteristic of a contractor.

    A worker can subcontract/delegate the work if they are contractually not required to do the work personally and can pay another person to do the work.

    Example

    A remedial massage therapist, Con, has a contract with an aged care facility to provide massage therapy to their residents.

    The written agreement between Con and the aged care facility specifies:

    • Con does not need to personally do the work
    • any suitably qualified massage therapist who has a current police clearance and the appropriate insurance can do the work.

    Con is unwell and can't work for a week. For that week:

    • Con organises for his colleague (who runs a massage business) to cover his work
    • the aged care facility still pays Con as outlined in the contracted agreement
    • Con pays his colleague who has completed the work.

    As Con was contractually not required to do the work personally and could pay another person to do the work, he was able to subcontract/delegate the work.

    End of example

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    Last modified: 14 Sep 2016QC 33176