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  • Unsure if your workers are employees or contractors?

    There are many deciding factors to determine if a worker is an employee or contractor for tax and super purposes. If you engage employees in your NFP, you need to review all the factors of the working arrangement to determine hwether they are an employee or contractor.

    The only exception is when you're either:

    • taking on an apprentice, trainee, labourer or trades assistant - these workers are always employees, never contractors.
    • hiring a company, trust or partnership to do the work - this is always a contracting relationship for tax and super purposes.

    For all other workers, you will need to ask the right questions to determine if they're an employee or contractor. Consider the following:

    • Ability to subcontract/delegate: can they pay someone else to do the work?
    • Basis of payment: are they paid based on an agreed quote they provided?
    • Equipment, tools and other assets: do they provide their own tools and equipment needed to get the job done?
    • Commercial risks: are they legally responsible for their work and liable for fixing mistakes or defects?
    • Control over the work: do they decide how the work gets done subject to specific terms in the contract or agreement?
    • Independence: do they operate their own business independently of your organisation?

    If the answer is no to some or all of these questions, it is likely that they are an employee. You will need to seek further advice if you want to treat your worker as a contractor. It's important to assess this correctly because getting it wrong will put your organisation at risk of penalties and charges.

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    Last modified: 28 Nov 2019QC 60760