• Basis of payment

    When working out whether a worker is an employee or contractor for tax and super purposes, one of the factors to consider is the basis of the amount you agree to pay the worker.

    Set amount per period

    This is a characteristic of an employee.

    You pay your worker a set amount per period if they're paid:

    • a set amount such as an award rate, annual salary or an hourly or weekly rate (which is paid regularly, for example weekly or monthly)
    • for the time they work.

    Example

    A supermarket trolley collection business provides trolley collection services for several small supermarkets in the local area. The business has several trolley collectors who collect the trolleys and return them to the respective supermarkets.

    The trolley collectors are paid:

    • an hourly rate (which is paid weekly)
    • for the rostered shifts they work each week.

    The trolley collectors are paid on a 'set amount per period' basis as they're paid a regular, set amount for the time they work.

    End of example

    Price per item or activity

    This is a characteristic of an employee.

    Price per item or activity can also be called 'piece' or 'piece-work' rates.

    You pay your worker a price per item or activity if they're paid:

    • a specific amount for each item or activity they produce (for example, number of research interviews conducted, quantity of fruit picked or amount of sales successfully completed)
    • for the number of items or activities they produce during a defined time period (for example, daily, weekly or monthly).

    Being paid on a commission basis is considered a price per item or activity.

    Example

    A business has a team of telemarketers who sell their products and services. The telemarketers are paid:

    • a specific amount per successful sale they make
    • for the number of successful sales they produce during their rostered shifts each week.

    The telemarketers are paid on a 'price per item or activity' basis as they are paid a specific amount for each item they produce and for the number of items they produce during a defined time period.

    End of example

    Quoted price for an agreed or pre-determined result

    This is a characteristic of a contractor.

    You pay your worker a quoted price for an agreed or pre-determined result if all the following apply:

    • the basis of the worker's job is to complete a specific task or project
    • the worker provides a quote for the specific task or project (a component of the quoted amount could be worked out on the basis of the time taken to complete the task or project)
    • you pay the worker the quoted amount only when they complete the agreed or pre-determined result of that task or project – that is, the achievement of the result is what entitles the worker to be paid.

    Sometimes progress payments may be paid once the worker has satisfactorily completed specific stages of the task or project.

    Example

    A retail business needs to have the windows of their commercial premises cleaned on a monthly basis. A window cleaner, Dana, provides a quote for the job. Based on this quote the retail business enters into a contract with Dana to complete the work.

    Each month Dana cleans the windows and submits an invoice to the retail business.

    If the windows are cleaned to the required standard, the retail business will then pay Dana the amount she quoted. It doesn't matter whether it takes Dana one hour or four hours to complete the work to the required standard; she'll only be paid the amount she quoted.

    Dana is paid for a quoted price for an agreed or pre-determined result as all of the following apply:

    • the basis of her job is to complete a specific task (cleaning the retail business's windows)
    • she provided a quote to clean the windows
    • the retail business paid Dana the quoted amount only when she finished cleaning the windows to the required standard (completing the cleaning of the windows is what entitled Dana to be paid).
    End of example

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    Last modified: 22 Feb 2016QC 33177