Employee VS Subcontractor
This is one tricky topic. I have seen a few business owners get lost in the ATO’s jargon as to what constitutes an employee to a subcontractor. I have tried to break it down below.
- work under your (the business owner's) control;
- paid for the time they work;
- receive paid leave (sick, annual, long service, and so on);
- use materials or equipment provided by the business to do their job;
- perform the duties of the position;
- have agreed to provide their personal services;
- work hours which are set by an agreement or an award;
- are recognized as part and parcel of the business; and
- Take no commercial risk and cannot make a profit or loss from the work performed.
- Are they paid for results achieved?
- Do they provide all or most of the necessary materials and equipment to complete the job?
- Are they free to delegate work to others (including subcontractors)?
- Do they have freedom in the way the work is done?
- Do they provide services to the general public and other businesses?
- Are they free to accept or refuse work?
- Are they in a position to make a profit or suffer a loss
Of course you should seek advice from your tax accountant before making any sudden changes to the way you pay people.