Did you know there are a number of factors that contribute to establishing the difference between an employee and an independent contractor? Its important that you understand the difference when each classification is appropriate.
On 30 July 2024 the Fair Work Ombudsman communicated that it had secured $197,000 in court-ordered penalties against a Sydney health and wellness research company for contraventions including sham contracting involving workers with disability.
The Federal Court imposed the penalties against Doll House Training Pty Ltd, which operated a business conducting research into robotics, coding and artificial intelligence and their application to the health and wellness industry.
Doll House Training breached the Fair Work Act after it terminated or threatened to terminate three workers’ employment in order to re-engage them as independent contractors to perform substantially the same work.
The company also misrepresented to the workers that they were or would be engaged as independent contractors, when in fact they continued to be employees.
The FWO investigated the company after receiving requests for assistance from the three workers, who had been engaged – through an employment services provider for people with disabilities – by Doll House Training as employees between August and October 2020.
What you need to know and do
Independent contractors and employees have different rights and obligations. This means it’s important to understand the difference between the two.
Independent contractors offer services to individuals or businesses without being employed by them. They typically set their own rates and work terms, and can serve multiple clients simultaneously. Independent contractors are also known as contractors or subcontractors.
Whether someone is an independent contractor or an employee depends on several indicators including:
We appreciate that whether a worker is an independent contractor or an employee can be complicated, and will come down to the circumstances of each working arrangement. If it is unclear whether someone is an employee or a contractor, you should get advice or check your existing contacts.
Contact our Business Advice Hotline at (08) 8300 0000 (select option 1).
