Contractor or Employee?… Know Your Obligations

Information technology, marketing, project management and engineering are just some of the roles that Australian companies are increasingly turning to contractors to fill.

Often what starts as a short term contract becomes a regular gig and before you know it, the contractor is pretty much working as a part, of full time, employee. Yet, they’re not being reported to the Australian Taxation Office (ATO) as such… so payroll tax is not being withheld and superannuation is not being paid.

While it’s easy to morph a contractor into part or full-time employment, it’s up to you as a business owner or senior manager to ensure steps are taken to treat the person accordingly. If you don’t, the risks are high – you could be penalised up to $63,000 per breach in accordance with the Fair Work Act 2009 and you will have to repay outstanding PAYG and superannuation contributions, including administrative and interest fees.

If you’re currently paying an employee as a contractor, don’t think it will go unnoticed – there are now around one million independent contractors working in Australia and the ATO is keeping a close look out on whether their legal obligations are being met as those numbers continue to rise.

Determining whether a person is a contractor or an employee is not black and white so it’s worth visiting the ATO website or speaking to an expert. At Ayers, our contractor management consultants can provide timely advice on your obligations and help to ensure your business remains compliant with current contractor management laws.

Talk to Ayers Group today.