From Workplace Bulletin 27 July 2015

The misclassification of employees as contractors has become a hot topic lately both in the media and in Courts.

Businesses hire people to carry out work every day, from secretaries to cleaners to IT professionals – and their legal status will vary. What are the essential criteria?

A ‘sham’ independent contractor arrangement is made when one or both parties know, or ought to reasonably know, that it is not a true independent contractor arrangement.

You can be liable under the Fair Work Act for civil penalties if you are unsure of the distinctions.

Businesses need to be aware of some of the key indicators that the Fair Work Ombudsman and the courts would expect including:

  • The level of control over the working relationship;
  • Tax arrangements; and
  • How the worker is paid.

Note that no single indicator will clearly determine a worker’s status. Employers (and employees!) can attempt to arrange their taxes to unlawfully claim an independent contractor relationship.

As always, if employers are unsure, they should seek legal advice. For more information on whether you have employees or contractors in the workplace contact Roy Hasda at Belperio Clark on 8212 1322 or email

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