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Monday 10th October 2016
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A cautionary tale - IT contractors may not be what they seem
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In today's Workplace Bulletin:
- Why it’s important to know the differences between casual workers and contractors
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 | For many companies, when their network ‘goes down’ – work stops. Such is our reliance on technology. But often, smaller companies don’t have the need for a full-time IT professional or don’t have the financial resources to pay someone to sit around in case of an emergency. Hence, finding a good IT contractor who knows what they’re doing, but can also drop everything and rush to fix a small company’s emergency, can be the ‘holy grail’. |
As lots of businesses will attest, once you find a good IT professional, stick with them.
Sometimes contractors can be used for projects that run much longer than an unplanned emergency.
If the period of so-called engagement as a contractor is genuine in the eyes of the law and not, in fact, casual employment, then the period will not count as service for the purposes of entitlements, such as the qualifying period to access unfair dismissal laws, unpaid parental leave entitlements, notice and redundancy (and even entitlements to paid annual leave and personal/carer’s leave). |
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But as the decision in Cole v Endless Solar Operations Pty Ltd (2016) highlights, there is a risk that the legal relationship of the supposed contractor engagements is actually regular and systematic casual employment, then that period counts as service for the purposes of the Fair Work Act.
Contractor becomes casual
The Cole decision concerned an IT professional who provided his services as a sole trader (i.e. not through an interposed entity such as a service company, partnership or trust). He invoiced for his services according to an hourly rate.
However, the ‘principal’ exercised significant control over the work performed, deducted PAYG tax and made superannuation contributions.
The Fair Work Commission concluded that during the relevant period the IT worker was a casual employee and not an independent contractor.
Therefore, his period of service counted towards the qualifying period to access unfair dismissal and, when his services were terminated, the employee’s unfair dismissal claim was able to be determined.
PS: Subscribers to the Employment Law Handbook can access a newly updated chapter on independent contractors (I2), which details the differences between contractors and employees, including checklists to help you determine if your worker is a contractor. There is also a template to use for a sole trader contractor agreement, and lots more information you need if using contractors or casual workers.
Chapter C4 also explains in great detail the differences between casual and full-time employment, and the use of contractors, along with casual employee entitlements under the Fair Work Act.
Order your copy of the Employment Law Handbook on an obligation-free and put it to work for your business.
Thanks for reading,
Charles Power
Editor–in–Chief
Employment Law Practical Handbook
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Workplace Bulletin ISSN 1836-117X
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