Are You a Contractor or an Employee? What’s the Difference, and What Are You Entitled To?

Are you working as a contractor, but are unsure whether the work you are doing actually classifies you as an employee? It’s a confusing concept, and there are so many factors to consider when you are trying to figure out whether someone is a contractor or whether they should be being treated as an employee. If you need some advice on the subject, so that you can decide whether legal action is necessary, then the information in this article will be helpful.

 What Is the Difference Between a Contractor and an Employee?

Each case is different, and it’s never one thing that can determine whether a person is a contractor or an employee – the courts will look at the entire situation and consider all the indicators to decide what someone’s position is.

A contractor runs their own business, they are their own boss and sell a service to customers, they also look after all of their own finances. In comparison, an employee works in someone else’s business, and they have a boss who controls how they do their work and pays them a wage.

 Main Differences:

  • In comparison to contractors, employees have less control over the way that work is completed.
  • Employees are paid on a regular basis, but contractors have to submit invoices to their clients to receive payment.
  • If you are a contractor you will be employed for a certain task, but employees have an ongoing work expectation.
  • Contractors determine their hours based on how long the agreed upon work will take, whereas employees work set hours.
  • Employees use equipment and tools provided by the employer, but contractors use their own.
  • As a contractor you will have to pay your own tax and superannuation, unlike employees who don’t have to handle those things.
  • A contractor does not receive paid leave, whereas employees can take sick leave or holidays and get paid.

 Should You Be Classified as an Employee?

It’s a common problem in many industries that businesses try to get ahead of the competition by paying illegitimate contractors instead of putting employees on the payroll. The Australian Tax Office has tried to eliminate this issue by adding a section to their compliance program concerning ‘promoting a level playing field for Australian business’. If you are unsure whether you are a proper independent contractor, and you are pretty sure that your employer is using your services unfairly, then you may need to seek legal advice. In this situation you might be doing the work of an employee, but not receiving any of the benefits that you are owed – therefore you might need to take legal action to set things right.

Indicators That You Are Actually an Employee:

  • Your employer has a lot of control over the way you work
  • The work is ongoing
  • You are not allowed to delegate
  • You don’t provide your services to other businesses
  • Your hours are set by the employer
  • Your employer provides the necessary equipment
  • Your employer pays for any work expenses
  • You are given paid leave or benefits
  • You are paid based on the amount of hours worked

How a Qualified Employment Lawyer Can Benefit You:

When you are experiencing problems as a contractor, and are unsure whether you should be treated as an employee instead, it can be a difficult situation to understand on your own. The courts consider a range of complicated factors, and you can’t be sure that you are in the right from just looking at the circumstances yourself. The only way to be sure that you have a right to take legal action against an employer, is if you have talked to a qualified employment lawyer in Perth. Someone with experience in these matters and a range of professional knowledge will be able to tell you outright whether your situation is worth looking into. That way, before you enter into a legal dispute, you will be sure that you have the necessary evidence.

Please note that this article is not to be used in the place of professional legal advice, it’s always recommended that you contact an experienced lawyer to discuss any legal matters.

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