Why be an employer ?

[moyjos]

http://www.aitkenlegal.com.au/


http://www.aitkenlegal.com.au/Home/LawyerLegalAdvice-360/ContractsandEnterpriseAgreements-362/

Here are a couple of case studies on "sham contracting"

http://www.aitkenlegal.com.au/Home/...tractsandEnterpriseAgreements-362/Topics-463/


Think I will these guys a ring today. (will probably scare the #}%~ out of me )

 

[Pa1nter]

The difference there is these were distinctively sham contracting.
That is employee's one day,forced to subcontract the next with the same conditions and pay.

I don't believe we fall into this category,however the same situation can arise.

I have just had a recommendation from my accountant and I was told that work-cover and super is a grey area and to be safe it would be wise to pay super and work-cover for all subcontractors whether a company,trust or sole trader and reduce their payments accordingly.

 

[Macca]

The difference there is these were distinctively sham contracting.
That is employee's one day,forced to subcontract the next with the same conditions and pay.

I don't believe we fall into this category,however the same situation can arise.

I have just had a recommendation from my accountant and I was told that work-cover and super is a grey area and to be safe it would be wise to pay super and work-cover for all subcontractors whether a company,trust or sole trader and reduce their payments accordingly.

It seems to me that there must be a point where the obligations stop and the logical point would be if the subcontractor is a company.

They must leave some way for people to be able to start their own businesses and grow. In the past it has been via a subcontract period, gather equipment and expertise, take on more contracts, increase staff etc....... all logical steps to becoming a successful business.

If they kill this path then we will soon be in the hands of those that have monopolies with no little guys kicking off to keep them honest

 

[Pa1nter]

I was just talking to one of my subcontractors who is a company and if I have to pay him 9% super and he has to pay himself 9% (as a director) that's compulsory 18% super right there,

Not to mention he has an income protection policy and I have to pay his workers comp,and if he made a claim,which one does he use?they wont both pay,most likely none will pay cause they will expect the other to pay

This is really gonna mess the country up

Chances are they will pick on the smaller companies first because they cant protect themselves (They will win of course) and then work their way up to the bigger companies.

 

[NBS]

I'm also looking at the ruling I know the last time I did look there was a difference in ATO and Workcover from memory WC had 5 or 6 more rules than the ATO. I think ATO had 23 rulings and WC had 28 ruling.

It was madness and a nightmare to ensure all people doing my work WERE true contractors.

I don't see any major change for me at them moment other than another level of paperwork, check there has been no changes that will effect me and a bit of time with accountant to ensure I am set up correctly.

One of the problems is once you find a good reliable contractor you are not encouraged to keep using them unless you can cover all the extra costs that go with it.

So much for the government committee set up to streamline red tape.

Brian

 

[Rolf Latham]

So much for the government committee set up to streamline red tape.

Brian

Oxymoron perhaps ??

ta
rolf

 

[moyjos]

Well... I rang aitken law and spoke to Lisa Aitken herself.

I was up front and asked what it would cost for me to come in and have a chat... she asked a few questions and she has decided that anyone we hire for the "out in the public" work is an employee.. (Because I expect them to be neat and tidy, clean up after the job and present themselves as "us" )

If that same guy works in the factory, where my rules are a little more lenient - they can let off a bit more steam inside - everybody knows a hammer hits harder to square up a job if you call it choice names and I don't care if they don't have a branded shirt for fabrication work. They MAY be able to be contractors.

Was on the phone for just on 40 mins and she said it was a freebie !! What a lawyer that gives free advice?? never heard of such a thing.

So hubby and I need to have a damn good think about what we want to do. We are planning on winding this business down over the next 3-5 years, so that may just be fast tracked. I really do NOT want the hassle of staff again

 

[dan c]

I was just talking to one of my subcontractors who is a company and if I have to pay him 9% super and he has to pay himself 9% (as a director) that's compulsory 18% super right there,

If you make a contract with a company, trust or partnership, this is deemed to be a genuine contract situation and no superannuation needs to be paid.

Super is only payable (maybe) if the contract is with an individual, and they can't sub-contract the work.

 

[Pa1nter]

If you make a contract with a company, trust or partnership, this is deemed to be a genuine contract situation and no superannuation needs to be paid.

Super is only payable (maybe) if the contract is with an individual, and they can't sub-contract the work.

I wish that it was this simple

 

[willair]

Chances are they will pick on the smaller companies first because they cant protect themselves (They will win of course) and then work their way up to the bigger companies.

And in the end it will be back too where it all started,it will only come under one item,Total Control,maybe those who are on sit-down money may not be that stupid after all,..

 

[redwing]

here's a couple more examples


If you engage the services of independent contractors, don't forget that there are a number of circumstances in which they may still need to be treated as an employee.

These include:

1. Superannuation

Even if a worker is a contractor, legislation may require that you still make Superannuation Guarantee contributions on their behalf. Superannuation Guarantee obligations will arise if the contract between you and the worker is wholly or principally for labour performed.

A contract is wholly or principally for labour performed if the value of the labour component of the contract is more than 50% of the value of the contract as a whole.

However, if an outside party is sending invoices to your business for your worker's services, then Superannuation Guarantee obligations are unlikely to arise. The issue will generally arise only where the worker is a sole trader providing tax invoices bearing an ABN for their services.

Your contract with the worker will not be wholly or principally for their labour if one or both of the following applies:
• the contract allows the worker to engage someone else to perform the contracted services, even if this right to delegate the work is not actually exercised; and/or
• the contract provides for payment of a fixed sum on satisfactory completion of the project, as opposed to an amount paid by reference to hours worked. That fee can be calculated according to an estimate of the time and labour cost that is necessary to complete the project.

2. WorkCover

Generally, workers' compensation legislation in each State or Territory requires you to pay workers' compensation premiums in respect of any 'worker'.

Obviously, an employee is a worker. But in some circumstances, the legislation also treats the contractor as a worker. Even if your worker is classified as a contractor, legislation may require you to ensure the worker is covered by a workers' compensation policy.


3. Payroll Tax

Payroll tax is generally payable with respect to 'wages', and in some circumstances, payments to contractors are treated as wages for the purposes of payroll tax.

For example, if a contractor only has one client other than you in a financial year, it is likely that you will have to treat the contractor the same as your employees and include the payments you make to the contractor in your payroll tax return.

4. Health and Safety

You are responsible of the health and safety of all workers under your management and control, regardless of whether they are classed as employees or independent contractors.

5. Discrimination

You may be held liable if a worker engages in acts of sexual harassment or discrimination. This is regardless of whether they are your contractor or your employee.

As an employer or principal, you will be held 'vicariously' liable for acts occurring in your workplace even if you had nothing to do with the acts in question. This liability will exist unless you can demonstrate that you took reasonable precautions to prevent the acts from occurring.

source

 

[dan c]

I wish that it was this simple

That's from the ATO website, and the employee/contractor decision tool. I also spoke to someone from the ATO, and they confirmed this.

That's only for superannuation and withholding of tax. As others have pointed out, workcover and payroll tax have different definitions.

 

[redwing]

here's another one from the same site

14 characteristics of a contractor relationship

To help you tell the difference between an employee and an independent contractor, here are 14 tell-tale characteristics of a contractor relationship:

1. You sourced the worker from an advertisement in an industry magazine, or following a successful tender application.

2. The worker operates an independent business.

3. Payment under the contract is conditional upon satisfactory completion of work.

4. The worker has their own insurance and indemnity policies.

5. The worker provides their own tools and equipment and pays all business expenses.

6. The worker does not work under supervision.

7. The worker provides services regularly to a number of different principals.

8. The worker is not given paid leave.

9. No tax is deducted from payments made to the worker.

10. The worker is only paid for the work they complete.

11. The worker can contract out some of the services without seeking permission from the principal.

12. The worker has flexible working hours.

13. The worker does not wear a uniform or use equipment with the principal's branding or logo.

14. The worker advertises their own business to the world at large.

If you are still unsure after going through the above characteristics, ask yourself the following two questions:

1. Is the worker running their own business or enterprise with independence in the conduct of their own operation?

If so, the worker is a contractor.

2. Is the worker operating as a representative of the principal's business with little or no independence in the conduct of their operation?

If so, the worker is an employee.

 

[dan c]

I've been playing with the employee contractor decision tool and the decision seems to hinge on whether the contractor/employee has the right to engage someone else to do the work for them.

They can be paid for activity (rather than hours worked) provide their own tools and be responsible for rectifying errors (all signs they are a contractor), and the decision tool says they are an employee IF they can not sub contract the work. Once you change the sub contract quesion from no to yes, it says they are a contractor.

I wonder how many people engaged as contractors have the right to sub-contract the work? I would say not many.

 

[Macca]

If there was ever any doubt as to the madness and incompetence this part really makes it clear

<<5. Discrimination

You may be held liable if a worker engages in acts of sexual harassment or discrimination. This is regardless of whether they are your contractor or your employee.

As an employer or principal, you will be held 'vicariously' liable for acts occurring in your workplace even if you had nothing to do with the acts in question. This liability will exist unless you can demonstrate that you took reasonable precautions to prevent the acts from occurring.>>

I can hire a contractor who is completely independent of me to do a job for me and if he/she should discriminate against someone I am now deemed to be guilty until proven innocent.

I fear we no longer live in a democracy, we have lost our personal rights somewhere along the way, I for one would vote for any party promising to reinstate our freedom at the next election

 

[Peter 14.7]

I've been playing with the employee contractor decision tool and the decision seems to hinge on whether the contractor/employee has the right to engage someone else to do the work for them.

They can be paid for activity (rather than hours worked) provide their own tools and be responsible for rectifying errors (all signs they are a contractor), and the decision tool says they are an employee IF they can not sub contract the work. Once you change the sub contract quesion from no to yes, it says they are a contractor.

I wonder how many people engaged as contractors have the right to sub-contract the work? I would say not many.

Except then the subcontractors subcontractor would be an employee!

The whole thing is set up to encourage unionisation of the workforce. You cannot easily unionise subbies.

No members equals no money to engage essential service like female escorts... sorry personal assistants and holidays overseas.... sorry ...fact finding missions.:roll eyes:

All a joke.

Peter 14.7

 

[dan c]

Except then the subcontractors subcontractor would be an employee!

True, but that would be the responsibility of the contractor (the one hired by you)

The whole thing is set up to encourage unionisation of the workforce. You cannot easily unionise subbies.

That may be a part of it, but I think it's more to do with collecting tax revenue, workcover, payroll tax etc. Employees are more limited in what they can and can't claim against their income,compared to true contractors.

 

[Aaron_C]

That may be a part of it, but I think it's more to do with collecting tax revenue, workcover, payroll tax etc. Employees are more limited in what they can and can't claim against their income,compared to true contractors.

I think dan has identified the crux of it. The entire income tax system is predicated on employees paying their PAYG tax upfront, and only claiming a refund afterwards. If everyone was self-employed - then the ATO would have a severe cashflow crisis and would have to spend half its time collecting and chasing on debts from businesses. I certainly don't pay the ATO early, better in my pocket than theirs

 

[willair]

If everyone was self-employed - then the ATO would have a severe cashflow crisis and would have to spend half its time collecting and chasing on debts from businesses.

That's the problem unskilled Unions don't like self-employed from my experience,, they want total control,when ever i used work on union run sites you would always have some 1.2 mts high unskilled union upstart always cause problems,but we had a way around that "I" would just say ring the boss give him them business card and say ring ,then walk away too the dunny block and they would ring me up not knowing that they were just talking to me,tell them something they don't understand and i'll be in there within 24 hours,or say one ex Vic painter and docker union heavies name,that came up too QLD in the early 1980's to run the unskilled unions
when things got too hot for him in Victoria,gotta love the Labor Party..

 

[Aaron_C]

That's the problem unskilled Unions don't like self-employed from my experience,, they want total control,when ever i used work on union run sites you would always have some 1.2 mts high unskilled union upstart always cause problems,but we had a way around that "I" would just say ring the boss give him them business card and say ring ,then walk away too the dunny block and they would ring me up not knowing that they were just talking to me,tell them something they don't understand and i'll be in there within 24 hours,or say one ex Vic painter and docker union heavies name,that came up too QLD in the early 1980's to run the unskilled unions
when things got too hot for him in Victoria,gotta love the Labor Party..

This is a common theme from those who have worked with Unions on construction sites - and this is why the Union (and the ALP) dismantled the ABCC because union corruption, bribes and extortion are rife in the construction sector. Now they are getting away with murder again.