When is a contractor not a contractor?

Mistaking an employee for a contractor can devastate any business, with fines of up to A$63,000 per breach.

There’s nothing temporary about it: contract work is on the rise. A recent survey by PwC reveals that 46 per cent of global human resources (HR) professionals believe contractors or temporary workers will comprise at least 20 per cent of their workforce by 2022. The sentiment is strongest in China, where half of the survey’s respondents believe traditional employment is being chipped away by an emerging preference among workers for greater freedoms, entrepreneurship and specialist skills.

In Australia, 23 per cent of employers say they now regularly engage contract or temporary staff – with another 44 per cent employing them for special projects – according to the 2017 Hays Salary Guide. The Australian Bureau of Statistics estimates there are one million independent contractors currently working in Australia, representing about 9 per cent of the workforce – an increase of 2 per cent in six years.

As businesses look for lower overheads and greater flexibility, contracting appears to be a great solution. In theory, employers can hire the resources they need, when they need them, without taking on the associated infrastructure and taxation overheads required for permanent employees. In Australia, that means employers of contract workers don’t need to meet pay-as-you-go (PAYG) tax, payroll tax, fringe benefits tax, workers’ compensation insurance or the superannuation guarantee.

It sounds like a no-brainer, but there’s much more to consider than just whether a contractor should be issued an invitation to the staff Christmas party.

To view the full In The Black article, click here.

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