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Contractors Or Employees

Having an ABN and sending you an invoice doesn’t make that person an independent contractor. This impacts on entitlements including superannuation and the ATO is planning a crackdown.

From Fair Work Australia

An independent contractor is someone who is self-employed and contracts their services to clients, such as other businesses. An example of an independent contractor could be a plumber who is hired by a business to fix a burst pipe. The plumber attends the business with his own tools and employees, fixes the pipe then bills the business for the cost of the job.

Although an independent contractor may perform work for a business, they are not regarded as an employee and will generally have different rights to employees.

Telling the difference between an independent contractor and an employee is not always a straightforward process. Some employers misrepresent or disguise employment relationships as independent contracting arrangements to avoid paying legal minimum rates of pay, tax and entitlements, such as annual leave and sick leave. Arrangements such as these are not genuine and may be regarded as sham contracting.

The Tax Office has advice about how to determine if workers are contractors or employees and an online decision making tool.