Employee or Contractor

Dave’s pool cleaning service has been booming with the arrival of Spring as the weather has been becoming warmer and people have begun to start using their pools again.

One day, Brad says to Dave

“We have a pool where the valve needs to be operated and that’s not within
my area of expertise. Can you bring in someone to help?”

Dave agrees and asks Maggie to find someone to help, and she finds a
potential candidate called Waldo Smith to help Brad.

Waldo comes in for a chat with Dave who asks him if he can do the job.

Waldo says “Sure, I’ll send you the invoice when I am done”.

Dave then says, “You’ll need to operate the valve and be there by 11am and make sure you wear our logo.”

Waldo agrees and carries out the job with Brad.

Two months later, after Waldo has worked for Dave on about 10 jobs, Dave receives an email from Waldo asking for his super.

Dave sends back an email saying that as he is not an employee he is not required to cover Waldo’s super.

Waldo is angry and consults with a lawyer who confirms that he will not be able to claim super from Dave as he was hired as a contractor.

Important Tips

» It is crucial to understand the distinction between an employee and contractor as it will make a big difference to the employer from a commercial aspect.
» If you hire someone who is not intended to be an employee you need to enter into a contract with them to establish that he or she is an independent contractor.
» However the facts of the relationship will override the contract as by simply calling someone a contractor does not make him or her one.

Q and A

Q : What is the distinction between a contractor and an employee?

A : An employee is a person who has a contract of service between themselves and the organisation, whilst a contractor has a contract for services. A contractor needs to establish independence such as wearing their own uniforms, maintaining their own workers compensation insurance, making their own decisions as to how the work is to be completed, etc.

Q: How can E Berman & Co Solicitors help me?
E Berman & Co Solicitors is a Chatswood law firm that has been providing quality legal services to the public since 1984. Contact our office on 9412 2493 – we’re more than happy to have a quick chat! You can also visit us on our website for more information.