16 telltale signs that a worker is an independent contractor

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 Some interesting and useful information for employers to take note of:

16 telltale signs that a worker is an independent contractor
By Charles Power
Editor-in-Chief, Employment Law Practical Handbook


When you have engaged someone to perform work for your business, you need to determine whether that person is engaged as an employee or an independent contractor.

Here are 16 telltale signs that a worker is an independent contractor:

  1. They advertise their services to the world at large (e.g. in industry magazines or in the Yellow Pages).
  2. They negotiate their own fees.
  3. They take out their own insurance and indemnity policies.
  4. They provide their own tools and equipment and pay all their own business expenses.
  5. They are paid only for the work they complete.
  6. They do not work under supervision.
  7. They are not given paid leave.
  8. No tax is deducted from their payments.
  9. They use an ABN (although in past cases the Court has given this little weight).
  10. They develop goodwill (name, brand or reputation) through their work.
  11. They provide services to a number of different purchasers (although in a past decision the Court said this was no different to that of casual or part-time employee working for a small number of employers).
  12. They employ or sub-contract individuals to perform the work.
  13. They use their own standard rates and terms and conditions of trade.
  14. They are registered for GST.
  15. They have their own systems for invoicing and payment, debt collection systems and budgeting.
  16. They have their own business names or contract through an incorporated entity.
If some of the above characteristics are present but the legal status of the relationship is still unclear, you need to ask yourself the following 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.
  1. 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.

 
If you need assistance in clarifying whether a worker is an independent contractor or an employee, please contact Annette at End2end Business Solutions on  02 8977-4002