Fair Work's 2022-23 priorities

 

Article provided by corporate partner, Hillhouse Legal. 

 

The Fair Work Ombudsman has recently released its priorities for the 2022-2023 financial year.  

The Ombudsman message can be found here. 

Of interest to readers may be the Ombudsman’s attention to sham contracting and contract cleaning.

Our recent article outlined what can be done to best ensure the Ombudsman is not drawn to particular circumstances and there is compliance with the letter and the spirit of the law. 

Whether a person can be classified as an employee or a contractor has been an ongoing legal debate in Australia since at least 1930 when Yellow Cabs successfully turned their employee taxi drivers into independent contractors.

This is a complex area of the law and unfortunately there is no black and white answer.  Each case turns on its own facts and the legal position as to whether or not a person is a contractor or employee may not actually be known until a Court or Tribunal (or the relevant Government body) makes a finding on that particular matter.  To make matters worse, if it is found these people are legally designated incorrectly then it may mean the unpaid tax and superannuation or liability for damages for injuries may become our reader’s problems. 

Some of the advantages and disadvantages for contracting with an independent contractor rather than employing an employee are listed below. 

Advantages	Disadvantages
No liability for any other payments or benefits other than paying the contractor's Tax Invoice.	Not the same control over the contractor as over an employee.
No liability for leave payments or superannuation.	The contractor can work for other people.
No or reduced liability (at least at first instance) for the negligent actions of a contractor whereas there is automatic liability for an employee's negligent actions.	The directors of the contractor company may have to guarantee the performance of the contractor company.

The main risks if the contractor is an employee, as a matter of law, are:

• There would have been failure to withhold and remit PAYG taxation and Superannuation.  The Australian Taxation Office has wide ranging powers to recover those monies, interest and penalties from companies and their directors. There may also be liability under State payroll taxation laws. 
• If a contractor is injured at work and has no insurance, the contractor may then allege that they were in fact an employee and sue.  

The High Court has made it clear that greater certainty will be afforded to a business owner who has a clear written contract with the worker (being an employee or an independent contractor) which clearly outlines the rights and obligations of both parties and properly and correctly records the nature of the relationship.  

How the parties conduct themselves after the agreement is signed is now measurably less important in determining the true legal relationship.

The key takeaway for business owners
All businesses should have accurate and precise written agreements for ALL employees and independent contractors, or any third parties. The accuracy and terms of these agreements are vital in characterising the employee/contractor relationship and protecting the business.

Businesses who engage independent contractors should audit their existing agreements to reduce possible risk and ensure that any new contractors have accurate written agreements that precisely outline the nature of the relationship and the obligations of each of the parties.

Hillhouse Legal Partners can assist with any legal questions and issues arising regarding employment law, independent contractors and service agreements.  

This information is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute legal advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. Legal or other professional advice should always be sought before acting or relying on any of the information as it may not be appropriate in some particular  circumstances.
 

Workplace Relations Support can send referrals to Hillhouse on behalf of our AMA Queensland members. If you are drafting service agreements for your practice, Hillhouse Legal Partners can assist AMA Queensland members with the validity and compliance aspect of these agreements. They can also assist members who currently have a service agreement and would like advice on the terms that have been set out in them. AMA Queensland members receive their first consultation session free. If you have queries or concerns about your service agreements, please contact the Workplace Relations Team and we can organise a referral for you. Email us at workplacerelations@amaq.com.au or call (07) 3872 2222.

You can contact us via phone (07) 3872 2222 and email support workplacerelations@amaq.com.au