December 9, 2020
With Christmas fast approaching, you may be thinking about hiring people to work in your business.
Before you hire a worker, you should decide if they’re considered an employee or contractor. You can use our Employee/contractor decision tool to help guide your decision.
This will make it easier for you to provide the right entitlements for that worker. It’ll also help you meet your tax and super obligations.
You can also use our checklists to discover what you need to do to get it right during the employment process.
If this is the first time you’ve hired a worker, it may be helpful to use the Hiring employees checklist on the business.gov.au website
Employee/contractor decision tool
To check if your worker is an employee or contractor, you need to consider the whole working arrangement. There are a number of factors that need to be considered, not just the terms of the employment contract. There isn’t one factor that makes a difference on determination on its own.
You can use the employee/contractor decision tool to help you work out if your worker is an employee or contractor for tax and super purposes.
The decision tool is for use by businesses that engage and pay a worker.
The tool is not designed for:
labour hire firms
individual workers
operators or drivers deriving income in connection with ride-sourcing arrangements.
Difference between employee and contractor
It’s important to understand the essential difference between an employee and a contractor:
An employee works in your business and is part of your business.
A contractor is running their own business.
We’ve developed a table outlining six of the factors that, taken together, determine whether a worker is an employee or contractor for tax and super purposes. This information helps in understanding each contributing factor involved in the decision-making process.
Hiring employees checklist
Are you thinking about hiring someone for your business? Use our checklist for small business owners to help you meet Australian laws when hiring an employee. We’ve also included some tips that might help you through the employment process.
Tax and super when engaging an employee
When you take on an employee, you will need to ensure you meet your tax and super obligations.
If this is the first time you have hired a worker, you can use the Hiring employee’s checklist to help you meet all your obligations as an employer under Australian law.