I can understand during difficult economic times that business owners search for ways to reduce their costs and outgoings, but when those decisions affect others detrimentally, that’s when I get cranky.
Recently I had a phone call from a client who had been retrenched six months ago. Although this man is very skilled and talented, he has been struggling to find full-time work in his chosen profession. Tim decided to apply for a truck licence and was successful. That was the easy part. Not wanting to drive long-haul he applied for a job driving buses on city and school runs and the occasional tourist charter. The pay rate was not mentioned in the job advertisement but he knew what the basic wage was for this type of work and figured it would help to cover some living costs.
He attended the interview and everything was going well until the HR Manager asked Tim if he had an ABN. He was a bit surprised and responded that he didn’t personally but his wife ran a bookkeeping business and she had one. When he asked why an ABN was needed, Tim was told that the job would be on a contract basis. The surprise transformed into shock when he was then told that the pay was $25 per hour and as he would be engaged as a contractor the bus company would not be paying his superannuation guarantee. Tim would be responsible for his super and pay his tax.
If you or someone you know is put in this position – or is working as a contractor when they should be an employee – please visit this page on the ATO website. There is a very short decision tool here https://www.ato.gov.au/calculators-and-tools/employee-or-contractor/. Even if you do have an ABN for a company, partnership or trust, there are other tests to determine the correct role more clearly.
If you’re still not sure, give me a call. I’ll be happy to chat with you to work out how you should be engaged.
Oh, and if you’re an employer who is unsure, answer the questions in the decision tool. If you’ve made a mistake and have employees wrongly engaged as contractors, do the right thing and fix it. Otherwise, the Fair Work Ombudsman might be asking you some very difficult questions.