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Contractor or casual employee? Which are you?

contractor employee

It is the scenario that no one ever thinks will happen: you are at work when something terrible happens and you are injured through no fault of your own. If this happens you may be significantly out of pocket, as not only do you have medical expenses to contend with, but you are also without income. With any luck you have Income Protection Insurance, but if you don’t there is still hope that you will receive compensation by way of weekly benefit through Queensland’s workers’ compensation scheme (WorkCover).

Provided that your employment was a significant contributing factor to an injury, you may be entitled to statutory compensation through WorkCover. If you are classified as an ‘employee’ and the principal contractor was at fault for your injury, you might even be able to claim for more (what we call common law damages). However, if you are classified as an ‘independent contractor’, you will not qualify to receive workers’ compensation benefits. So which are you: A contractor, or a casual employee?

It is important to realise that even if you, or your employer, are of the belief that you are an independent contractor, there is a possibility that you may be considered an employee. This is because whether you are an employee or a contactor is not black and white. Instead, the question to be asked is who exercises the most control over the situation at work?

Cases like Stevens v Brodribb Sawmilling Co Ltd (1986) 160 CLR 16 and Hollis v Vabu Pty Ltd (2001) 75 AJLR 1356 have helped in developing a checklist of sorts to determine if you are an independent contractor, or a casual employee. The checklist includes:

  • How much control does the employer exercise over the work?
  • How is the worker remunerated?
  • Who provides & maintains tools and equipment?
  • Are there any obligations on the worker to provide the employer work?
  • Who determines the hours of work and holidays?
  • Is income tax deducted from the worker’s pay?
  • Is the worker able to delegate work to others?
  • How specialised is the work?
  • Is there any public representation that the worker is an employee?

You don’t have to check off the entire checklist to be considered an employee. For example, you might be contracted to work at a site, and you invoice the principal contractor for the work completed. Despite this method of remuneration, the principal contactor provides you with the tools and equipment required to do the work; they tell you what hours to work;  and all of your work is directed and overseen by the principal contractor. This might mean you are more like a casual employee than a contractor, and if you are injured, you might be entitled to claim workers’ compensation benefits.

Here are some examples to demonstrate.

Tradespeople

Tradespeople are perhaps the most legally contentious industry as many ‘contractors’ are often employees. To illustrate this, let us consider the scenarios of Bob and Kelly, two tradespeople who consider themselves to be independent contractors.

Bob is a painter who performs work for different people but always works for Jim whenever he is asked. In return for Bob’s loyalty, Jim provides all of Bob’s paints and paintbrushes as well as an apron with Jim’s logo on it. Despite the fact that Bob’s work is fairly standard, Jim refuses to let Bob’s apprentices do any of the work due as he believes that Bob is the best painter. Jim also takes any tax out of the hourly rate that he pays Bob to make tax time easier for Bob.

Kelly is a builder who likes knowing how much she will be paid in advance and always ensures that this figure is set before arriving at a job. Kelly also uses her own tools and equipment as she often performs difficult building work that not many people can do. Kelly will often get apprentices to do some work for her, especially when she wants to take a day off.

While both Bob and Kelly consider themselves contractors, the law will only recognise Bob as an employee. This is because the majority of Bob’s working situation is dictated to him by Jim, whereas Kelly is largely in control of her own work. Therefore, if they were both injured while working, only Bob would be able to make a claim for compensation with WorkCover as an ‘employee’ of Jim.

Cleaners

Most people would likely be of the opinion that if they engage a person to do cleaning, the person will be a contractor, whereas if they engage a company, the individual cleaners will be employees of the company. While this is true in most cases, it should be realised that if you engage an individual cleaner, it is possible that the law will consider them to be your employee. This is likely to be the case if you provide the equipment for the cleaner as well as paying them an hourly rate and setting their hours of work. This is similar to the example of Bob the painter. However, if the cleaner were to provide their own equipment and they were free to refuse to do cleaning work for you, it is likely that they would be considered an independent contractor.

Babysitters

Babysitting is an occupation that many people would consider not likely to result in an injury or subsequent compensation claim. However, it should be noted that babysitters could be considered employees. This means if they were injured while working, they could make a claim for compensation with WorkCover. The primary reason for this is that babysitters are usually told what times they are required to work and are under an obligation to do so. Furthermore, babysitters are rarely able to delegate work to other people due to the individual and personal nature of the job.

The question of whether you are an employee or a contractor is not as simple and as easy to discern as was once thought. Therefore, it is always wise to seek legal advice whenever you are injured at work, regardless of whether you consider yourself an employee or contractor. For further information, or if you have been injured while at work, contact our office on 13 58 28.