What Employment Contract Should I Use - Contractor or Employee?

[simonq]

Hi, I run a small I.T. Consulting business and need to provide cover for a 24/7 call out roster as well as ad hoc support work. This would mean employing someone to be on call on a regular basis but with no guarantee of other hours, like a contractor. I have colleagues willing to do this and initially I thought that I could do this by sub-contracting but the ATO calculator categorises them as employees which means that I need to understand my employment law obligations. My understanding is that I may have problems defining them as casual employees as there would be an on call roster even though it is not guaranteed work, there will be an on call standby fee being paid.

What employment/contract options are potentially suitable?
What are my employer obligations for these options with respect to leave etc?
I understand that PAYG, super and workcover would be required for an employee but I just need to know what else there is.
Thanks

 

[John R]

Hi Simon,
Such questions generally require input from your accountant/financial advisor based on your current business structure, etc.
Has your accountant provided any suggestions?

 

[simonq]

I am running with a Ltd company as trustee for a trust. My accountant confirmed that my colleagues would have to be an employee as far as tax is concerned. I am just checking out if this would mean that I have to provide paid leave etc really. I feel that as the work is adhoc besides the on call, it fits casual employee as I cannot guarantee hours. But I want to make sure that casual is OK in this scenario. Getting paid leave for being on call seems an odd idea to me but if that is what is required, then I must be prepared.

 

[Paul Cott]

Simonq,

The difference between an employee and a contractor is very tricky sometimes.

A number of factors come into the answer to the question, such as who pays tax, who supplies uniforms, who pays super, any possibility of delegation of work, whether the workers work anywhere else, the list is endless. Unfortunately the consequences of deeming a worker to be a contractor when they are an employee in actuality, can be serious.

The ATO website has an indicative 'decision tool' which provides an answer of sorts.

Hope that helps.

 

[simonq]

Hi,
I am erring on the side of caution and have used the ATO tool. As you say, it is tricky but I am assuming that for tax and workcover purposes they are employees. It's the type of employment contract and my obligations that I am having trouble with. I am not guaranteeing work but I am guaranteeing a payment to retain the employee availability for call out on a scheduled basis.

Ad hoc work would be deemed casual and as such I do not provide leave or sick pay - this matches my colleagues' expectations as they want flexibility their side too. However, I read that being on a schedule would fail the test for casual employment. Does being paid to be on call count as scheduled work? If so how much paid leave would I have to provide?