Tool Box
Issue No. 30 - August/September 2006
Employee v contractor - more rules
by Dr David Corkindale and Dr David Corkindale
After the Independent Contractors Act was presented as a Bill to Australian Parliament on 22 June, Workplace Relations Minister Kevin Andrews said the legislation would “enshrine and protect the status of independent contractors” and encourage it as a “wholly legitimate form of work”.
The editorial in the Financial Review the next day said that protecting the “contractor army” from “unnecessary harassment by state arbitral machinery… is good policy and good politics”.
What will the Bill achieve? Are you now in a better position to engage an independent contractor rather than assuming the burden of taking on an employee?
The impact of the Bill in the real world will not be significant despite what the political theatre would have us believe.
State laws concerning taxation, workers compensation and occupational health and safety are not affected by the legislation. Thus, genuine independent contractors will continue to be deemed employees for these critical purposes.
The new legislation will, however, override State laws that purport to set remuneration, leave entitlements, hours of work and so on – traditional employee entitlements.
In other words, if the common law deems an arrangement is a genuine contract with an independent contractor, not an employee, then standard employee entitlements cannot be imposed on the arrangement via State legislation.
The Bill will have an impact in New South Wales, as the deeming provisions in that state's Industrial Relations Act 1996 will be overridden (subject to there being a constitutional connection).
Contractors affected in that State include milk vendors, cleaners, certain building workers and some drivers. The Bill will operate to a lesser extent in Queensland, South Australia and Tasmania. There are no deeming provisions in ACT, NT or Victoria.
What is the difference between an independent contractor and an employee?
The Bill itse...
