1. What's in a Name? A closer look at the difference between “employees” and “independent contractors”
Webinar to the Dietitians Association of Australia
Rima Murray, Senior Associate Allens
Tarsha Gavin, Associate Allens
11 June 2015

2. What we will cover
Criteria to differentiate “independent contractor” from “employee”
Implications for tax, leave and termination
Raising disputes
Restraints of trade

3. Employee vs Independent Contractor
Contract of Service VS
Contract for Services

4. Relevant Factors Does worker advertise own services?
Does worker perform work for others?
Regular wages / salary or pay at completion of task?
Degree of control?
Separate place of work?
NB: no single determinative factor
Term used to describe worker
Ability to delegate / subcontract?
Own equipment (e.g scales)/ own handouts?
Expectation of ongoing work?
Regular hours of work?

5. Employee Bears no financial risk Regular salary / wages
Equipment / material usually provided by employer (or reimbursed)
No inherent right to subcontract
Regular salary / wages
Performs work under direction and control of employer
Ongoing expectation of work
Prescribed hours / location

6. Independent Contractor
Engaged for specific task
High degree of discretion / flexibility / control
Bears risk of loss / profit
Provides own equipment / incurs expenses
Paid for work completed / contract performed
Ability to delegate / subcontract
Likely to advertise services to public
Sets own hours

7. Other key differences Independent Contractor Employee No paid leave
No parental leave
No redundancy pay
Pays own superannuation*
Pays own tax and GST
Often own insurance
* In some instances a company engaging an independent contractor may be required to pay superannuation on behalf of the independent contractor.
Employee
Paid leave
Parental leave
Redundancy pay
Superannuation contributions paid by employer
Income tax deducted by employer

8. Termination of relationship
Independent Contractor:
contract comes to an end; or
in accordance with contract
Employee:
notice (except summary dismissal)

9. Causes of action Independent Contractor Employee Unfair Dismissal
X (if termination at end of contract)
 (if employee meets eligibility requirements)
Adverse Action 
Discrimination / Harassment
Bullying

10. Sham Arrangements Employer must not:
Misrepresent employment relationship as independent contractor relationship
Dismiss / threaten to dismiss employee to re- engage as independent contractor
Make false statements to persuade individual to enter into independent contracting relationship

11. Sham Arrangements Penalties
Maximum penalty - $51,000 / contravention
Injunctions
Reinstatement / compensation

12. Disputes re classification
ATO
Fair Work Ombudsman
Litigation (can sometimes be costly / lengthy)
Backpay of annual leave/long service leave

13. Restraints of trade
Can apply to both employees and independent contractors
Unreasonable restraints unenforceable
Must protect legitimate business interests
Customer connections
Confidential information
Stable workforce

14. Types of restraints Non-competition provisions
Non-solicitation provisions
Non-dealing provisions

15. Enforceability of restraints
Necessity
Reasonableness:
Activities
Geographical reach
Duration
Certainty (not ambiguous)
Opportunity to obtain legal advice

16. © 2015 Allens. Reproduced by Dietitians Association of Australia with the license of Allens.
Allens is an independent partnership operating in alliance with Linklaters LLP.
The information provided in this presentation is not intended to be comprehensive and does not constitute and must not be relied on as legal advice.