Employing / Recruiting Staff or Contractors

By 26 August 2013Workplace

Employing Staff or Contractors


Employers need to be aware of the state and federal laws dealing with discrimination and equal opportunity. A failure to comply with these laws will expose employers to claims by prospective employees for discrimination and adverse action.

Effective recruitment, equal opportunity and anti-discrimination policies and procedures can limit exposure to these claims, particularly when they are consistently followed.

Are you aware that a “potential employee” can claim damages from a prospective employer, in certain situations?
There are questions which a prospective employer should not ask a prospective employee. Having a predetermined list of questions will help you stay on track and avoid asking questions that can get you into trouble.

Employee v Contractor

In Australia, workers are generally described as either employees or independent contractors. It is important to get this initial determination right to fully understand the legal framework which applies to that work relationship.

Employees have set minimum entitlements (eg wages, hours of work, leave) that you cannot contract out of and are generally prohibited from working for anyone else. They are employed under an employment contract (with minimum requirements set by an enterprise agreement or relevant award and the NES).

Independent contractors tend to run their own businesses so they provide a service for a fee. Often they provide a wide range of services to a number of clients. They are generally engaged under a contract for services.

Generally, workplace relations laws are federal laws. There are specific laws that apply to employees – Fair Work Act and other laws that apply to independent contractors – Independent Contractors Act. However, there are several pieces of legislation that define “independent contractor” differently, such as workers compensation laws. There are also instances where an independent contractor will be entitled to receive superannuation, for example, if their contract is principally for labour. This means that even if a worker is an independent contractor, the person paying them may have obligations to that worker under the State work cover laws and under the Federal superannuation laws.

It is often difficult to determine whether a worker is an employee or an independent contractor and there are severe consequences for getting it wrong. If an employer tries to “dress up” a contract as an independent contractor arrangement when in fact it is an employment arrangement, the employer may be fined $51,000 for a company and $10,200 for an individual, per offence. Additionally, an employer might have to pay back pay, penalty rates, overtime, allowances etc for the duration of the work relationship.

Employers should avoid trying to torture an employment arrangement into an independent contractor arrangement.

It is illegal for an employer to:

  • Misrepresent an employment relationship, or employment offer, as an independent contracting arrangement;
  • Dismiss, or threaten to dismiss, an employee with the main purpose of re-hiring that person as an independent contractor to do substantially the same work; and
  • Knowingly make false statements to a current or former employee to persuade that person to become an independent contractor to do substantially the same work.

Are you aware that independent contractors are able to claim adverse action?

    Contact Information

    Direct Line: 1300 068 736