There are a number of tests to determine the true nature of a work relationship. Generally it will either be:

  • Employment – where an employee works under a contract of service;
  • Independent contractor – where a worker works under a contract for services.

A key feature of employment is control. An independent contractor on the other hand operates their own business.

Determining whether an employment relationship or independent contractor relationship exists can be complex as there are different rules depending on the issue to be considered.

The ATO Contractor tool is useful for PAYG and super purposes. However, for employment law purposes, the case law is the important source of law.

An independent contractor relationship should be appropriately documented to reflect the agreed terms, deal with GST issues and clearly set out what is expected.

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