What is the Difference Between an Employee and Contractor? | LegalVision


Samira’s Sweets business has really taken off. To help meet the increase in demand, she’s hired Francine as a store manager and Costa to clean the shop once a week. But are they employees or contractors? It’s important all business owners know the difference because employees and contractors have different legal rights. For example, your business will have different tax and superannuation obligations depending on whether a worker is an employee or contractor. Your business may face consequences if you don’t classify your workers correctly or disguise an employee as a contractor. To determine whether workers are employees or contractors, there are four key factors to consider. Hours Equipment Payment Entitlements Employees typically have regular and defined hours whereas contractors work the hours needed in order to deliver their services. Employees are usually given tools and equipment by their employers. On the other hand, contractors use their own tools and equipment. When it comes to pay, employees are usually paid a fixed wage based on whether they are full-time, part-time or casual. On the other hand, contractors provide quotes and invoices for their work. Employees also receive entitlements like sick leave, annual leave and workers’ compensation. Contractors, on the other hand, do not receive the same entitlements. These are just a few factors that can help Samira determine whether Francine and Costa are employees or contractors. It will also depend on your business’ particular circumstances. Looking at these factors, it’s likely that Francine is an employee, and Costa is a contractor. If you need guidance in figuring out whether your workers are employees or contractors, we can help. Contact LegalVision’s employment lawyers today.

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