Misclassifying a worker as an independent contractor instead of an employee, also known as sham contracting, has been identified as a compliance risk for disability support services, particularly for in-home care services.
Sham contracting can result in underpayments and significant hardship for workers, and substantial fines for businesses and individuals.
Whether a worker is a contractor or an employee under the Fair Work Act depends on a number of factors including:
the amount of control the business has over how work is performed
who holds financial responsibility and risk
who supplies the tools and equipment
the worker’s ability to delegate or subcontract work
how hours of work are set
any expectation of work continuing indefinitely.
These factors are used in different tests depending on:
when the test is applied
the type and location of the business who engages the worker.
When checking if a worker should be classified as an employee or independent contractor, you should:
use the applicable test to determine if the worker is a contractor or an employee.
Visit Fair Work Ombudsman for more information and guidance on independent contractors.
If you supply workers to another person, regardless of whether they are independent contractors or employees, you must have a labour hire licence. If you would like to discuss an arrangement to ensure you are complying with your obligations under the Labour Hire Licensing Act 2017 (the LHL Act) please contact us or phone 1300 576 088.
