Contractor

What is the Difference Between Employees and Contractors, and Why Does it Matter?

by Advice

There are key differences between employees and contractors, and as with most things, there’s pros & cons for both. Understanding the obligations for your choices in business is key to your success, so let’s get clear on the type of people you work with in your business.

The Critical Differences Between an Employee and an Independent Contractor.

An employee works in your business and performs their role as a representative of your business. An independent contractor will provide a service TO your business and performs work to further their own personal business.

An employee represents your business, where as a contractor represents themselves and is more self-interested.

There is More Flexibility with Contractors.

An independent contractor has more control to choose how, when and where their work is done, they represent themselves and often work for a fixed fee. A contractor has the ability to subcontract or delegate to others and is responsible for providing their own tools and equipment, as well as bearing the commercial risk for any costs arising out of injury or defect in their work.

Where there is risk there can be reward. The flexibility can be very appealing but obviously for business owners an employee is likely going to be more reliable in the long term.

For Superannuation, a Contractor Can, and Often is, Still Considered an Employee…

Often the choice to lean towards putting on contractors instead of employees is driven by the desire to avoid paying their superannuation. Unfortunately, that is a bit of a misguided notion.

Even if someone is labelled as an independent contractor, have their own ABN, and work infrequently for short periods, they can still be considered an employee for super purposes.

This is When You Still Need to Pay Your Contractor Superannuation.

You still need to pay your contractors superannuation in these circumstances:

  • if the worker works under a contract that is wholly or principally for their labour
  • if they are a sportsperson, artist or entertainer paid to perform, present, or participate in any music, play, dance, entertainment, sport, display or promotional activity, or similar activity
  • if the person is paid to provide services in connection with any performance, presentation or participation in these activities
  • if the person is paid to perform services related to the making of a film, tape, disc, television or radio broadcast.

If a person’s contract is mainly for labour, super will most likely need to be paid, so as an employer you would need to be negotiating rates of pay to contractors while taking this into account.

Workers Compensation Also Needs to be Considered When Looking at Contractors.

As an employer you need to provide workers compensation for workers and ‘deemed workers’, but not for contractors, sub-contractors and labour-hire workers. Important to note that some contractors are deemed workers for compensation and insurance purposes. Here is an online link that can be used to check what your workers would be classified as.

Payroll Tax

Payroll Tax only applies if the total wages, contractor payments and superannuation exceeds the annual threshold of $1.3 million. Generally, payments by employers that relate to work performed by contractors are liable for payroll tax unless an exemption applies. Any part of the payments which are for materials, tools or equipment are not liable for payroll tax.

Employees and Contractors Can Both be Very Complicated to Negotiate.

Each situation is unique and can vary from situation to situation. There is no easy way around the obligations of business ownership and sometimes a legal specialist can be a good idea if there is any doubt.

Bearing in mind, an accountant who specialises in working with business owners (*us*) can make it a whole lot easier.

It’s Important You Understand Your Obligations as an Employer.

Knowing the difference between employees and contractors is crucial to your decision-making in the hiring process. Jumping into a scenario in an attempt to cut corners without the right advice can lead to unwanted consequences.

We are Accountants for Growing Businesses in Brisbane and Beyond.

We work exclusively with business owners who are serious about growing their businesses.

Diving into the world of employees and contractors? Talk to a business accountant who can handle all of your business’s financial obligations.

Family-leave

Paid Family & Domestic Violence Leave From August 1

by Advice

Paid family and domestic violence leave (FDVL) kicked off for large employers on February 1. Now it’s time for small businesses to get on board.

Ten days’ paid family and domestic violence is a significant new entitlement for employees.

The obligation to provide paid family and domestic violence leave applies:

  • from 1 February 2023, for employees of businesses that are not small businesses (i.e. on 1 February 2023, the business employed 15 or more employees); and
  • from 1 August 2023, for employees of small businesses (i.e. on 1 February 2023, the business employed fewer than 15 employees).

What is Family and Domestic Violence leave?

Paid family or domestic violence leave will be available in the event that the employee needs to do something to deal with the impact of the family and domestic violence and it is impractical for them to do it outside their ordinary hours of work.

For example, making arrangements for their safety or the safety of a family member (including relocation), attending urgent court hearings, or accessing police services.

Family and domestic violence – What is it?

A family or domestic violence incident is defined as violent, threatening, or abusive behaviour directed at an employee by a former or current intimate partner, a household member, or a close relative in an effort to coerce or control them.

A close relative of an employee is considered the following:

  • Spouse or former spouse
  • Current or former de facto partner
  • Child
  • Parent/s
  • Grandparent
  • Grandchild
  • Sibling
  • Family members of an employee’s current or former partner, including siblings, children, parents, and grandparents
  • Individuals who are related to the employee according to Aboriginal or Torres Strait Islander kinship rules.

The following types of behaviour are examples of family and domestic violence:

  • Financial abuse
  • Stalking
  • Emotional abuse
  • Sexual assault
  • Physical violence
  • Controlling behaviour

When does Family and Domestic Violence Leave apply?

Employees (including part-time and casual employees) can take this paid leave if they need to do something to deal with the impact of family and domestic violence. For example:

  • Making arrangements for their safety or the safety of a close relative (including relocation)
  • Attending court hearings
  • Accessing police services
  • Attending counselling sessions, medical appointments, financial consultations, or legal consultations.

Who is entitled to Paid Family and Domestic Violence Leave?

Employees covered by the Fair Work System, including full-time, part-time, and casual employees, are entitled to ten days of paid leave for domestic and family violence. For every 12 months of employment, employees will receive ten days paid for family and domestic violence; the entitlement is provided up-front at the start of each 12-month period. The leave does not accumulate like annual leave.

Employees who started employment on or after 1 February 2023 are entitled to the full 10 days from their starting day.

How is pay calculated for Family and Domestic Violence Leave?

The type of employment determines the amount of pay for paid family and domestic violence leave.

Both part-time and full-time employees are entitled to receive full pay for the hours they would have worked if they did not need to take family or domestic violence leave.

Casual employees are paid their full pay rate for the hours they were scheduled to work if they need to take leave due to family or domestic violence.

Family and Domestic Violence Leave pay slip data and record keeping

The employer must ensure that any information regarding paid family and domestic violence leave balances or leave taken is not included in payslips. This safety measure aims to reduce any risk for employees that need to use their family and domestic violence leave.

Employers must keep a record of all employees’ leave balances and leave taken for Family and Domestic Violence.

What are the employee’s obligations when taking Paid Family and Domestic Violence Leave?

As soon as practicably possible, the employee should notify their employer they are taking family and domestic violence leave and how long they expect to be away from work. The notification can be after the employee has taken the leave.

Employers may request evidence that shows the leave taken was to deal with the impact of family or domestic violence and that it was not feasible to manage this outside of working hours. Evidence can be documentation issued by the police, a court of law, family support services or a statutory declaration.

The employer can only use the information provided to determine whether the employee is entitled to family and domestic violence leave.

Key takeaways:

The Paid Family and Domestic Violence Leave legislation key points:

  • On 1 February 2023, the new paid family and domestic violence leave is available to employees for businesses with at least 15 employees or over.
  • The start date for paid family and domestic violence leave for employers with less than 15 employees is 1 August 2023.
  • Over 12 months, full-time, part-time, and casual employees can take up to 10 days of paid family and domestic violence leave.
  • The leave is pro-rated for part-time or casual employees.
  • No matter how many hours employees work per week, they are entitled to 10 days of family and domestic violence leave.
  • Employees who started employment on or after 1 February 2023 are entitled to the full 10 days from their starting day.
  • The paid family and domestic violence leave renewal is on the employee’s start date anniversary, not on the 1 February every year.
  • The 10-day entitlement does not accumulate year after year, like annual leave.
  • An employee’s pay slip must not contain any information regarding paid family and domestic violence leave as of 1 February 2023.

For more information on paid family and domestic violence leave, visit fairwork.gov.au.

A8-Group-2

Changes for Business From 1 July, 2023

by Advice

From 1st July 2023, there are a number of key changes to come into effect which will impact your business and employees.

SUPER GUARANTEE RATE RISE 

Don’t forget that the super guarantee rate increases to 11% from 1 July 2023. 

This means you need to calculate super contributions at 11% for your eligible workers for payments of salary and wages you make from this date. 

Your super contributions for the current quarter (ending 30 June, due by 28 July 2023) are still calculated at the 10.5% rate for payments of salary and wages made prior to 1 July.  

WAGES GO UP 

Wage increases kick in on 1 July, following a ruling from the Fair Work Commission. 

For employees who aren’t covered by an award, the minimum wage will go up from 1 July to $882.80 per week, or $23.23 per hour, and will apply from the first full pay period starting on or after 1 July 2023. 

For employees covered by an award, minimum award wages will increase by 5.75%, also applying to the first full pay period starting on or after 1 July 2023.  

PAID PARENTAL LEAVE CHANGES 

From 1 July, amendments to the Paid Parental Leave Scheme will come into effect.  

Notably, the Dad and Partner Pay (DAPP) scheme, which currently provides up to two weeks of paid leave, will now be combined with the 18-week paid parental leave scheme. This means eligible parent couples or single parents can share their 20 weeks of leave – aimed at greater gender equity in parental caring responsibilities. 

There are other changes, too, such as the whole 20 weeks of leave of instalments can be received flexibly in multiple blocks within 24 months of the child’s birth or adoption date, removing the previous requirement of 12 weeks in one continuous period. 

Also, note that employees now have greater rights to request an additional 12 months of leave (24 in total) – and employers need to show reasonable business grounds on which to refuse.

DOMESTIC VIOLENCE LEAVE INTRODUCED 

This entitlement has been in place since 1 February 2023 for employers with 15 or more employees.  For smaller employers who employ less than 15 employees, this entitlement will operate from 1 August 2023. 

Employees will be entitled to 10 days of paid family and domestic violence leave (FDVL) per year.  

Paid family and domestic violence leave is quite a sensitive topic, and there need to be procedures in place – for everything from how the HR or manager handles requests to the privacy issues around how it gets recorded on a pay slip.  

PENSION AGE AND ELIGIBILITY INCREASES 

For those businesses employing older Australians, it’s worth noting that from 1 July, the pension age will be raised to 67 for those born on or after 1 January 1957. 

Not only that but asset and income eligibility tests will also be revamped, which means singles can earn $204 a fortnight and couples $360 a fortnight, before losing their full pension.  

ENERGY BILL RELIEF ON ITS WAY 

With soaring power bills contributing significantly to business operating costs, $650 in bill relief is on its way from July for small businesses. 

To be eligible, your business must be on a separately metered business tariff with your electricity retailer and your annual consumption must be less than 100MWh.  If you run a business from home, you probably won’t qualify. 

You don’t need to do anything. If you are eligible, you will receive bill relief on your electricity bills from 1 July 2023.  

Note these are Queensland numbers.  There are different thresholds and bill relief for each state. 

If you require further information on any of these measures, please do not hesitate to contact our office on (07) 3367 3366.