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What to consider when hiring workers for your business

Written by Peter Carter • Bookkeeping Manager
Published on 15 Nov 2016

Before you hire a worker

As an employer, you are legally obligated to ensure that your employees meet certain employment standards.

 

Are they Legally allowed to work in Australia?

One thing you will need to consider from the get-go is whether or not your potential worker is allowed to work in Australia.

Naturally, Australian Citizens are allowed to work in Australia. Permanent Australian residents are also allowed to work, as well as citizens of New Zealand.

If you believe that a potential worker may be a foreign national, it is your responsibility to further investigate. You will need to find out if the worker has a visa with permission to work. In order to do this, you will need to collect their visa number to check.

 

 

Are you hiring an employee or a contractor?

One thing you will need to know if you are hiring a worker is whether you will be hiring an employee or a contractor. Here is a table with some of the main differences:

 

Employee
Contractor

Ability to Subcontract/Delegate

 

The worker can’t subcontract/delegate the work – they can’t pay someone else to do the work.

Ability to Subcontract/Delegate

 

The worker is free to subcontract/delegate the work – they can pay someone else to do the work.

Basis of payment

 

The worker is paid:

  • for the time worked
  • a price per item or activity
  • a commission

Basis of payment

 

The worker is paid for a result achieved on the quote they provided.

 

Equipment, tools, and other assets

 

  • your business provides all or most of the equipment, tools and other assets required to complete the work, or
  • the worker provides all or most of the equipment, tools and other assets required to complete the work, but your business provides them with an allowance or reimburses them for the cost of the equipment, tools and other assets.

Equipment, tools, and other assets

 

  • the worker provides all or most of the equipment, tools and other assets required to complete the work.
  • the worker does not receive an allowance or reimbursement for the cost of this equipment, tools and other assets.

Commercial risks

 

The worker takes no commercial risks. Your business is legally responsible for the work done by the worker and liable for the cost of rectifying any defect in the work.

Commercial risks

 

The worker takes commercial risks, with the worker being legally responsible for their work and liable for the cost of rectifying any defect in their work.

Control over the work

 

Your business has the right to direct the way in which the worker does their work.

Control over the work

 

The worker has freedom in the way the work is done, subject to the specific terms in any contract or agreement.

Independence

 

The worker is not operating independently of your business. They work within and are considered part of your business.

 

Independence:

 

The worker is operating their own business independently of your business. The worker performs services as specified in their contract or agreement and is free to accept or refuse additional work.

 

To get a clearer idea of who you are hiring, you can use the Employee/Contractor Decision Tool.

Click here to use the tool!

Check out another recent blog in this category.

Peter is a Certified Practicing Accountant (CPA) and has completed an Advanced Diploma in Accounting and Bachelor of Commerce (Accounting and Finance Law). Peter has worked with Fitzpatrick Group since July 2002. Authour • Peter Carter

Senior Accountant, Fitzpatrick Group

Post Categories: Small Business

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