What is an employee?
Employees are typically subject to controls on how, where and when their work is performed. They are paid regularly and cannot pay someone else to do their work for them.
When determining if a worker is an employee, you need to look at the total relationship between the business and the worker. This includes considering a wide range of factors including:
1) Control: who has the authority to determine who, when, where and how the task is to be done, and when and how will the worker will be paid?
2) Integration: is the worker providing the services conducting a business or merely part of the operations of the employer?
3) Contract versus Practical Relationship: are the terms of the contract consistent with the practical relationship between both parties?
4) Contracts to achieve a ’given result’: does the contract focus on the ultimate result or what must be provided during the performance of the contracted task?
5) Independent Business: is the worker conducting a business on his or her own or actually participating in the business of the business operator?
6) Power to Delegate: does the worker have the power to delegate work or subcontract another person to complete the services for which the worker was engaged?
Factors that indicate a worker is an employee include, but are not limited to:
the worker is subject to the direction of the business operator or an employee of the business operator as to where, when and how work is to be performed
the worker wholly or predominately provides labour
the worker is paid on a time basis or at 'piece rates'
the worker provides services that are integral to the day-to-day operations of the business operator’s business
the worker works set hours
the worker is required to perform the work personally
the worker is entitled to sick leave, annual leave and regular payments at set rates
the business operator, not the worker, is legally responsible for the quality of the work performed by the worker.
In deciding whether a worker is an employee, it is necessary to consider the totality of the relationship between the business operator and the worker.
Payments to a worker who meets the definition of employee are liable for payroll tax.
If you are not sure about the status of a worker, contact us.
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