The lines between employee roles and contracts can be confusing at times for business owners, especially those just starting out. Recruitment expert, Kristy-Lee Johnston of Footprint Recruitment, believes in understanding the differences between a contractor and an employee, to help you determine what your business needs are. Whether you’re unsure whether to employ or outsource, Kristy-Lee highlights that contractors are an easy way to get people to help your business when you’re tight on budget or currently do not want to invest in an employee long term. Kristy-Lee lists the main roles and expectations of a contractor: – Contractors are people paid to do a project rather than paid for their time – They are free to delegate work to other people – Contractors can pay someone else to do their work for them – They are paid for the result achieved and completion – They typically provide their own tools and equipment – A contractor will in most cases have their own insurance to cover themselves – They have freedom over the way they do their work – Contractors are independent and basically run their own business The main difference, she explains, is in regards to the type of work they are completing and what they are being paid to do.
“Unfortunately the lines between what is a contractor and what is an employee are often, to be honest, very blurred, and the ATO and lots of the other agencies, are really starting to crack down on this.”
Often employers have to pay entitlements to contractors whom the ATO actually considered them deemed as employees, and Kristy-Lee urges business owners to be aware of the amount of control you have on the tasks done by a contractor and how you are paying them. In terms of employees, Kristy-Lee explains the different options, being full-time employees, part time, casual and temporary. If you are looking for a flexible option and are unsure if you require someone permanently or your business is in the beginning stages, she advises employing casuals as the best option. If you definitely know you require someone on an ongoing basis, then a full time or part time arrangement might suit you.
“The key difference between, for example, a part time and a casual employee is the entitlements that employee gets and the ability for you to chop and change their hours as you need to. So, you’re much more locked in with a full time or a part time employee in that you are required to pay for annual leave, pay for sick leave, their hours are typically fixed, so you don’t have the flexibility.”
Regardless whether you hire a contractor or an employee, Kristy-Lee says it’s important to have an appropriate contract.
“Whether it’s an employment contract, a contractor’s agreement, or an agreement with your outsource provider, which stipulates the terms and conditions of that engagement. You need to have some sort of contractor agreement in place to protect yourself and protect your business.”
Kristy-Lee recommends the ATO website, which provides tools and definitions to business owners which can be easily utilised. Kristy-Lee presents the Hire, Contract or Outsource? Course which looks at Practical ways to grow and manage your small business team. Learn more about Kristy-Lee, here.