When engaging a contractor, there are a lot of considerations. Is your contractor able to complete your work in the desired timeframe? Are you better off hiring an employee? Is the worker truly a contractor, or does their work status change for different purposes under various acts of state and federal legislation? While these are all important questions to ask, top of mind should be one question: ‘what are my obligations?’ As a work provider or ‘principal’, there are numerous obligations when engaging a contractor as we will now discuss.
Statutory Obligations when Engaging a Contractor
If you’re conducting a business or undertaking, you owe a statutory obligation to take reasonably practicable steps for the safety of those in your work environment. This doesn’t just mean for employees. If you have hired contractors, you must take the steps to ensure their safety as well as that they do not pose a risk to others.
A great way to assess the safety of and risks posed by contractors, is to conduct a risk assessment. Many contractors themselves can conduct one upon reasonable request. Whether you need to ask for a risk assessment from a contractor for lower-risk work is dependant on a number of factors, including:
- the skills and expertise of the contractor;
- the nature and timing for when the work is being performed;
- potential for interaction with others; and
- the overall duration of the contractor’s services.
Engaging a Contractor: Covid Considerations
In the climate of the Covid pandemic, you also need to accommodate Covid-safety into a risk assessment of contractors. Are your contractors wearing masks and taking all the applicable precautions to keep themselves and your other staff safe? If you have a Covid-Safe Business Plan, have you incorporated procedures and policies relating to contractors entering the workplace?
Additionally, there are also contractor entitlements to be aware of as part of your obligations as a Principal. For each legislative and tax purpose, contractors are treated differently; with some being classified as an employee for some purposes even though they are treated as a contractor for others. For example, some contractors may be entitled to superannuation contributions if they are paid wholly or principally for their labour. Further while most contractors are liable for payroll tax, there are exemptions that may apply.
A Final Note on your Contractor Obligations
The best piece of advice we can give you is to be ‘on the ball’ with your obligations when engaging contractors. If you are unaware of your responsibilities, you may find yourself in big issues or face liability for not meeting your obligations. We at The Quinn Group have created an exciting free resource: ‘Everything you Need to Know about Employment and Contracting in Australia’. This book features up to date information on your obligations to contractors for each statutory and tax purpose, and can also assist you in discerning which workers are treated as contractors or employees for each respective purpose. Download your free copy now.
If you need assistance in regards to employment and contracting or would like help in this area, contact our team of experienced employment lawyers. You can submit an online enquiry or call us on +61 2 9223 9166 to arrange a teleconference or appointment. You can also order a free copy of our eBook on employment and contracting in Australia on our Free Resources page.
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