The status of contractors

Despite all the warnings unfortunately some organisations fail to see the down side of taking on someone in the workplace on a ‘self-employed’ basis.  Sometimes engaging a contractor is acceptable practice, other times it can be classified as ‘sham contracting’ and the employer organisation in this latter case is leaving themselves open to penalties and other financial costs where the ATO gets involved.  Sham contracting is not legal; it disadvantages the employee/contractor and is deemed to give an organisation an unfair competitive advantage by engaging staff at reduced costs (e.g. superannuation, leave entitlements).

There is some very good information on the ATO website which sets out the tests to differentiate between contractors and employees.

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