An overview of legal procedure & case law
A person (the employer) that employs, or proposes to employ, an individual must not represent to the individual that the contract of employment under which the individual is, or would be, employed by the employer is a contract for services under which the individual performs, or would perform, work as an independent contractor.
Subsection (1) does not apply if the employer proves that, when the representation was made, the employer:
- did not know; and
- was not reckless as to whether;
the contract was a contract of employment rather than a contract for services.
An employer cannot pretend that they are offering a person a job as an independent contractor when the position actually involves entering into an employment contract.
An employer must not tell a person whom the employer proposes to engage as an employee that the person needs to get an ABN and register themselves as their own business before they start work because they will be an independent contractor.
The provision will not apply if the employer can prove that they did not know, and were not reckless, as to whether the engagement was not meant to be as an independent contractor but as an employee.
A contract of employment is a contract between an employer and an employee which creates the employment relationship between the parties.
A contract for services is a contract between a person (the principal) and an independent contractor which creates a commercial arrangement where the independent contractor agrees to provide a specified service to the principal—no employment relationship is created.