#13 Employee V Contractor: Know the difference
In previous episodes, I’ve talked a lot about building solid foundations for your business and making sure that all the necessary framework is established right from the word go. In this episode, I discuss a very important topic for when it’s time to start building your team.
Today I talk about the difference between employees and contractors. I discuss why it’s so important to understand the difference and how doing the work upfront to choose the best fit for your business will prevent you from entering into legal battles in the future.
I discuss the importance of establishing the right agreements for your business and what can go wrong if the agreements you enter into don’t line up with the conditions put in place.
Topics discussed and where to find them
[1:40]: There are subtle differences between employees and contractors but you need to understand how it impacts tax, super, insurance and avoiding penalties
[2:30]: When you decide to bring someone into your business, the first thing you need to do is work out which type of work suits your business best and record it in writing.
[3:55]: If you hire an employee, you pay them as an individual on a regular basis and take full responsibility for their work conditions.
[5:05]: If you engage an independent contractor, they work when it suits them provided that they get you the outcome required. They have their own ABN and insurance and are not entitled to paid leave.
[6:10]: A situation where someone is hired as a contractor but treated as an employee becomes complicated
[7:30]: If something goes wrong, they can make a claim against you for unpaid entitlements because they could prove to a court that they were an employee, not a contractor
[8:30]: If people are looking to do the wrong there, there is legislation and processes in place to impose penalties.
[8:45]: Make sure you understand the difference between the roles of a contractor and an employee and enter into the correct arrangement as you expand your team.