When it comes time to hiring new team members or further labour into your business it is important to understand what options are available so that you can decide on the right type of worker for your business.
There are five main employment types:
- Permanent or fixed-term employees
- Casual employees
- Apprentices or trainees (employees)
- Employment agency staff – also known as labour hire
- Contractors and sub-contractors
Which type of employment option you take will depend on a number of factors including whether the additional workload is permanent or temporary, what future growth you anticipate in your business, the budget you have to employ someone and the skills and training required to carry out the role.
Having an understanding of the types of employment available will allow you to make the right decision that best meets your business needs. Below is some further information on each of the arrangements.
Hiring people as an employee means they:
- Receive payment in the form of a salary or wage
- Have their tax taken out by you as the employer
- In most cases have compulsory superannuation paid on their wages from you as the employer
- Are based at your business, work from home or can be mobile
- Can be full-time, part-time, casual, apprentice or trainee
Hiring people through an employment agency means:
- The employment agency employs that worker and you engage the agency and pay them for the use of the worker for an agreed period
- The agency pays the workers wages, superannuation, insurances and other entitlements
- The agency will charge you a commission or fee for providing the staff
- You can hire people at short notice with required skills, or for a longer-term project
- Works usually stay only short-term, meaning they take their knowledge with them and don’t have a long loyalty with your business
Contractors and Sub-contractors
Engaging contactors or independent contractors usually:
- Don’t receive wages, but instead invoice for their work
- Runs their own business and have an Australian Business Number (ABN)
- Have their own insurance
- Perform a set task and once the task is complete the engagement ends
- Can work for more than one customer and subcontract their work to others
- Provides their own equipment, tools or works from their own premises/base.
Labour in Australia is a significant cost to most business, therefore, it is important that you are hiring the right staff to enable your business to grow profitably. If you are unsure about employing staff for the first time or taking on further staff and need help understanding the financial impact on your business, please reach out to us for help.