What are the important things to consider when hiring new members to your team? What works for you may or may not be suitable for the next person, but it is worth the discussion.
Subcontractor versus employee: what’s the difference?
Before you look to employ new staff, it is important to understand the difference between employee and subcontractor. The Australian Tax Office provides a clear line between the two
- An employee works in your business and is part of your business.
- A contractor is running their own business
FairWork Australia explains there are some complexities with ‘Sham” Contracting being a real issue in Australia. This usually happens when an employer attempts to disguise contracting arrangements to avoid responsibility for employee entitlements. There are serious penalties if the provisions of the above are to occur.
Subcontractors: Pros and Cons
You may end up paying slightly more when hiring a subbie but you are also less likely to spend as much as you will not need to pay full-time employee benefits. If your company is busy, you can temporarily hire subbies to assist with a sudden influx of work. Alternatively, you can also reduce the support you need during slower months.
In terms of Cons, at the end of the day subbies are running their own businesses, they may not be inclined to prioritise your company objectives or apply the same level of loyalty and dedication as an employee usually would. On the flip side of having to supervise less, they may work differently to how you usually do and think works best. This could cause unpredicted challenges.
Employees: Pros and Cons
Apprentices, Trainees, labourers, and assistants are always treated as employees. These workers are paid under an award or employment agreement and receive specific pay and conditions.
With hiring an employee there are no question marks in relation to the arrangement of the contract which would usually mean less contractual disagreements. An employee performs work, under the control and direction of you and the business, on a permanent basis.
Each individual situation is different and would depend on your circumstances. We suggest to seek professional advice if unsure on which way to go and on your legal obligations.