It is critical for business owners and operators to understand the distinction between employees and independent contractors implemented by Fair Work Commission as part of the Closing the Loop Holes Bill, effective 26 August 2024. There are a number of changes and many more ahead, which the WCA Solutions Outsourced HR and Commercial Team have been engaged to help thier clients. navigate.
Employee or Independent Contractor changes include:
- Clarified Definition: The law now provides clearer guidelines on what constitutes an independent contractor, emphasising the nature of the working relationship and the level of control the contractor has over their work, rather than written terms and conditions called the whole of relationship test.
- Sham Contracting Protections: Stronger protections are now in place to prevent sham contracting, where employees are misclassified as contractors to avoid providing entitlements like leave and superannuation. Penalties for businesses that engage in sham contracting have also increased.
- New Rights and Protections: Contractors now have better access to dispute resolution mechanisms and stronger rights against unfair dismissal if they are found to be misclassified.
- Opt-Out Provision: A worker who earns more than the contractor high income threshold ($175,000 per annum) can choose to not use the whole of relationship test to define the relationship with an organisation by following notice requirements.
Employers need to be vigilant in their classifications and ensure that they are adhering to the legal standards set forth in these changes. It is crucial for employers and business owners to get accurate advice from qualified professionals and not rely on past experience when engaging contractors in their workplace. Business owners and operators should consider the reputational and financial risks in the event they fail to get this right.
If you need support to review your commercial and contract arrangements with current and future Contractors in your workforce, WCA Solutions, Outsourced HR and Commercial Team can help. Contact WCA Solutions on (08) 9383 3293 today!
