Understanding the Concept of a 'Common Law Employee'
Over the years, the definition of a "common law employee" has been shaped by numerous court rulings. Determining if someone is an employee or an independent contractor is a detailed process that depends heavily on specific facts and involves multiple factors.
In the landmark case of On Call Interpreters and Translators Agency Pty Ltd v FCT [2011] FCA 366 (referred to as "On Call's case"), Justice Bromberg emphasized the need for an objective assessment of the relationship between a worker and the organization benefiting from their work. This involves looking beyond the contract to how the work is actually done and how the working relationship is structured.
The approach developed by Bromberg J is practical: it checks if the worker acts as a business owner, taking entrepreneurial risks and working primarily for their own enterprise, not merely as a representative of the hiring firm. If the answer to these considerations is "yes," the worker is generally seen as an independent contractor. If not, they are likely an employee.
Key indicators used to determine if a business exists, as noted in On Call's case, include:
If you have questions about determining the status of a worker or setting up a compliant business structure, please get in touch with Tax Ideas Accountants & Advisers at +61 2 83181545 or book a time directly through our online calendar.