Lyne Mear, HR Advisor and Employment Advocate, Owl Industries

Is your support worker or carer a contractor or an employee? If you are managing your own care or support arrangement, this is an important question, even if your focus is to be free of mainstream service providers and be able to determine your own life. 

Although the employee or contractor question may seem simple, it is not – this is a complex matter that is governed throughout Australia by a number of pieces of legislation. The Fair Work Act 2009 (Commonwealth) and the Independent Contractors Act 2006 (Commonwealth) are two of the relevant legislative governances, as well as other legislations dealing with tax, superannuation, workplace health and safety, discrimination etc. These are laws that you, as the person or entity responsible for engaging carers or support workers, will need to be aware of and abide by.

There are a number of tests that are run to determine whether someone is an independent contractor or an employee which include (this list is not exhaustive): is the person operating a meaningful business?  This test considers: is the person operating a business that is advertised, promoted and actively worked on? Does the person have a list of rates and fees? Does the person hold all necessary and relevant insurances? Is the person in control of their business i.e. do they get to say what, when, where and how they work? Are they responsible for their mistakes and the costs such mistakes may incur? Are their fees commensurate with all costs relating to a business? As a clue for this one, it would be unlikely that paying a person $20 per hour would be sufficient to cover all business costs.

If a person is not operating a meaningful business it is highly likely that they would be deemed an employee and you, as the employer, may be liable for payment of PAYG tax, superannuation and other employment entitlements, as well as severe penalties that can be allied if there are breaches of legislation. Contract arrangements that in practicality are employment arrangements are referred to as Sham Contracting arrangements and currently in Australia are simply and bluntly put - illegal.

Similarly, engaging a carer or support worker for less than what you would need to pay under the Award is fraught with potential adverse and unwanted consequences. There are advantages and opportunities under the Social, Community, Home Care and Disability Industry Award 2010 that can be accessed, but this must be done within the compliance requirements.

Does a labour hire or third party agency, such as a service provider or host provider, take this responsibility from you?  The short answer is no, not really.  A recent High Court decision in Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] HCA 45 brought down a decision that has enormous impact on the third party relationship. Essentially, the High Court held that  the misrepresentation of contracts for services between the third parties and the employees contravened Section 357 (1) of the Fair Work Act 2009 (Cth) and that an employer can no longer avoid penalty under the section by introducing a third party into the contractual arrangement between the employer and the employee. This decision will also apply to ‘booking agents’ such as those who purport to simply be an agent that matches a potential care giver to a care receiver – the tests of meaningful business and contract for or contract of service remain.

Does this matter? I hear you say – well yes it does.  It means that you, as an employer of carers or support workers, need to know or be advised on the legalities of the employment relationship. It will not be acceptable for you to say you were not aware of the legislative requirements, if there is a dispute. The reality is that the penalties can be significant for the business, individual or entity. Penalties frequently include financial penalties; disruption to care or support provision; and the emotional toll of dealing with these issues. Families who have found themselves in these situations face unexpected challenges dealing with the legalities associated with the penalties, as well as the impact on their own security, particularly if they don’t have any insurances or have had the belief that the law, or Fair Work, didn’t apply to them.

In short – get good advice on how to set up your arrangement; seek the opportunities in the Award and employment law structure and operate within the legal frameworks so that you can enjoy your freedom and your self-determined life. There are numerous employment arrangement options available and you will need to understand the responsibilities, consequences and benefits or each.

None of this is pleasant.  However, such unpleasantness and the ensuing potential financial and emotional burden are preventable. 

About the author

Lyne Mear is an independent Employment Advocate and Human Resource Advisor. Lyne has worked all over Australia – and provided service globally – for various large and small organisations.  She has held very senior roles in some major corporations, advising CEOs on employment and industrial matters as well as human resource areas.  She also developed and managed a service for people with disabilities that continues to exist today (although it has evolved), and now specialises in dealing with and resolving some very complex and difficult employment matters. Her focus is on the prevention and resolution of issues, and to prevent long and costly (emotionally and financially) hearings and battles. She believes that with up to date and accurate knowledge of employment law requirements and a desire to make work, work – all things in the work place are achievable.

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