Long Term Independent Contractors Classed as Employees

Tue, 24 Jan 2012

A number of recent court decisions declaring that independent contractors are in fact employees could trigger liabilities for superannuation and other employee entitlements for businesses.  

ACE Insurance was recently forced to pay annual leave and long service leave entitlements for five travelling agents contracted to sell policies on a commission-only payment basis. Despite the agents using their own cars and being allowed to run other businesses the Federal Court still determined they were employees. It was seen that the agents were not carrying on their own business and were generating goodwill for ACE.

These and other recent decisions in this area should sound alarm bells for businesses that use independent contractors. Employee entitlements such as superannuation, long service and annual leave may be accruing to independent contractors. The working arrangements for any contractors who have been paid for a significant period of time should be reviewed to check exposure to such liabilities.

Should you have any concerns regarding existing arrangements with individual contractors please contact Brad Ryan from our Taxation Services Division on (07) 3023 1300.

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