17 September 2023
Another key Federal Court case may have a bearing on whether you owe certain workers you engage superannuation guarantee or not.
For background, early last year the High Court made a game-changing decision in determining whether a worker is an employee or contractor at common law. It ruled that this is determined by the employment contract / agreement and whether it contains the usual indicators that tend toward a finding that a worker is an employee at common law including:
- Does the business have control over the worker (e.g. what hours they work and how they do they do the work)?
- Must the worker perform the work personally (rather than having the ability to delegate or subcontract the work to an outside party)?
- Is the worker paid like an employee (e.g. hourly rate)?
- Does the business supply the tools and equipment for the worker?
- Does the business bear the risk and liability to outside parties for any defects in the work?
Where the answer to most of those questions is yes, then the worker is an employee at common law.
Up until the High Court’s decision, lower courts were looking at how individual work arrangements were playing out in practice when answering the above questions. The High Court however ruled that you should instead look at the rights and obligations set out in the respective contract between the parties rather than how the situation plays out after the contract is signed. This is provided that the contract was not a sham.
