Do you Engage Subcontractors? Do you engage Casuals?
If you answered yes to the above questions, then you need to know that there are law changes taking place on the August 26 2024 that may affect your business.
There are changes to the way you engage Subcontractors from August 26 2024. The current legal position to determine that a worker is an employee or subcontractor depends on the written contract between parties unless the contract itself is a sham. (Sham contracting is misrepresenting an employment arrangement as an independent contractor arrangement. Employers who engage in sham contracting can be penalised).
From the August 26 all relevant factors will be considered with no one factor necessarily determinative. Under the new test, the relationship is determined by ascertaining the real substance, practical reality and true nature of the relationship in deciding whether a worker is an employee or contractor.
Some factors to consider include whether a contractor behaves and is treated like an employee in reality, the extent of control of or the right to control the contractor, whether the contractor is provided with tools and equipment, whether uniforms are provided and worn, whether the contractor is permitted to delegate or subcontract work, and the remuneration structure – specifically, whether the contractor receives payment of a weekly wage or salary or compensation by reference to the completion of a task or project.
Cover your bases
There is a misclassification risk for employers of claims for employee entitlements and/or civil penalties for engaging in sham contracting. There is also an opt out clause for contractors who earn above the high-income threshold which is yet to be determined. Just because a contractor signs an agreement, requests or prefers to be a contractor, does not mean the arrangement isn’t a sham.
Genuine contractors are not owed employee entitlements and if employers are offering employee like benefits, the relationship should be re-evaluated.
Also from the August 26 there will also be a new definition of a casual employee. This definition is that there is no firm advance commitment to continuing and indefinite work based on agreed pattern or work. The Employer can offer and employee can accept or reject work, the employee is offered work according to the needs of employer, the relationship is described as casual and the employee is paid casual loading which is separated on payslip.
Employers may be required to offer a casual employees to convert to full time or part time employment.
Eligible employees also have a right to make a request for casual conversion. Employers may be allowed to not accept the request if there are reasonable grounds such as the employees position will not exist or the employees hours will significantly reduce.
The key differences between the current position and the new law changes are that employers no longer need to determine whether to offer casual conversion and employees can activate the new process by claiming that their employment has ceased to be casual.
All employers of casuals need to provide the Casual Employment Information Statement to each casual every 12 months and for businesses that are not small businesses, every six months. All employers need to provide the Casual Employment Information Statement to casuals upon commencement of employment.
Get the support and advice you need by joining the Master Painters Association of Victoria/Tasmania. For more information, please contact the Master Painters Association on 03 9813 5922 or email us at mail@mpav.com.au.