Independent Contractors and Employees

Employee or Contractor? Navigating New Legislation

The question of whether a trade engaged to work on a building site is an employee or an independent contractor has long been a subject of debate and confusion.

With the Australian government recently announcing amendments to industrial relations laws, fresh opportunities for debate and confusion have arisen.

Home builders often rely on trades to construct homes. For many builders, employing a trade is not feasible, making it necessary to engage them as independent contractors. Many builders and trades happily adopt this approach, allowing them the freedom to collaborate when needed. Good quality trades rarely encounter difficulties in finding a builder to contract them for their projects.

It appears that this new Australian government legislation will not have an adverse impact on the home building industry’s use of independent contracting. It remains important for trades to stay aware of legal requirements that may apply to them.

Contractor or Employee

Traditionally, several factors needed consideration to determine whether a worker is an employee or a contractor. Recently, the High Court of Australia ruled that the terms of the contract between a business and a worker would determine the worker’s classification. The new Commonwealth legislation is expected to overrule this decision and instead allow the practical reality of the working relationship to be considered when determining the worker’s status.

This means that factors such as the ability to subcontract, control over how and when work is performed, provision of tools and equipment by the business, and responsibility for defective or incomplete work will once again become crucial considerations.

Written Contracts

It is still considered best practice for a contractor and builder to establish a written contract and provide a clear statement of works or specifications for the work to be completed by the contractor. The written contract need not be overly detailed. For instance, HIA offers simple contracts known as the Project Trade and Period Trade Contract Conditions.

Using a written contract serves to provide evidence that a trade and builder maintain a business relationship rather than an employment arrangement. Additionally, it offers clarity to both the builder and contractor regarding expectations and rights that might otherwise be unclear without a written agreement.

LeavePlus

Victoria’s portable long service leave agency has undergone a name change from CoInvest to LeavePlus. This change is intended to clarify the agency’s purpose. It’s important to note that the change in name does not imply any alterations to the rules governing which workers are required to have portable long service leave in place.

HIA Members

HIA members may contact our Workplace Services team for further advice on the above-mentioned issues. Updates will also be available on our website and through regular emails for our members.