When working out whether a worker is an employee or an independent contractor based on the legal rights and obligations (that is, the terms) in the contract you entered into with your worker, one factor to consider is whether your business or the worker is responsible for providing the equipment, tools and other assets (such as heavy machinery or motor vehicles) needed to do the work.
When considering this factor, you don't include any:
- equipment, tools and other assets that are of incidental use and therefore not strictly needed to do the work (for example, a hammer used by a real estate agent to put up a 'for sale' sign)
- motor vehicles that are exclusively used for travelling to and from work.
Your business is responsible for providing the equipment, tools and other assets
This is a characteristic of an employee.
Your business is responsible for providing the equipment, tools and other assets if either your:
- business provides all or most of the equipment, tools and other assets needed to do the work
- worker provides all or most of the equipment, tools and other assets needed to do the work, but your business provides the worker with an allowance or reimburses them for the cost of the equipment, tools and other assets.
Example: employer provides the tools
Henry works at a golf club as a greenkeeper. He's responsible for the upkeep of the golf course greens, tees, fairways, rough and surrounds, and general landscaping maintenance.
Under the contract between Henry and the golf club, the club is responsible for providing all necessary tools, equipment and other assets for Henry to complete his work.
However, Henry does bring along a few inexpensive hand tools of his own, as he prefers using them. The golf club provides all the other equipment, tools and assets to complete the work, including:
- greens mower
- tractor
- slasher
- spreader
- line trimmer.
Although Henry provides some tools, the golf club is contractually responsible for providing the equipment, tools or other assets needed for Henry to do the work.
End of exampleWorker is responsible for providing the equipment, tools and other assets
This is a characteristic of an independent contractor.
The worker is considered responsible for providing the equipment, tools and other assets if they:
- provide all or most of the equipment, tools and other assets needed to do the work
- don't receive an allowance or reimbursement for the cost of the equipment, tools and other assets.
Example: worker provides the tools
Jeff is a garden maintenance worker who has a contract with a business to maintain its lawns and gardens on a fortnightly basis. The contract requires Jeff to use his own tools, equipment and assets to complete his work.
As required by the contract, Jeff provides all his own equipment and tools to complete the job, including a:
- lawnmower
- line trimmer
- blower vac
- hedge trimmer
- garden hand tools.
He also has his own vehicle and trailer to transport the equipment and tools to the business's premises.
Each fortnight while the lawns and gardens are maintained to the agreed standard, the business pays Jeff the amount specified in the contract (it doesn't provide any other payments to Jeff).
Jeff is responsible for providing the equipment, tools and other assets as he:
- is required to provide all his own equipment, tools and vehicle to complete the job
- doesn't receive an allowance or reimbursement from the business.