Employee
A domestic painter, Clarissa, works for a painting business on an ongoing basis. Clarissa and the painting business have a comprehensive written contract in place that governs their relationship. The business has told Clarissa she will be painting the interior of home units at a local retirement village for the next 4 weeks.
Independent contractor
A domestic painter, Vince, has been engaged, under a comprehensive written contract, by a local retirement village to paint the interior of some of their home units.
See the differences in their worker characteristics:
- Control over the work
- Integration
- Ability to delegate or subcontract the work
- Basis of payment
- Equipment, tools and other assets
- Commercial risks
Control over the work
Clarissa
Clarissa is contractually required to be at the retirement village from 8.00 am – 4.00 pm, Monday to Friday.
Each morning the business instructs her about what work she will carry out that day. Clarissa must do any painting work it requests.
Employee characteristic – the painting business has contractual control over the work.
Vince
Based on their agreement, Vince is responsible for preparing, priming and painting all interior walls of the specified home units in the colour the retirement village has requested. The retirement village requires Vince to complete the work during 5 January to 4 February between 7.30 am and 5.00 pm to limit disruptions, but Vince can choose how the work is undertaken. If the retirement village needs further work done, Vince can choose whether he completes the work (depending on what other jobs are booked at the time).
Independent contractor characteristic – Vince has freedom in the way the work is done, subject to the specific terms in the agreement.
Integration
Clarissa
Clarissa undertakes a core function of the painting business, being painting. She is contractually required to wear a uniform with the business's name and logo when working.
Employee characteristic – Clarissa is integrated into the painting business and is held out as an emanation of the business; she is not operating independently of the painting business.
Vince
Painting is not a core function of the retirement village's business. Vince is not required to wear a uniform while conducting the painting services suggesting any affiliation with the retirement village.
Independent contractor characteristic – Vince is operating his own business independently of the retirement village; he is not integrated in the business of the retirement village.
Ability to delegate or subcontract the work
Clarissa
Clarissa has been hired by the business to do painting work and needs to personally perform the work requested of her.
Employee characteristic – Clarissa cannot delegate or subcontract the work.
Vince
Vince does not need to complete the work himself according to the contract he has with the retirement village. He has an apprentice who will help in completing the work on the retirement village. Vince pays the apprentice weekly for the hours he works.
Independent contractor characteristic – Vince can delegate or subcontract the work.
Basis of payment
Clarissa
Clarissa is paid an hourly rate for the time she works each week.
Employee characteristic – Clarissa is paid for the time worked.
Vince
Vince will be paid the amount he quoted to paint the interior of the home units once the work is completed to the required standards and timeframe.
Independent contractor characteristic – Vince is paid for a specific result based on the quote he provided.
Equipment, tools and other assets
Clarissa
Clarissa uses the painting business's tools, equipment and materials, which the business is contractually required to provide
She drives her own ute to and from the worksite each day. The painting business requires Clarissa to have her own transport.
Employee characteristic – the contract provides the equipment, tools and assets required to complete the work. The ute is not being used to perform the work.
Vince
As specified in the contract, Vince is required to provide the tools, equipment and materials required to complete the job.
Independent contractor characteristic – Vince provides the equipment, tools and assets required to complete the work.
Commercial risks
Clarissa
If Clarissa does a sub-standard job, the painting business is responsible for the work completed. The business will tell Clarissa to fix the problem, but contractually she will:
- do the work during her standard working hours and the painting business will pay her for those hours
- use the painting business's equipment, tools and materials to rectify the poor workmanship.
Employee characteristic – Clarissa takes no commercial risks.
Vince
If the standard of work does not meet the required standards, Vince will need to rectify the poor workmanship at his own cost.
Independent contractor characteristic – Vince takes commercial risks.