This chapter is an extract from LegalVision’s Online Business Manual. Download the full guide here.

Although your team may begin with just you, you’ll soon bring on board team members. When growing your team, the first thing you need to consider is whether they are an employee or contractor. Taxation, superannuation and employment law obligations differ for each and this issue can get business owners into trouble. Some factors that determine whether a worker is a contractor or employee are set out below.

An Employee or Contractor?

  • Control: Does the hirer have the right to exercise detailed control over the way work is performed or does the worker have full autonomy?
  • Advertising the business: Is the worker required to wear a uniform or display material that associates them with the hirer’s business?
  • Provision and maintenance of significant tools and equipment: Is the worker required to supply and maintain any tools or equipment (especially if expensive)
  • Right to delegate or subcontract work: Is the worker free to work for others at the same time? Can the worker subcontract the work or delegate work to others?
  • Income taxation deductions: Is taxation deducted by the hirer from the worker’s pay?
  • Remuneration: Is the worker paid according to task completion, rather than receiving wages based on time worked?

Sham Contracting

You can’t call a worker a contractor while treating them as an employee (also known as ‘sham contracting’). There are possible ATO and Fair Work penalties if you mischaracterise workers to avoid employment law obligations. If you are unsure, use the employee/contractor decision tool on the ATO’s website to determine whether your team member is an employee or a contractor.

Employment Agreements

Employees all need employment agreements. Your employment agreement should address a number of standard issues including:

  • intellectual property;
  • non-compete provisions; and
  • leave requirements.

Contractor Agreements

Contractors need contractor agreements. Your contractor agreement should address a number of standard issues including:

  • scope and delivery of the project;
  • ownership and use of intellectual property;
  • non-compete provisions; and
  • confidentiality.

If you have any questions about how you can grow your team or whether your new hire is a contractor or an employee, you can contact LegalVision’s online business lawyers by calling 1300 544 755 or filling out the form on this page.

The Ultimate Guide to Starting an Online Business

It’s now easier than ever to start a business online. But growing and sustaining an online business requires a great deal of attention and planning.

This How to Start an Online Business Manual covers all the essential topics you need to know about starting your online business.

The publication also includes eight case studies featuring leading Australian businesses and online influencers.

Download Now

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. For just $199 per month, membership unlocks unlimited lawyer consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2019 NewLaw Firm of the Year - Australian Law Awards 2019 NewLaw Firm of the Year - Australian Law Awards
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer