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It is important for businesses who engage contractors to be mindful of the tests and indicators contained within this checklist to avoid potential legal exposure associated with sham contracting. The passage of time is no guarantee that an existing relationship is an independent contracting arrangement, nor is the intention of the parties to the agreement.
Although a person may willingly accept an appointment as a contractor and happily work as a contractor for a long period of time, on the happening of some event (such as injury at work, or termination of the contract by the principal) they may seek legal advice, and then pursue legal rights as an employee. If an employment relationship is found to exist, employers face liabilities in areas of:
No one factor is determinative of whether an employment or contractor relationship exists. Similarly, if the majority of factors fall on one side or the other of the checklist, this does not necessarily mean that a worker is either an employee or an independent contractor. Rather, the multi-factorial approach involves considering the overall nature of the relationship.
Businesses are encouraged to complete this checklist for a general indication of the type of relationship that exists and to contact Ai Group’s Workplace Advice Line on 1300 55 66 77 for advice about specific cases.
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