Having recently completed seminar tours in Canada, Australia and the UK – it appears each of these countries are facing legal and taxation issues – with respect to the way health businesses engage their therapists.
The old Contractor V’s Employee discussion – is on the agenda at every seminar or event I run – regardless of which country I am speaking in.
So – it was with some interests I read this email – sent to me by Neil Fairley – co-presenter on our “The Truth About Contractor V’s Employee – What All Health Business Owners MUST Know” – DVD and CD program.
Here is what Neil said about a recent Australian case that has implications for all health business owners:
Over to Neil:
Hi Paul – this may be of interest to you and your subscribers.
I had a ring from one of the purchasers of your contractor DVD / CD program – who was concerned about having a two party agreement in place with a number of contractors.
After seeing the video they had also been on the Australian Tax Office (ATO) website – had used the assessment tool and latched on to the notion that having a delegation clause in their agreement meant they were compliantly engaging their contractors.
Essentially – the owner was of the opinion that if they allow the so called contractor – to be able to delegate their work to another therapist – then they could be classified as a contractor for taxation purposes.
This is nonsense as the ATO actually applies a suite of six tests as the minimum benchmark in determining if a relationship is that of employment or independent contracting.
Interestingly the notion of being able to delegate work, even if the worker is contractually entitled to delegate the work is only effective when it can be done without reference to the putative employer.
It is a strong indicator of independence when there is no contractual reference to the principle approving the delegation.
We pointed out the significant deficiencies in their agreement and have begun working on sorting out how the engagements should be structured.
Then – as fate would have it – they have been subjected to a Workcover investigation and their contractors have been deemed employees for the purposes of the Act.
In spite of having a two party agreement in place the following reasons were cited for WorkCover’s decision:
# In spite of the delegation clause it was effectively substitution.
# The contractors were paid a pre-determined piece rate to provide labour based services.
# The provision of tools by the independent contractor was limited.
# There was little freedom for the independent contractor to have control over when and how the work was completed.
# There was no notion of independence as the contractors had little freedom to accept and refuse work.
# The contractors did not promote their services and were integrated into the business and on the surface appeared to be employees.
It is interesting to note WorkCover’s comment:
“As with a lot of personal service industries (allied health care, massage therapists, beauty therapists, hairdressers, nail technician etc.) it is difficult for individuals to be determined as independent contractors because the nature of their work requires a close integration of their services into the business that they are working for”
WorkCover QLD also stated, they and other State Revenue offices were beginning concerted programs to look into these segments (and others) as regulatory non-compliance was considered to be rife.
What to Do About it?
Paul here again.
There is little doubt governments around the world are becoming more and more interested in tightening the whole Contractor / Employee – issue – and with good reason.
They want to have tighter control over the collection of taxes – and feel the employee model gives them the best control over tax collection.
I suggest all health business owners look more closely into their current contractor / employee relationships and make sure you are compliant.
A good place to start is with my most recent DVD /CD program – “The Truth About Contractor V’s Employee – What All Health Business Owners MUST Know“.
You can order this DVD / CD program at:
If you are an Australian health business and would like Neil and his team at Contract Right to do a FREE review your current contractor agreements you can contact them on
1300 358 431 , at the website http://www.