Employees vs. Contractors – do you know the difference?

Employees vs. Contractors – do you know the difference?

  • Published on Sunday, February 14, 2016

It’s important as an employer or business owner that you know the difference between an employee and a contractor and which will be best for your company.

Employees work in your business and are part of your organisation.

They are usually:

  • given ongoing work and hours
  • work hours that are set by their employer
  • paid superannuation by their employer
  • entitled to minimum wages and to be paid regularly
  • entitled to paid leave if they are permanent employees
  • not responsible for financial risk (e.g. supplier invoices)

Contractors run their own business and provide services to your organisation.

They usually:

  • work for a set time/task and decide the hours they work
  • pay their own insurance, superannuation and tax
  • do not get paid leave
  • negotiate how much they are paid for their work
  • invoice for their work or get paid at the end of the task/project

Your worker may be considered a contractor for taxation purposes, but an employee for other purposes which is why it’s important to consider each situation and be clear on your workers’ roles to avoid any confusion.

Need more help to work out whether someone is a contractor or employee and which one will be best for your business?