Work arrangements

Are you an employee?

It is important to confirm your employment status, as independent contractors are treated very differently to employees. This is not as straightforward as it seems. Some workplaces engage people as ‘independent contractors’ rather than employees. The Australian Tax Office provides some useful information on its website, including a helpful guideline definition of an employee as a worker who is:

  • paid for time worked;
  • entitled to paid leave (for example, sick leave and annual leave);
  • not required to provide the materials or equipment required to do their job;
  • required to perform the work personally;
  • required to work hours set by an agreement or award;
  • recognised as part and parcel of the employer’s business; and
  • not able to make a profit or loss from their work.

Generally, if you are an independent contractor rather than an employee, you will:

  • not have any deductions from your pay;
  • be responsible for your own taxation and superannuation payments; and
  • not have the same protections or entitlements as employees.

As an independent contractor you should have an Australian Business Number (ABN) and you should invoice the company that has engaged you for the work that you have performed.

Disputes sometimes arise about whether a person is an employee or an independent contractor. These disputes often arise because employees have benefits and entitlements which independent contractors do not have. This includes leave entitlements, workers’ compensation and protection from unfair dismissal.

When dealing with these disputes, the courts apply a test which involves the criteria described above. Whether a court determines if a worker is an employee or an independent contractor will depend on the facts before the court.

As an example, the High Court found that a courier company was liable for injuries to a member of the public caused by the negligence of one of its bicycle couriers (see Hollis v Vabu Pty Ltd [2001] HCA 44).

The company had argued that the courier was an independent contractor. The Court decided he was in fact an employee based on the multi-factor test, which included a test for ‘control’ over the work done, to determine if the courier was an employee.

Even if a worker is called a subcontractor, the worker might still be an employee and not a subcontractor.

Some courts have found that independent contracting arrangements have been set up as a ‘sham’ or to disguise a genuine employment relationship. The Fair Work Act 2009 provides for penalties for employers who engage in such behaviour.

Apprentices and Trainees

An apprenticeship allows a person to learn a trade through a mix of on-the-job training and off-the-job study. The apprentice signs a legal training agreement (called a training contract) with the employer, that must be registered with the NSW Department of Education and Training. The employer can require a probationary (trial) period of up to three months at the commencement of the apprenticeship. Both employer and apprentice must agree before an indenture may be terminated.

Different awards have different conditions which apply to apprentices. Some awards require the employer to pay for off-the-job training or for course costs. Some employers will pay for off-the-job training or for course costs even if an award does not require them to do this.

A traineeship also combines training and work but generally takes place in non-trade jobs. The trainee undertakes on-the-job work (usually four days per week) as well as training provided by a college or other training provider (usually one day each week).

Even though the main purpose of a traineeship or apprenticeship is to provide training, the terms and conditions of employment (such issues as sick leave, pay rates, hours of work) are still governed by an award. You should become aware of your rights regarding your conditions of employment as soon as commencing the traineeship or apprenticeship. For more information about apprenticeships and traineeships, or for advice or assistance, contact State Training Services, run by the NSW Department of Education and Training.

Work Experience

Many schools and colleges encourage students to undertake unpaid work experience or ‘placements’, but these programs are not ‘trial work’. Students should only observe what other employees are doing, and not actually undertake work.

Trial Work

Although most job offers are made after an interview, some employers like to take people on for a trial period to see whether they can do the job. The employer should tell you how long the trial will last and pay you a full wage during the trial period.

Hot Tip: Work trials must be paid

Be careful if an employer wants to ‘try you out’ for a while without paying you. It is always unlawful to require an employee to work without being paid, unless the worker is a volunteer. If you are required to work without pay, you can claim your wages for up to six years from the time you did the work.

Probationary Period

A probationary period of employment provides the employer with the opportunity to assess the suitability of a new employee in the job. Employees must be paid for work done during a probationary period, and they accrue leave entitlements at the same rate as other employees.

In the NSW system of employment law, the standard period of probation is three months. The length of the probation must be agreed before commencing employment. This is set out in section 83(2)(b)of the Industrial Relations Act 1996 and Clause 6(c)(i) of the Industrial Relations (General) Regulation 2001.

In the national system, there are qualifying periods for how long you need to be employed and conditions which determine if you are protected from unfair dismissal. For more details, see Leaving work section.


Your right to be paid

If you think you are not being paid properly, you can complain to the Fair Work Ombudsman and ask that they try to recover your entitlements. FWO is a free service.

FWO has the power to enforce Commonwealth workplace laws, ensuring your employer pays you the amount you’re supposed to get.

If you think your employer is not paying your superannuation, the Australian Tax Office has processes in place to help you investigate this. For more information, visit ATO - unpaid super.

What to do if you have a complaint

  1. Check your facts. Call FWO to find out your pay, conditions and workplace rights.
  2. Talk to your employer. This might resolve the problem. If you’ve done this without success, FWO has a sample letter of demand which you can put to your employer or former employer.
  3. If you can’t approach your employer, or you’ve tried and it hasn’t worked, make a workplace complaint to FWO.

Recovery of unpaid wages

If you have not been paid the correct wages and entitlements by your employer, you can lodge a complaint with the FWO who will attempt voluntary resolution or start a full investigation.

You can also consider recovering unpaid wages through court action. One option is to take action through the Chief Industrial Magistrate’s Court or the Local Court. You will need to lodge a claim in the local court in your own name, setting out what your employer owes you. See the Local Courts website for more information.

Evidence is important in whatever option you choose to recover unpaid wages. You will need some evidence that you actually worked the time you are claiming for. This evidence could include timesheets or rosters matched to bank statements for the corresponding period to show that you were not paid. FWO can require employers to produce evidence that you do not have access to. Without timesheets, rosters, logbooks or entry records, your diary records made at the time you worked can help support your claim.

You can start action to recover your pay up to six years after you should have been paid, although it is a good idea to take action promptly.