Understanding the Difference Between Employee and Independent Contractor

This article discusses the differences between an employee and an independent contractor in the context of business law. It explores the relevant rules, rights, and responsibilities of each role, using real-life scenarios as examples. The article also highlights the importance of understanding and acting on these differences for better relationships and clarity in the workplace.

Business Law

Contents
SCENARIO 1..................................................................................................................................2
Relevant law related to case........................................................................................................2
Understanding and acting on the difference................................................................................4
SCENARIO 2..................................................................................................................................4
BBC claim against Felix and Oberlisk........................................................................................4
REFERENCES................................................................................................................................6
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SCENARIO 1
Relevant law related to case
Issue: In the present situation Jacky is being appointed by Felix and Oberlisk to work for
two to three days in their office, according to her choice. On the end of month Jacky was being
given the amount on basis of number of days worked and it was based on daily amount. No
amount was being dictated for payment of tax and Jacky has been told to submit her on quarterly
tax statement to the ATO and she can pay according to her requirements. She brings her own
computer to workplace as the Felix computer was not reliable and was quite old. Her friend told
Jacky that she was an employee but Felix and Oberlisk told her that she was independent
contractor.
Rules: In an employment contract, employee is being appointed by employer for regular
salary and wages, in which employees agree to give their services. On the other hand,
independent contractor is those who provides their services for a part of having share in profit
related to commercial business.
Indicia of Employment Relationship
 Commercial risk faced by organisation and employee is not responsible for any loss
related to poor workmanship
 Company provides the time and location for doing work
 Equipment’s related to work are also provided by organisation
 Worker can not perform same work for any other company
 If worker used their own equipment, its is reimbursed through allowance.
Indicia of a Busines
 Worker sets their own hour of work
 They also make use of their own equipment’s
 Workers also bears the risk related to commercial loss
 Worker is provided with power to advertise their services to public.
 Workers are held responsible for their own expenses.
Mode of remuneration: Employees are been paid wages for the hours work whereas independent
contractor is always being paid for the pre-decided negotiation and remuneration.
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Provision of tools and equipment’s: Independent contractor needs to maintain their own
tools and equipment’s. Moreover, employees are being provided with tools from company.
Risk and liability: An independent contractor will be liable for their mistakes and faults in
their work on the other hand employer can be held liable for the mistakes done by employee.
Tax remuneration: According to the Taxation Administration Act 1953, an employer has
the responsibility to deduct tax on the wages paid to employee. On the other hand, contractors
are paid with gross sum of money and for this they must meet their own tax liability.
All these differences can be understood by going through this case law. “VABU PTY
LIMITED v FC of T, Supreme Court of New South Wales, Court of Appeal, 06 September
1996” (Leberstein and Ruckelshaus, 2016). In this case law it has been described that person
who is been involved in delivering the courier is employee of company or independent
contractor. In employee condition they are being provided with certain wage and remuneration
and control lies in hands of company. There are also various conditions that has made think that
balances couriers are not employees. The courier providers maintain their own vehicles and
expenses related to it are also being maintained by them. They have to bear expenses related to
repairing, petrol and diesel of vehicle. If the person is being working wholly or principally for
the labour then they can be considered as employee. In this case situation court has made
decision that courier delivery person was to be taken as independent contractor and they are also
liable for mistakes made by organisation. The result declared was this and it can be applied in
similar situation.
Application: In the present case situation “VABU PTY LIMITED v FC of T, Jacky can
be considered as an employee as she is paid according to the working hours spent in workplace.
She is also being provided with a computer to work. If Felix wants to see her as independent
contractor then she must be given with a negotiated amount. They are treating her as an
employee and calling independent contractor (Fishman, 2017).
Conclusion: From the above case it has been summarised that independent owner has
subsequent sharing in profit related to commercial business. On the other hand, employees are
providing with daily wage remuneration and also equipment’s to work. In an employment
contract, employee is being appointed by employer for regular salary and wages, in which
employees agree to give their services. On the other hand, independent contractor is those who
provides their services for a part of having share in profit related to commercial business.
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Understanding and acting on the difference
It is really necessary for Jake, Felix, and Oberlisk to have knowledge related to employee
and independent contractor, this is because to maintain better relationship and also have clarity
upon what they are doing. Employees are one who are being paid daily wages and remuneration.
On the other hand, independent contractors are is those who provides their services for a part of
having share in profit related to commercial business. They also bring their own equipment’s to
work and are liable for any mistake which happens in organisation.
SCENARIO 2
BBC claim against Felix and Oberlisk
Issue: In the present case situation, Felix and Oberlisk wants an office on rent and they
have come to noticed that BBC own blocks of offices which they want to lease to tenants. BBC
has contracted with PMC in order to manage leasing shops with them. After some time, BBC
was not happy and satisfied with the services delivered by PMC, so they have terminated
agreement (Iglitzin and Robbins, 2017). Although it took BMC seven weeks to replace PMC
name. Felix and Oberlisk do not receive this information as the letter got lost in mail and also,
they have sent money to PMC which was unable to be re-located. BMC has asked Felix and
Oberlisk that they still owe them rent.
Rules: The rules are being prescribed in residential tenancies act 1997. The act has
described the content of termination and possession orders. If the ACAT makes a termination,
they must specify the date of termination and premises must be made vacant before the
prescribed date. the lessor may request the registrar to issue a warrant for the eviction of the
former tenant. The lessor can also ask tenant to terminate the agreement if the tenant has
breached out terms and conditions related to tenancy. It can also be terminated if tenants are
failed to pay the rent. In this there can also be occupancy agreements. In this the proper notice
also needs to be sent to every party which is included in the terms and conditions related to sub-
letting (McKeown, 2016). The transfer also needs to be made when the other person has an idea
related to same if such things are not being done then the contract or agreement can be
terminated. The landlords consent needs to be obtained when transferring or renting their
property. Rights and responsibilities need to be understood in this context.
Applicability: In the present situation all these rules under the act will be applied to
present situation. In this Felix and other party is not obliged to pay rent to them as BBC has
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failed to provide the information on mail and because of which they have given rent to PMC.
The mil has been lost which is their mistake and also BMC has taken about seven weeks to
remove PMC board because of which this mis-confusion has existed. It has also been analysed
that Felix will not be entitled to give rent to them and it is the duty of PMC to re-locate money
and provide it to their original owners. They must have proper knowledge related to maintain
rent and leasing agreements (Hawkins, 2019). This will assist them in reducing down the mis-
conceptions. It will also assist them in knowing about the gaps which can be find out in their
services. In section 48 of the act, they must provide change of the leasing partner within 14 days
of changing. This is being done to avoid any type of mis-confusion.
Conclusion: From the above study it has been summarised that Felix and other partner are
not obliged to pay rent again to BMC as it was mistake of them, the mail was being lost and also
they have not remove the sign board for so many weeks because of which Felix got confused and
also it is the duty of PMC to re-locate money back. All these legal rules and regulations needs to
be followed by both the parties (Dubal, 2018). Further they also need to make sure that
information related to changing in renting conditions is being given to every party. PMC also
needs to repay again to Felix, in this type of situation.
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REFERENCES
Books and Journals
McKeown, T., 2016. A consilience framework: Revealing hidden features of the independent
contractor. Journal of Management and Organization, 22(6), p.779.
Iglitzin, D. and Robbins, J.L., 2017. The City of Seattle's Ordinance Providing Collective
Bargaining Rights to Independent Contractor For-Hire Drivers: An Analysis of the
Major Legal Hurdles. Berkeley J. Emp. & Lab. L., 38, p.49.
Fishman, S., 2017. Consultant & independent contractor agreements. Nolo.
Leberstein, S. and Ruckelshaus, C., 2016. Independent Contractor vs. Employee: Why
independent contractor misclassification matters and what we can do to stop it.
Hawkins, D., 2019. LIRC Review Independent Contractor. Wisconsin Law Journal.
Dubal, V.B., 2018. Employment Law: The Employee vs. Independent Contractor
Dichotomy. The Judges' Book, 2(1), p.10.
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