Employees v contractors v volunteers - understanding the spectrum October 2014 Facilitator: Kate Fazio Presenter: Liz Morgan PO Box 16013 Melbourne VIC Tel +61 3 8636 4400 Fax +61 3 8636 4455 justiceconnect.org.au/nfplaw About Justice Connect Not-for-profit Law service • Website: www.justiceconnect.org.au/nfplaw • Phone: 1800 706 220 (Victoria) 02 9114 1793 (NSW) • Our services: • Legal information factsheets on common legal issues www.nfplaw.org.au • Legal training for community groups • Law reform work aimed at reducing unnecessary NFP regulation • Phone advice to answer quick legal questions** • Referral to a lawyer to assist with complex legal issue** ** These are very limited services, available for eligible organisations only: see www.justiceconnect.org.au/nfpeligibility Justice Connect | NFP Law 2 Introduction Justice Connect | NFP Law Introduction “…the infinite variety of human affairs means that work relationships present as a spectrum, some of which are clearly relationships of employment and others of which are clearly relationships of independent contract [and some of which are clearly volunteer relationships] but some of which are less clear cut… French Accent v Do Rozario [2011] FWAFB 830 (with colour emphasis and words in italics added by me!) Justice Connect | NFP Law 4 Introduction Spectrum Potential or spontaneous volunteers Member of public Spontaneous Volunteer ‘Traditional’ Mutual obligation volunteer volunteering / work (related to government payment or court order) Volunteer Voluntary work under Court Order Work activity for Govt. payment Work for the dole Work experience Voluntary work Green Corps Justice Connect | NFP Law Unpaid ‘work’ Employment relationship Contract of service Contractor relationship Contract for services Vocational placement or Internship / work experience or Casual employee Fixed-term contract employee Independent Permanent contractor employee or consultant Unpaid work trial 5 Introduction What we will cover today Part A: Employee, contractor or volunteer: a 3 step test Part B: Why the differences are important Part C: The implications of other forms of ‘unpaid work’ Please ask questions along the way!! Justice Connect | NFP Law 6 A. Employee, contractor or volunteer? Justice Connect | NFP Law Employee, contractor or volunteer Step 1 Step 2 Yes If yes, what kind of contract is it ? Is there a contract? Step 3 Contract of service ? Employee Contract for services ? Independent consultant Volunteer No Other? Member of public Justice Connect | NFP Law 8 Employee, contractor or volunteer Step 1 Step 2 Yes If yes, what kind of contract is it ? Is there a contract? Step 3 Contract of service ? Employee Contract for services ? Independent consultant Volunteer No Other? Member of public Justice Connect | NFP Law 9 Employee, contractor or volunteer Step 1: Is there a contract? • A few preliminary points: A written document is not necessary – a contract can be verbal or inferred from conduct You do need ‘consideration’, but it doesn’t have to be money ‘Substance is more important than form’ Court will look at the whole relationship over time Justice Connect | NFP Law 10 Employee, contractor or volunteer Step 1: Is there a contract? • 3 things are needed to show a contract Intention to create legal relations + Consideration + Mutuality of obligation = contract Justice Connect | NFP Law 11 Employee, contractor or volunteer Step 1: Is there a contract? • Some case examples: Case example: the volunteer and the horseriding camp Teen Ranch Pty Ltd v Brown (1995) 87 IR 3068 NSW SCA Case example: the camp caretakers Morris v Anglican Community Services (2000) SA IRC 24 Justice Connect | NFP Law 12 Employee, contractor or volunteer Step 1 Step 2 Yes If yes, what kind of contract is it ? Is there a contract? Step 3 Contract of service ? Employee Contract for services ? Independent consultant Volunteer No Other? Member of public Justice Connect | NFP Law 13 Employee, contractor or volunteer Step 2: If a contract exists, what kind of contract? • The ultimate question: “…In determining whether a worker is an employee or an independent contractor, the ultimate question is whether the worker is the servant of another in that other’s business (= employee) or whether the worker carries on a trade or business of his or her own behalf (= independent contractor)…” French Accent v Do Rozario [2011] FWAFB 830 Justice Connect | NFP Law 14 Employee, contractor or volunteer Indicia E Work performed under supervision/ control of employer Right to suspend or dismiss Worker is presented as a representative of NFP Periodic wage or salary IC Indicia IC Runs own business or enterprise Does work for others Work can be delegated or contracted Own tools and equipment used / separate workplace Agree set hours and invoice for completed work Superannuation treatment Remuneration spent on business expenses Tax treatment Goodwill / profit / risk Holiday and sick leave E 15 Employee, contractor or volunteer Step 2: If a contract exists, what kind of contract? • A few case examples IC Case example: the hospital bed fixer Tsolacis v St Vincent's Hospital (Melb) Ltd [2013] FWC 5221 Case example: the off-site interpreters and translators On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366 Justice Connect | NFP Law E 16 Employee, contractor or volunteer Step 1 Step 2 Yes If yes, what kind of contract is it ? Is there a contract? Step 3 Contract of service ? Employee Contract for services ? Independent consultant Volunteer No Other? Member of public Justice Connect | NFP Law 17 Employee, contractor or volunteer If contract of service, what does this mean? • If the indicia reveal a contract of service, then the person has been engaged as an employee • The Fair Work Act 2000 (Cth) applies to employees ** • Further analysis may be required to determine whether the employment is casual, fixed term, or ongoing • Under the Fair Work Act, employees have a legal right to various entitlements (to be discussed in next part). Justice Connect | NFP Law 18 Employee, contractor or volunteer Step 1 Step 2 Yes If yes, what kind of contract is it ? Is there a contract? Step 3 Contract of service ? Employee Contract for services ? Independent consultant Volunteer No Other? Member of public Justice Connect | NFP Law 19 Employee, contractor or volunteer If contract of service, what does this mean? • If the indicia reveal a contract for services, then the person has been engaged as a contractor • The Independent Contractors Act 2006 (Cth) applies to independent contractors • Independent contractors can enforce terms of the contract and may also have entitlements under common law, Fair Work Act and other legislation (we will discuss in next part). Justice Connect | NFP Law 20 Employee, contractor or volunteer Step 1 Step 2 Yes If yes, what kind of contract is it ? Is there a contract? Step 3 Contract of service ? Employee Contract for services ? Independent consultant Volunteer No Other? Member of public Justice Connect | NFP Law 21 Employee, contractor or volunteer Step 2: If no contract, what’s the person’s status? • If there is no contract and the person is undertaking voluntary tasks for the NFP – they are probably a volunteer • No set definition of volunteer in law or legislation • Will generally be found to be a volunteer relationship if: The parties did not intend to create a legally binding relationship The person is under no obligation to attend the workplace or perform work The person doesn’t expect to be paid for their work Justice Connect | NFP Law 22 Employee, contractor or volunteer Step 2: If no contract, what’s the person’s status? • It is possible that the person may have some other kind of status - such as an intern or work experience student – we will discuss these further later in session • Because your organisation may be legally responsible for the actions of your volunteers, it is also important to distinguish a volunteer from a member or the public (who may spontaneously volunteer) Justice Connect | NFP Law 23 Employee, contractor or volunteer Top tips: 1 Be clear about the basis on which your organisation is engaging someone: analyse the role and the work required and determine the best fit 2 Documentation is not enough, but is good evidence: have written contracts for employees, independent contractors; and consider a volunteer agreement 3 Be clear and consistent in use of language: use ‘volunteer’ ‘reimbursement’, ‘we would be pleased if you would…’ instead of ‘pay’, ‘salary’ ‘contract’ or ‘you must’ Justice Connect | NFP Law 24 B. Why the differences are important Justice Connect | NFP Law Why the differences are important “Mr Bell says Mr de Castella owes him $100,000 in wages for 20 months work but Mr de Castella says Mr Bell was a volunteer and declined to accept money so as not to affect a disability pension…” Alice Springs News Online 18 June 2012 Justice Connect | NFP Law 26 Why the differences are important Legal rights of various people engaged Issue Contractor Employee [ongoing or fixed term] Casual employee Volunteer Payment for work National Employment Standards /award etc. 3 Redundancy / Unfair dismissal Unfair 4 dismissal 1 Superannuation possibly Workers compensation possibly Paid sick and annual leave Paid long service leave Termination rights Justice Connect | NFP Law 2 Contractual Why the differences are important Further issues • In addition to entitlements, there are other legal issues which will turn on status of person engaged: Insurance Occupational / worker health and safety laws Vicarious liability for actions of worker Equal opportunity laws Other benefits (Government payments / visas) Justice Connect | NFP Law 28 Why the differences are important Top tips: 4 The law applies differently to different ‘categories’ of people: being clear about status helps protects the rights and safety or people involved in your NFP 5 Wrongly classifying someone is a financial risk for your organisation: seek advice early if you are unsure about the basis on which you engage a person to do work 6 Think carefully about insurance: workers comp. covers employees only; you may require contractors to have their own; do you have volunteer personal accident insurance? Justice Connect | NFP Law 29 C. The legal implications of other forms of ‘unpaid work’ Justice Connect | NFP Law Other forms of unpaid work Step 1 Step 2 Yes If yes, what kind of contract is it ? Is there a contract? Step 3 Contract of service ? Employee Contract for services ? Independent consultant Volunteer No Other? Member of public Justice Connect | NFP Law 31 Other forms of unpaid work Spectrum Potential or spontaneous volunteers Member of public Spontaneous Volunteer ‘Traditional’ Mutual obligation volunteer volunteering / work (related to government payment or court order) Volunteer Voluntary work under Court Order Work activity for Govt. payment Work for the dole Work experience Voluntary work Green Corps Justice Connect | NFP Law Unpaid ‘work’ Employment relationship Contract of service Contractor relationship Contract for services Vocational placement or Internship / work experience or Casual employee Fixed-term contract employee Independent Permanent contractor employee or consultant Unpaid work trial 32 Other forms of unpaid work Student placements (vocational) Unpaid work trials Internships / work experience Refer Fair Work Ombudsman factsheets: www.fairwork.gov.au/Pay/unpaid-work Justice Connect | NFP Law 33 Other forms of unpaid work Mutual obligation volunteers Work for the dole / Green Corps etc Justice Connect | NFP Law 34 Other forms of unpaid work Top tips: 7 Consider having a ‘people engagement policy’: to guide your NFP about what the law says about the people you might want to do work for your NFP 8 Again, think carefully about insurance for unpaid workers: workers compensation insurance only covers employees - ensure others are covered 9 Expect a rise in government-required volunteering and unpaid work: this appears to be an emerging trend and if your NFP is interested - it needs to have the ‘legals’ clear! Justice Connect | NFP Law 35 Summary, questions and evaluation Justice Connect | NFP Law Summary and questions What we have covered today Introduction Part A: Employee, Contractor or Volunteer: A 3 step test Part B: Why the differences are important? Part C: The implications of other forms of ‘ unpaid work’ Summary, questions, close Justice Connect | NFP Law 37 www.justiceconnect.org.au Justice Connect | NFP Law 38 Not-for-profit Law Justice Connect | NFP Law 39 NFP Law Info Hub: www.nfplaw.org.au Justice Connect | NFP Law 40 Summary and questions Stay online for an interactive Q&A chat session with Kate and Liz Type your questions into the question panel Justice Connect | NFP Law 41
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