On 29 July 2011 the Victorian State Revenue Office released
Revenue Ruling PTA.038 – Determining whether a worker
is an employee. The Ruling provides information about
employment relationships to assist employers, principals and their
professional representatives in determining whether their workers
are common law employees and applies from 1 July 2011.
The Ruling highlights a number of areas which help determine the
correct relationship of a worker and the Ruling takes the view of
this from the courts perspective. In a common law relationship
there is a contract of service which is based on a 'mutuality
of obligation'. This includes some of the following factors
which are considered by the courts in determining whether a worker
is an employee:
Control and direction;
Contract and practical relationship;
Contract to achieve a given result;
Power to delegate;
Provision of tools and equipment; and
The Ruling also goes onto state an employer/employee
relationship will generally not exist where there is a lease or
bailment arrangement. Also an employment relationship under common
law cannot exist between a principal and an interposed entity i.e.
a company. However, payments to inter-posed entities may still be
subject to payroll tax in some circumstances.
The Ruling provides a table outlining employee and independent
contractor indicators in relation to the abovementioned factors the
courts take into consideration in determining a workers employment
status. To view the table or for further information regarding
Revenue Ruling PTA.038 please see the link below:
Revenue Ruling PTA.038
This Ruling is important as State Governments come under
increased revenue pressure and will actively pursue opportunities
to increase their revenue base.
Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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