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Employee or contractor?

Supplier: Mitrefinch Australia By: Katrina Hall
06 April, 2016

The line between employees and contractors may not always appear clear. This Mitrefinch blog looks at the subject in greater detail, and shines a spotlight on some workforce management issues common to contract workers.

Recent reports of several major Australian workers unions joining to lobby the Fair Work Commission for staff rights to become permanent employees after 6 months of regular casual work with one employer (unless they opt out and want to remain casual) have brought the issue of employees and contractors in the workforce under greater scrutiny. The lobbying has also brought some heated debate around the topic.

According to Independent Contractors Australia, just over 17 per cent (approximately 2 million) of Australia's workforce are self-employed. An Edelman Berland/ Elance-oDesk survey took a slightly more liberal definition of freelance workers, including all who had 'engaged in supplemental, temporary, project or contract-based work, within the past 12 months' and found up to 30 per cent of working Australians fell into that category.

The Australian Taxation Office website provides a useful table, and a number of resources to help determine the difference between employees and contractors. As a general guide, an employee works in your business and is part of your business whereas a contractor runs their own business.

However one chooses to define employees/ contract workers/ self-employed workers/ freelancers, there are many important workforce management issues relevant to properly managing these kinds of employees.

While contingent workers do not typically avail paid entitlements such as annual leave, sick leave and public holidays, management still need to track time and attendance information, and other important workforce management data. The NSW Public Service Commission provides a few key points for best practice in contingent labour in their useful guide. Tips include:

  1. Only engage contingent labour when it is best for your business
  2. Minimise emergency 'stop-gap' contingent labour hire through better planning
  3. Adopt processes and systems that promote efficiency
  4. Report clearly on contingent labour activity to evaluate your strategy better
  5. Formally on/off board contingent workers

Decision makers within Australia's logistics industry in particular, with its high numbers of contract workers, require better visibility into scheduled costs to include both permanent workers and contractors.

Mitrefinch job and labour costing functionality gives management access to information such as comparisons of expended labour cost against budget. It also allows you to plan daily and weekly tasks across multiple cost centres, compare planned tasks and budgets with those already achieved, and track projects by hours, quantity, or cost.