Defining the Employment Relationship
From the 26 August 2024 a new definition has been inserted into the Fair Work Act with the intention to define whether a person is an employee or employer. The change applies to most workers and businesses covered by the Fair Work Act 2009.
For the purposes of the Act, the terms ‘employer’ and ‘employee’ are determined by assessing the ‘totality’ of the working relationship which considers real substance, practical reality and true nature of the employment relationship. This means that the practical reality of the employment and working relationship is considered, not just the written terms of the contract typically governing the relationship.
The change applies to most workers and businesses covered by the Fair Work Act 2009 and with it brings a fairer test that applies when determining whether a person is an employee or rather an independent contractor, employee or principal.
In practice, the new definition will not affect employees and businesses where a person is an employee when compared with a contractor and for those instances where it is not clear the fairer test now applies.
Wondering whether the working relationship is an employment one? Do you need a contractor agreement or to update your employment agreements? Not sure what to pay them? Please contact us at [email protected] or 1300 720 004.
