Employee or sub-contractor?
It’s a question that causes confusion but one that business owners need to be clear about to avoid insurance issues in a worse-case scenario.
In theory, an employee works in the business while sub-contractors run their own business and supply a service. For example, the wait staff at a restaurant are likely to be employees while the person who cleans it (and provides similar cleaning services to other restaurants) is likely to be a contractor or sub-contractor.
In practice, the lines can blur. For example, a person can be a contractor for tax purposes but still be deemed an employee when it comes to workers’ compensation insurance. If someone a business owner thinks is a sub-contractor can be classified as an employee (under any circumstances), that business owner has a lot more liability than they realise, should anything go wrong.
Each state and territory has its own rules around the demarcations between employees and contractors/sub-contractors for workers’ compensation, so checking the relevant websites is a good place to start. Then seek legal advice if you’re worried you might have an employee on your hands rather than a contractor or subcontractor.