Engaging contractors into your business: it’s perceived to be a tricky option. Here, we looked at the myths of contract working from the contractor’s side. But, with so much misinformation out there, it’s time to tackle a bigger roadblock: the myths around engaging Contractors from a business point of view.
At times, with the stigma attached to contract workers (for example…. glorified, overpaid temps), companies get deterred from engaging them. But more often than not, the myths and misconceptions around the legalities of engaging contract workers are the biggest deterrent. So today, we’re hoping to break some of these down for you.
Contract employment can create a highly effective workforce for your organisation. But you must go about the selection and engagement process the right way.
Don’t let Misinformation Ruin your Lean, Mean Workforce Machine: Let’s Tackle Some of Today’s Myths
1. ‘Contractors are not a permanent solution for any business’
Well, no. That’s the point. They are not temps – they’re a highly-skilled resource that you can bring on when you need them. Your contract workforce can be as temporary or as ‘permanent’ as you like: as long as you’re not breaching employment legislation such as the dreaded ‘deemed employment’, and you’re well equipped at managing the engagement process.
You have greater flexibility with contractors. So if you manage them right, your workforce will be a cost-effective & highly-skilled project-smashing machine.
2. ‘Anyone who invoices me is a contractor’
This is an interesting thought. How do we categorise a contractor? By invoices? We deal with the concept of worker categorisation in this post, but the receipt of an invoice does not automatically qualify your supplier or employee as a contractor.
Invoices are irrelevant, except as tools for payment. The contractor vs employee question should be dealt with in the employment arrangement.
3. ‘Short-term work = contractor’
This equation doesn’t balance. Just ask the contractors.
The Australian Government weighs in:
Both employees and contractors can be hired for:
- casual, temporary, on-call and infrequent work
- busy periods
- short-term jobs, specific tasks and projects
Knowing who counts as a temp, and who counts as a contractor, is a critical part of your workforce setup. Are you categorising them on the time spent on the job? Don’t do it.
4. ‘An ABN/ACN shows that they’re a contractor’
This, again, is simply not true. If your employee holds an ABN, your work arrangement with them will still need to be locked down in terms of the benefits they receive.
While the contractor’s ABN may look like a ‘Get out of Jail Free’ card for dealing with tax, leave, and other entitlements, the onus is on the business to make the working arrangement compliant.
5. ‘This is how contracts work in our industry’
This myth is a double-whammy:
- Just because everyone is doing it doesn’t make it right, true, or legal
- The contract in place doesn’t trump the rules of the work arrangement. This means it does not:
- override the employment relationship or make the worker a contractor, or
- remove your tax and super obligations
Our last myth can be as true or as false as you let it be:
6. ‘Freelancers and contractors create problems for business’
They definitely do if you let them.
How to prevent this myth from becoming reality:
- Check the regulations around working arrangements
- Ensure your working arrangement is rock solid
- Make sure you keep track of your contractors and optimise their scheduling
- Stay abreast of changes in legislation
Getting to the point where you are confident about using contractors, and that they are compliant and correctly managed, is a turning point for business. This will allow for greater security, flexibility, and cost savings for your organisation.
Contact us for more information on how we can help you engage contractors by removing the risk & ensuring full legislative compliance..