There are several different employment options to consider when it comes to your career. You can become an employee or you can contract yourself
There are pros and cons to both options so what are the key differences? If you work in hospitality and want to contract your services then you may be performing your job at various venues, private homes, corporate business or venues. This means you really need to evaluate the advantages and disadvantages to ensure you are informed of YOUR obligations as a contractor, you understand the benefits from either option, and you understand the serious risks that could affect you.
Firstly, to be a contractor you need to have an ABN number (Australian Business Number) which is a unique 11 digit number that identifies your business with the government and community. An ABN doesn't replace your tax file number, but it is used for various tax and other business purposes. Not everyone needs an ABN. To get one you need to be carrying on an enterprise.
With an ABN you can:
- confirm your business identity with others when ordering and invoicing
- avoid Pay as You Go (PAYG) tax on payments you receive
- claim Goods and Services Tax (GST) credits
- claim energy grants credits
- obtain an Australian domain name.
Applying for an ABN is free. To apply for an ABN online, visit the Australian Business Register website.
- A slightly higher rate of pay (but you have to arrange your own tax).
- If you have multiple jobs through different businesses, it could benefit your tax situation
- You usually get paid soon after you have completed the shift.
- If you are an international student, you are responsible for yourself and could realistically work more than 40 hour fortnights. Therefore, running the risk of losing your visa entitlement and having to leave the country.
- Usually, worker’s compensation insurance isn't provided and if you are injured during work, you are unfortunately unable to lodge a claim.
- As you're own employer, no superannuation is paid on your behalf and into your selected fund so you would need to contribute this from your own pocket.
- You must pay your own tax out of your earnings.
- You must also pay GST that you collect (if you are earning over AUD $75,000 per year)
- There is no long-term job security.
- There is little or no HR Support for workplace compliance, discrimination and if the employer isn't happy with you, you are simply - on your own to find a new job.
- You are paid at the minimum award rate for your industry, minus tax
- Your tax is already calculated and taken out before you get paid and on most occasions, you can choose between selecting the Tax-Free Threshold to minimize this
- Superannuation is guaranteed and paid in addition to your hourly rate
- Full insurance is provided for you, from Public Liability, Workers Compensation (so if injured at work, you will be eligible to receive an average of your recent pay as long as you are unable to work)
- More likely to be offered opportunities to progress or be promoted
- You are paid Regularly - in most cases, weekly, same time every week
- A best practice employer will provide Human Resource support, including performance management
- Work can be canceled by your employer within a 2 hour notice period. Unless under special agreement with employer
- You are only liable to perform a minimum of 2 hrs work per shift. Meaning if work is quiet, you may be sent home.
- If you are an international student, your employer is bound to only providing 40 hrs per fortnight of work in order to be compliant so you can remain in the country under the correct visa.
It is really a personal choice based on your unique requirements. The key difference as a contractor is that you are responsible for everything and although you get paid more money you need to calculate if you will actually earn more at the end of the day.
Published by: Admin Officer on Feb 14, 2018