Your business is up and running and you’re almost ready to go to market. Maybe you’ve already started selling your product and the business is growing exponentially. At some stage in the early days of your business you’ll need people to help you reach your goals. Whether you choose to employ people on a full time, part time of casual basis, or engage a contractor, having new blood in the business is important to keep it moving forward.
WHAT DOES IT COVER?
An independent contractor is someone who works for themselves and who you engage to perform a service or specific project for you. When an IC hires another person or entity to perform their task, this new service provider is called a sub-contractor. If you are an independent contractor and you are seeking to hire someone to help you deliver a project, or simply just require more resources to complete one, a Sub-Contractor Agreement is a pre-requisite, to help govern the relationship between yourself as the independent contractor, and the contractor you have engaged.
Having a well-written Sub-Contractor Agreement will protect you from potential disputes over employment status, what work is to be performed and delivered and allow you to clearly articulate the tasks and activities they are to complete, as part of a broader project. The Agreement forms the basis of the relationship between you and the sub-contractor and outlines both your obligations and responsibilities, including expectations of the client, confidentiality, and any considerations concerning termination of the sub-contractor.
WHY IS THIS IMPORTANT?
Sub-contractors - like independent contractors - work autonomously and for a specific purpose within a particular project, whereas employees create more obligations and responsibilities on a company, and work for the benefit of that company, not themselves . It is important to note then that you cannot disguise an employment arrangement to be a sub-contractor arrangement. Whilst it might be cheaper, easier and better suited to both parties, “sham contracting” can have substantial and significant legal consequences for both the company and you as a director. Any contracting arrangement must come within the confines of Australian employment law.