Home – New Forums Starting your journey Is there such thing as a free employee?

  • This topic is empty.
Viewing 9 posts - 1 through 9 (of 9 total)
  • Author
    Posts
  • #981936
    Joel Krause
    Member
    • Total posts: 103
    Up
    0
    ::

    Hey Guys,
    As you can currently see in my signature, I run a solo web design business, one of my friends has come along and loves the idea and wants to help me, he has said he didn’t care if he wasn’t paid, he just wants something else to do apart from his usual part time job.

    The business isn’t big enough yet to bring on an employee, how can I legally allow him to help me out? Or can I just let him help me with out worry of being nailed by the ATO or something?

    #1133809
    Healthy Personal Finances
    Member
    • Total posts: 194
    Up
    0
    ::

    Hi
    You might be able to argue that he is a volunteer :
    http://www.ato.gov.au/nonprofit/content.aspx?doc=/content/61920.htm

    Whether you could argue this strongly I would suggest looking at the definition of employee and ruling out all those factors.

    Hope this helps
    Stacey & Richard

    #1133810
    Joel Krause
    Member
    • Total posts: 103
    Up
    0
    ::

    Thanks for the reply. He actually suggested volunteering. Is it difficult to argue that he is infact a volunteer and isn’t an employee? I’ve read on the ATO about volunteers and the regulations seem understandable, so long as I make sure I keep inside of those regulations, I guess he can be a volunteer?

    Would I be better off hiring him as a casual employee? I don’t require him all the time, but would want him when I have work, therefore would be able to pay him for his time.

    #1133811
    Healthy Personal Finances
    Member
    • Total posts: 194
    Up
    0
    ::

    To argue he is a volunterr the ATO would first of all try to prove he is not an employee.
    So you would need to look at those rules, and make sure you don’t meet any of them.
    So any contract, any payments, any leave entitlements, any job description that they are expected to achieve, etc, etc

    If you hire as a casual, you would need to make sure you pay at least minimum wage and look at whether or not any awards are applicable as they would have requirements about over time, weekend work, leave loading, etc, etc

    Depending on how much you choose to pay him and how many hours he works, you may or may not need to take tax out. You would need to look at the ATO for the tax with holding rates for that.

    You would need to consider Superannation at the government rate (currently9%) if you pay any employees more than $450 (before tax) in any month.

    Hope this helps.
    Cheers
    Stacey & Richard

    #1133812
    Divert To Mobile
    Member
    • Total posts: 2,751
    Up
    0
    ::

    He is a friend who helps out, simple as that.
    I think don’t over complicate something that is simple.

    Steve

    #1133813
    Joel Krause
    Member
    • Total posts: 103
    Up
    0
    ::
    Divert To Mobile, post: 152224 wrote:
    He is a friend who helps out, simple as that.
    I think don’t over complicate something that is simple.

    Steve

    Thanks Steve. Just wanted to make sure it was ok to have a friend who just helped out. :)

    #1133814
    CindyK
    Member
    • Total posts: 155
    Up
    0
    ::

    Hi Joel,

    What you do in your own business with your friend, is of course your decision, some things to be aware of though:

    1. Volunteers only really exist in the ‘Not-for-Profit’ sector and within particular guidelines, they are not available for commercial businesses, regardless of what the persons says they are happy with. In Australia, a worker is entitled to payment for that work.

    2. Watch out for any backflips by friends. It is rarely the intention of people to cause harm to their friends but you can easily get yourself into a situation whereby your friend can claim wages from you. As mentioned, volunteering is not an option for you. This means that if your friend works for you, strives in the business to make it a success, provides value and service, sells product, enhances your business in any way, then they are entitled to (in the eyes of current legislation) payment for those services.

    If that person were to decide later that they were unhappy with the ‘friend’ agreement, they have the option of trying to prove their case and ask you for wages, super etc, some form of remuneration.

    I can understand the position you are in, and I wish there were free employees, but by definition that isn’t possible. An employee is someone employed by your business to carry out instructions, designated by you for the furtherance of your business. They gain nothing and are entitled to payment of employee wages.

    Please don’t be offended, and in the end it is your business and your choice. Please just be aware that there are technical rules here that you are/could be breaking and there is opportunity for you to be taken advantage of.

    Good luck with your business, whatever path you take.

    #1133815
    WhatsThePlanDan
    Participant
    • Total posts: 297
    Up
    0
    ::

    Hi Joel,

    I would suggest that the ATO may be only part of your worries. If you have concerns make sure you also check with Fair Work Australia as I’m sure they will have some wonderful (:rolleyes:) ideas on where your friend fits in your business and your obligations towards them. Also make sure you are aware of whether you need to have workers comp, etc.

    Sometimes, although it’s a wonderful idea, it just may not be worth the hassle. It’s a sad state of affairs but that’s life.

    Good luck with your decision!

    Cheers
    Daniel

    #1133816
    JustJames
    Member
    • Total posts: 104
    Up
    0
    ::

    My free employee is busy right now making me a free lunch.

    (Not even remotely true, but I couldn’t resist.)

    Much over-complicating in this thread.

    Somebody is spending time in your business, but not as an employee. They are learning (most likely) in exchange for helping (most likely). It’s an informal arrangement, not designed to get out of any obligations.

    Like Steve said: It’s a mate helping a mate.

    Why make it any more complicated than that?

    James

Viewing 9 posts - 1 through 9 (of 9 total)
  • You must be logged in to reply to this topic.