Home – New Forums Money matters Working with freelancers – the hiring process/legalities?

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  • #972507
    Techalite
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    I’m always on the lookout for contractors (especially copywriters) and would like to add a new section to my website with available positions. I’d also like to advertise these on my LinkedIn company page and, possibly, eventually on Seek.

    However, are there any legal requirements when hiring freelancers or contractors this way? I’ve never had a problem or seen this mentioned when hiring through elance or freelance forums, but these aren’t exactly very “official” job advertisement boards (in addition most of the respondents tend to be overseas, in the US, or UK, so I’ve never hired someone in Australia this way).

    The type of work I’d need would be intermittent. Usually recurring in copywriting cases, but nowhere near even a part time work load. I don’t actually want to “hire” anybody in the legal “this is my employee” sense apart from giving them a brief or task (after thorough screening of each applicant, of course) when required and promptly paying them for the work completed. Do I need to worry about anything like superannuation, taxes, and other things that an employer usually needs to take into consideration when hiring within Australia or am I legally allowed to just negotiate a payment for a piece of work (such as an article) and have the successful applicant take taxes etc into consideration on their end?

    #1056536
    The Copy Chick
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    Your best bet would be to chat to the ATO. My understanding is that as long as the freelancer isn’t contracted to you for more than ‘X’ amount of their workload, they’re not considered an employee (you would need to check the percentage with the ATO).

    As a freelancer/sole trader, I’m responsible for tax payable, super, insurances, etc. As a GST registered business, I submit a quote then if it’s accepted, complete the work and send a Tax Invoice. You would pay the invoice and I would pay the GST and tax for the income I’ve earned.

    You can call the ATO and set up a meeting with one of their agents who can explain all the ins & outs to you – free of charge.

    #1056537
    hmirz
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    Hi Techalite,

    Here are the answers to your questions.

    1. You do not have any superannuation (specifically you don’t have the 9% Superannuation Guarantee Charge) to worry about if the people you engage are not “employees”.

    2. You are not responsible for pay-roll obligations in most States unless the payments you make to the freelancers or independent contractors performing work exceed a threshold of $1M annually.

    3. You do not have PAYG obligations in respect of the freelancers you engage. You do not have to provide them with a group certificate/s. They have to take care of their own income tax obligations.

    4. The freelancers who you engage in Australia should quote and provide their ABN and provide you with a tax invoice in respect of their services so that you can pay them. Note, most freelancers should be registered for GST (on the basis that their annual turnover is $75,000 or more per year). The tax invoice they issue to you and which you pay (in respect of the services they perform) will be a GST-inclusive amount. You will be able to claim back as a GST credit, the GST amount on the invoices issued to you on your BAS.
    If they don’t provide you with a tax invoice or ABN, you will be required to withhold a portion of each payment you make to freelancers you engage who are in Australia to the ATO.

    5. You don’t need to make payments in respect of WorkCover, or workplace insurance or take out any form of workers insurance for freelancers, as they are independent contractors and not your employees.

    6. If the freelancers use your premises, equipment, you still have to comply with OHS and Workplace safety laws even though they are not your employees.

    7. Note, the distinction between an independent contractor and freelancer on the one hand and an “employee” on the other hand is made via the application of tests under the common law. So, just a word of caution, some people get in wrong and workers who they think for all intents and purposes are independent contractors are actually employees in a legal sense. So you may just want to be sure about this because all the points I have made about rely on your description being accurate.

    8. Finally, where you were remunerating freelancers overseas, unless they were doing some sort of IP licensing work or copyright work for you (in which case you would withhold royalty withholding tax from the payments) there should not be any international tax or levies you need to be concerned about. So basically with post international and Australian-based freelancers, you can just negotiate a fee!

    9. And finally (honestly this time), make sure you enter into written agreements with your freelancers which are clear, spell out all the consequences are are executed by all relevant parties! If you need help with drafting up documents or agreements, flick me an e-mail.

    Cheers,
    Hamid Mirza
    Barrister-at-Law
    http://www.panachelegal.com

    #1056538
    Techalite
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    Thanks so much for your extremely helpful and detailed advice, I appreciate it! Everything is much clearer now.

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