The Superannuation Guarantee Act of 1992 defines a person as an “employee” if they are an employee under Common Law. As a result, it has the effect of a contractor being deemed as employees for the purposes of Superannuation Liability.
The meaning of “employees” is expanded if the contract is wholly or principally for “labour”, in that situation the person is “deemed an employee.”
There have been a number of legal cases fighting over which type of arrangement should be deemed as an “employee” and which should be deemed as a “contractor.” The Australian Taxation Office has been active and is involved in numerous of these cases.
The following is just one example of a court case on this issue. The case of Roy Morgan Research Pty. Ltd. vs. Commissioner of Taxation & Anor went before the full Federal Court to make a determination. In this case, the Federal Court decided that certain individuals engaged by the taxpayer were in fact “employees” for the purposes of the Superannuation Guarantee Act 1992 (Commonwealth).
The result of this court case should reinforce the need for businesses to reconsider their position where they have previously hired and sought out contractors. They should also consider the implications of this in their future hiring.