[Key Characteristics of Independent Contractors] The following are generally accepted characteristics that identify an individual worker as an independent contractor (contract for service). While it may not always be essential for all of the characteristics to be present in order for an independent contractor relationship to exist, a majority would customarily apply.
Should there be uncertainty as to the extent to which one or more of these characteristics accurately apply to the circumstances of an intended contract, advice should be sought from one of the Senior HR Advisers in the HR Client Services team.
As a starting point, it will not be possible to enter into an independent contractor relationship with an individual who does not hold a current ABN. The following information assumes that the prospective contractor is an individual with an ABN.
1.1 Results Based
An independent contractor is engaged for the purpose of providing for a given and agreed result, as opposed to merely the provision of their personal labour.
A clear and simple example of such a “results based” contract would be where a contractor is engaged to cut down and safely remove a tree from the University premises. However the principle of contracting for a result may be applied to a wide range of circumstances where the provision of a specific service is required (eg an administrative or management related project, or a specialised service not able to be performed by existing staff).
1.2 Payment Upon Completion
Payment will usually be made upon satisfactory delivery/provision of the agreed result. A fee will be negotiated and set in advance of any work being undertaken and should not be based upon University set rates of pay (ie casual hourly rates or similar). Progress payments may be applicable for longer projects.
1.3 Freedom to Delegate
An independent contractor will not be constrained contractually (ie via the Services Agreement) to be the only individual to perform the work associated with the contract. The contractor will be free to delegate work and functions associated with the delivery of the agreed result.
In this connection, it is advisable to ensure that the Services Agreement (ie the contract) provides for an unfettered freedom to delegate; eg by enabling work to be delegated by the contractor to employees of the contractor or other persons who are competent to undertake the work.
1.4 Materials, Equipment and Expenses
It is expected that an independent contractor will supply and use their own materials, tools and equipment in the production of the agreed result. Similarly, ancillary expenses are typically the responsibility of the contractor (eg travel and communication expenses).
1.5 Responsibility and Risk
An independent contractor will be expected to bear any risk associated with their work and will be responsible for rectifying any faulty or defective work without further payment. Accordingly, an independent contractor is expected to have appropriate insurance.
In examining the level and type of insurance that an independent contractor has, the University may need to assess the risk of engaging an individual, particularly where insufficient coverage may leave the University itself more open to risk. The level of actual risk may of course depend upon the nature of the service being provided.
1.6 Freedom Regarding Performance of Work
An independent contractor will generally maintain a high degree of flexibility in relation to how and when work is to be performed towards the production of the agreed result, even if the contract contains specific terms regarding the use of materials and methods of performance.
1.7 Provision of Services to Other Organisations
An independent contractor will typically be free to provide services to other businesses and organisations and is free to accept and refuse work accordingly. In this regard, an independent contractor generally advertises their services to the public at large.