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The rise of the ‘gig’ economy and other changes in the way people now work have brought about dramatic transformations in the workplace. Workers who utilize web-based platforms, such as freelancers and contractors employed through personal service businesses, are now an established component of the modern workforce.
In this post, you’ll learn about the many employment statuses, the tests that can be used to determine one’s status, and its significance for both the employee and the employer.
Understanding Employee And Employment Status
Individuals paid by their employer to do certain tasks within the company are called employees. They are an integral part of the company for which they work.
In determining the difference between employee and contractor, it’s not sufficient to just look at the nature of the work being done. Independent contractors can do the same work as employees without becoming employees themselves.
In the event of a dispute, the court will consider a variety of factors rather than strictly applying one rule and will make a decision based on the entirety of the circumstances.
Employment status determines a person’s employment rights and employer’s legal obligations. There’s a common practice of classifying people and jobs. When combined with other socioeconomic factors, this status provides valuable insight into the dynamics of the labor market.
Here are four common employment statuses in Australia:
1. Full-Time Employees
Most full-time employees work up to 38 hours a week, plus reasonable extra hours. A full-time employee is eligible for many types of paid leave, such as annual, sick, and carer’s leave.
In most cases, the employer and employee will negotiate the working hours for a full-time position. But in some cases, the hours will be set by a registered agreement or award.
Enterprise agreements define the terms of employment for several workplaces and group employees. In addition, an enterprise agreement requires the presence of two or more workers.
In most cases, enterprise agreements improve upon the terms of employment provided by the modern award. Enterprise agreements cannot have a wage rate that’s lower than the wage rate specified in the applicable award.
2. Part-Time Employees
Part-time employees work fewer than 38 hours per week on a regular basis. They may be hired on a long-term basis or for a specific length of time.
The main difference is that full-time employees are entitled to all of the benefits specified. On the other hand, minimum benefits like sick leave are prorated for part-time workers based on their weekly hours worked.
3. Fixed-Term Employees
Individuals hired for a specified period of time are entitled to the same benefits as those hired permanently, whether they work full or part-time. Their employment is distinct from that of full-time employees as it’s limited in duration (often less than a year) or is tied to the completion of a single project. With a fixed-term employee, the end date of the contract is stipulated in advance.
Workers on a fixed-term basis are entitled to the same benefits, including paid leave and other pay, as permanent workers under the relevant industrial instrument.
4. Casual Employees
A person is considered to be a casual employee under the Fair Work Act if they accept a job offer without a guaranteed schedule of regular hours.
Partly, the same advantages are extended to temporary workers as to permanent ones.
The law does more than just define casual work by amending the National Employment Standards to make it possible for casual workers to transition into full-time, permanent positions.
For the employee in question to qualify, they must:
- have worked for the company for at least 12 months;
- have worked the same schedule consistently for at least six months;
- and be able to continue doing the same amount of work each week, whether full-time or part-time, without major changes.
Why Does Employee Status Matter?
Employment benefits and wages can be affected by a person’s employment status. For example, while an employee will receive paychecks after taxes have been withheld through the payroll system and will be entitled to certain benefits, a contractor will be paid in full upon receipt of the invoices and will not be entitled to any such benefits.
One’s status can determine whether or not they are eligible for benefits like the minimum wage, paid vacation, retirement, and protection from unfair dismissal.
More importantly, when running your business, it’s crucial that you have a clear understanding of the legal frameworks that govern your employees and the various responsibilities that you have to them. Without it, you can’t be confident you’re treating your employees fairly and can even risk legal action. Not understanding your legal rights leaves you in the dark about the outcomes of your decisions and the circumstances which may give rise to complaints.
Rights And Protections For Employees
Many elements of the Fair Work Act 2009, such as the National Minimum Wage (NMW) and the National Employment Standards (NES), exist to protect employees.
The NES established the 11 minimum employment conditions that must be provided to all employees. These conditions include maximum weekly hours, a notice of termination and redundancy pay, flexible working arrangements, and minimum leave amounts for annual, domestic violence, long service, parental, and personal leave. These minimal criteria apply regardless of whether an employee is protected by an award, enterprise agreement, or employment contract.
It’s evident that this is a complicated topic, and it’s one that employers need to allocate considerable time to properly explore at the start of each new working relationship. As mentioned above, status is important in determining rights and obligations both on the part of the employee and the employer.