Private ruling: Superannuation guarantee - status of worker
Published: October 2011

Ruling: Q1: Are agents engaged under the Agreement employees or independent contractors of the Company for the purposes of section 12 of the Superannuation Guarantee (Administration) Act 1992 (SGAA) for the period 1 July 2010 to 30 June 2011? Advice Based on the provided information the agents are considered to be contractors of the Company. Accordingly, the Company has no obligation under the SGAA to make superannuation guarantee contributions on behalf of the agents. Please see our 'Reasons for Decision'.

Relevant facts and circumstances: Your advice is based on the facts stated in the description of the scheme that is set out below. If your circumstances are significantly different from these facts, this advice has no effect and you cannot rely on it. The fact sheet has more information about relying on ATO advice . In June 2011 the Commissioner received a request for administratively binding advice (ABA) from your authorised representative, with respect to workers engaged as agents for the Company. This request included the following attachments: o An agreement for services by agents o An agent authority form o Procedures guide o Confidentiality & non disclosure agreement · The 'Agreement' that is offered to the individual agents by the Company contains a number of conditions of engagement which we have outlined to you. · The 'agent authority' form certifies the relevant individual/agent completed the Company's training course and is authorised to carry out either alone or with the Company's Agent or contractors the following activities on behalf of the Company. 1. To serve any writ, claim, application, summons or other process. 2. To collect debts or request payment of debts. 3. To locate a person using only ethical and proper means. 4. To repossess any goods or chattels that he is entitled to repossess under any lawful and binding agreement. · The Procedures guide provides procedures and principles that must be followed by the individual agents when acting on behalf of the Company. We have outlined these clauses to you. · During 2011 we requested further information. · Later in 2011, we received a response from the Company, which we summarised to you. Contentions In the request for the administratively binding advice dated June 2011 your authorised representative made the following contentions on behalf of the Company: · The Company is a process and recovery agency. · To conduct its business the Company engages mainly individual contractors to perform the work. · Each contractor signs an Agreement which sets out the arrangement between the Company and the contractor. · All contractors are paid on results and have to supply their own vehicle, telephone and any other items required to complete their contract. · Each contractor is responsible for any rectification of work at their own cost. · The Company does not stipulate to the contractors the hours of work or directs the contractor as to how to perform their duties except that the contractor must comply with the Procedures Guide as directed by the Company. · The Procedures Guide is required for the contractors to comply with the Industry Code of Practice. · The contractor must have a current insurance policy to cover the contractor if injured on the job. · The contractor is not based or works at the Company address and the Company leaves it to the judgement of the contractor about how it approaches each job and does not exercise control over the contractor. · There is no mutual obligation between the Company and the contractor to provide work. · The Company has no control over the work of the contractor and the contractor conduct their own business using their own Australian Business Numbers (ABN) number and business name. · Contractors are engaged Australia wide by the Company of which the contractor receives a percentage of the fee. · Every contractor must be licensed in the State they operate. · A contractor can refuse any job of and are not dependant on the Company for their sole source of income. · The contractor is free to undertake work provided by rival companies. · On the above grounds it is believed the contractors are contractors and are not entitled to superannuation guarantee contributions. The contentions had been taken into consideration. Please see 'Reason for decision'. Assumptions: No assumptions have been made.

Relevant legislative provisions: Superannuation Guarantee (Administration) Act 1992 section 12 and | Superannuation Guarantee (Administration) Act 1992 subsection 12(3). Other references | Superannuation Guarantee Ruling SGR 2005/1

Reasons for decision: Summary: The agents/workers that are engaged by the Company under the Agreement are independent contractors as their engagement does not satisfy the common law definition of an employee nor does it satisfy the extended definition of employee under subsection 12(3) of the SGAA. Accordingly, the Company has no obligation under the SGAA to make superannuation guarantee contributions on behalf of the agents/workers that that are engaged under the Agreement. | Detailed Reasoning - Detailed reasoning: The SGAA states that an employer must provide the prescribed minimum level of superannuation support for its employees (unless the employees are exempt employees) or they must pay the superannuation guarantee charge (SGC). While the term 'employee', which is defined in section 12 of the SGAA, includes common law employees, it also extends to include workers who are engaged under a contract wholly or principally for their labour. The employment relationship is often referred to as a 'contract of service'. This relationship is distinguished in Superannuation Guarantee Ruling SGR 2005/1 from a 'contract for service' which is typically a contractor and principal type of relationship that does not attract any SGC liability. Therefore, it is necessary to consider not only whether there is a common law relationship of employer/employee between the parties, but also, if the common law test is not met or is inconclusive, whether the extended definition of 'employee' in subsection 12(3) of the SGAA applies. The task of defining the characteristics of the contract of service - the employment relationship - has been the subject of much judicial consideration. As a result, some general tests have been developed by the courts to assist in the determination of the nature of the relationship. However, defining the contractual relationship between the employer and employee can be a difficult task and will depend on the facts of each case. Accordingly it is necessary to determine the true nature of the whole relationship that exists between the Company and their agents/workers, as to whether there is a common law employer/employee relationship, or whether the workers meet the extended definition of employee under subsection 12(3) of the SGAA. | Detailed Reasoning - Common law employee: The courts have developed a method for applying the ordinary, or 'common law' meaning of an 'employee'. Their approach is to look at a wide range of factors, which indicate whether a person is an employee. For example, if the employer provides the place of work, this might indicate an employment relationship, while the absence of holiday pay might suggest the opposite. The courts' decisions tend to be taken on balance, after considering the relevant factors. The common law meaning of the term 'employee' was stated by the High Court in Stevens v. Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16. It is clear from that case that there is no single objective test which will give the answer: …it is the totality of the relationship between the parties which must be considered...the question is one of degree for which there is no exclusive measure. While various factors have been identified by the courts as indicators of the true nature of the relationship, those features are only ever a guide to answering that question. It is necessary in each case to examine all the terms of the contract and to determine whether, on balance, the person is working in the service of another (as an employee) or is working on his or her own behalf (as an independent contractor). A clause in a contract that purports to characterise the relationship between the parties as that of principal and independent contractor and not that of employer and employee must be considered with all the other terms of the contract. Such a clause cannot receive effect according to its terms if it contradicts the effect of the agreement as a whole. That is, the parties cannot deem the relationship between themselves to be something that it is not. The parties to an agreement cannot alter the true substance of the relationship by simply giving it a different label. Subsequent conduct of the parties may demonstrate the relationship has a character contrary to the terms of the contract. In deciding whether the workers are common law employees of the Company there are a number of factors to consider. These factors are considered below. | Detailed Reasoning - Terms of engagement: The terms and conditions of the contract whether express or implied, in the light of the circumstances surrounding the making of the contract, whether verbal or written, will always be of considerable importance to the proper characterisation of the relationship between the parties. Some conditions of engagement are closely associated with employment and may, therefore, be persuasive indicators. For example: · provision of benefits such as annual, sick, and long service leave; · provision of other benefits prescribed under an award for employees; · payer prescribed times and location for the performance of work; · remuneration in the form of a salary or wage; · the worker uses assets and materials provided by the payer or is reimbursed, or paid a compensatory allowance, for expenses incurred in respect of use of own assets and materials; and · payer discretion (within the constraints of industrial relations laws) in respect of task allocation and termination of engagement. However, this list is not exhaustive and it must be emphasised that there is not a standard set of conditions applicable to an employee and another (different) set applicable to an independent contractor. It might be argued that the parties' intention in forming a contract is not subjective, but an objective one; that is, the task is not to discover the intention of the parties involved but to decide what each could reasonably conclude from the actions of the other. In the observation made by Isaacs J in Curtis v. The Perth and Fremantle Bottle Exchange Co Ltd (1914) 18 CLR 17: Where parties enter into a bargain with one another whereby certain rights and obligations are created, they cannot by a mere consensual label alter the inherent character of the relations they have actually called into existence. Many cases have arisen where Courts have disregarded such labels, because in law they were wrong, and have looked beneath them to the real substance. Therefore, simply defining someone as a contractor does not necessarily lead to the conclusion that the individual is providing services as part of an operation of their own independent business. | Detailed Reasoning - Application of the facts to your case: In the ABA application the Company's authorised representative advised us the workers that are engaged by the Company are self employed professionals that are engaged on a contract basis to achieve a result. To support the contentions the Company provided copies of: · an Agreement for services · An agent authority form · Procedures guide for Contractors. These documents that are offered to the interested agents/workers for their consideration before they sign the engagement consistently refer to the agents/workers as independent agents or Company's contractors. The 'Agreement states, with respect to the agent: · The work he/she conducts on behalf of the Company or its clients is done of their own responsibility and any action outside the parameters of the relevant legislation is done so of their responsibility as it is not condoned or acknowledged by the Company · He/she is responsible for their Work Cover insurance and also indemnifies the Company from any claim of injury to a third party/s or themselves · He/she is responsible for their own invoices and taxation payments · He/she is to hold a current Licence applicable to the type of work he/she conduct on behalf of the Company · He/she understands that the Company may at their discretion at any time without excuse terminate this agreement It was stated that the workers provide an ABN, they are not provided with leave benefits and they are responsible for their own taxation. The Procedures guide for the Company's Contractors also indicates the agent/worker can delegate their work to others. It states: All Company's Contractors must ensure their Relevant Staff are familiar with … In your responses to our request for further information you further advised us: · agents/workers are able to renegotiate their pay · working relationship is established through 'word of mouth' or by agents/workers contacting your office when they look for working opportunities · agents/workers are only paid at he completion of the task · agents/workers have the right to refuse a job · agents/workers are free to work for other collection agencies; · agents/workers are not required to wear any uniform, badge or signage of the Company; However it should be noted the Company do have the right to terminate the contract, without notice, at their discretion. Upon consideration of the facts and evidence, the Commissioner considers on balance, the factors in this test support the notion that the relationship is that of a principal/independent contractor relationship. | Detailed Reasoning - Control: A prominent factor in determining the nature of the relationship between parties is the degree of control which the employer has over the employee, as it goes to the root of the classical view of the master-servant relationship. The degree of control varies with the type of job, as the increasing usage of skilled labour has seen a consequential reduction in supervisory functions. The issue of control does not always rely on whether the employer exercises it, although this is clearly relevant, but rather whether they have the right to exercise it. Traditionally, a common law employee is told what work needs to be done, how it is to be done, and where it is to be done. However the mere fact that a contract may specify in detail how the contracted services are to be performed does not necessarily imply an employment relationship and a high degree of direction and control is not uncommon in contracts for services. It is not necessary for the employer to exercise day to day control over the worker. What is important is that the employer has the legal right of control. In Zuijs v.Wirth Brothers Pty Ltd (1955) 93 CLR 561 the High Court articulated the significance of control in an employment relationship in the following way: What matters is lawful authority to command so far as there is scope for it. And there must always be some room for it, if only in incidental or collateral matters. Additionally, Dixon J in Humberstone v. Northern Timber Mills (1949) 79 CLR 389 stated : The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in performance of his work resided in the employer so that he was subject to the latter's orders and directions. The right to control versus actual control is particularly relevant where the nature of the employment requires a considerable degree of experience, knowledge or skill. In these circumstances, it is to be expected that the employer will leave the performance of the activity up to the employee. In Hollis v. Vabu (2001) 207 CLR 21, where the decision was that bicycle couriers were considered to be employees, Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ observed that: Vabu's whole business consisted of the delivery of documents and parcels by means of couriers. Vabu retained control of the allocation and direction of the various deliveries…Their work was allocated by Vabu's fleet controller. They were to deliver goods in the manner in which Vabu directed. In this way, Vabu's business involved the marshalling and direction of the labour of the couriers, whose efforts comprised the very essence of the public manifestation of Vabu's business. The High Court in Zuijs v. Writh Brothers Proprietary Ltd (Zuijis) described the significance of control in the following way in the context of skilled employment where the nature of the work performed left little scope for detailed control: What matters is the lawful authority to command as far as there is scope for it. And there must always be some room for it, if only in incidental or collateral matters. | Detailed Reasoning - Application of the Law to the facts provided: The Company contends that with the exception that requires all agents/workers comply with the Procedures Guide, to ensure conformity with the Industry Code of Practice, the Company does not control the agents/workers in any other way as the agents/workers are able to: · refuse the allocated job or task · control their hours of work, provided these are within the bandwidth specified in the Procedures Guide; · control the time they take to complete the accepted work · control the way they perform the work · choose the work that is convenient to their preferred location · negotiate their pay · work for other agencies. The Company also contends the agents/workers are not required to adhere to dress standards or wear uniforms, logos or other identification that would present them to the public as representatives of the Company. The Company only provides the agents/workers with a generic business card the agents/workers to pass onto the debtor to have them call the Company, if needed. On the other hand the Company has discretion to terminate the agent's/worker's agreement any time and without any excuse. Even though, the Company can terminate the agents/workers at any time and without excuse majority of the above mentioned conditions strongly supports the notion of a principal/independent contractor relationship. Accordingly, with respect to the control test, the Commissioner considers that the relationship between the Company and the agents/workers is within the ambit of a principal/independent contractor relationship. | Detailed Reasoning - 3. Integration: Another significant factor in establishing the nature of a contractual relationship at common law is to determine whether the worker's services are an integral part of the employer's business (under a contract of service as an employee) or providing services as an individual carrying on his or her own business (under a contract for services as an independent contractor). This is otherwise known as the 'business' or 'integration' test. Whether the worker operates on their own account or as part of a business of the payer is sometimes viewed as a consideration of whether the worker would be viewed by a third party as carrying on their own enterprise as an independent contractor or operator and whether they could be expected to generate goodwill in their own right. In Montreal v. Montreal Locomotive Works (1947) 1 DLR 161, Lord Wright said: ...it is in some cases possible to decide the issue by raising as the crucial question whose business is it, or in other words by asking whether the party is carrying on the business, in the sense of carrying it on for himself or on his own behalf and not merely for a superior. Similarly, in Stevenson, Jordan and Harrison Ltd v. MacDonald and Evans (1952) 1 TLR 101 Denning LJ said: ...under a contract of service, a man is employed as part of the business, and his work is done as a integral part of the business; whereas, under a contract for services, his work, although done for the business, is not integrated into it but is only accessory to it. The Full Bench of the High Court in Hollis v. Vabu (2001) 207 CLR 21 endorsed the proposition stated by Windeyer J in Marshall v. Whittaker's Building Supply Co (1963) 109 CLR 210 that the distinction between an employee and independent contractor is: …rooted fundamentally in the difference between a person who serves his employer in his, the employer's, business, and a person who carries on a trade or business of his own. This factor was given significant prominence by the High Court as an aid to determining the common law contractual relationship between the parties to the dispute in the context of vicarious liability. In arriving at the conclusion that the bicycle courier was a common law employee of the courier company (which then became vicariously liable for the bicycle courier's negligence), Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ stated that: Viewed as a practical matter, the bicycle couriers were not running their own business or enterprise, nor did they have independence in the conduct of their operations. The skills involved in carrying out the work are also a useful guide in determining whether a person is carrying on their own business or not. The provision of professional skill or skilled labour may imply that the contractor is able to make an independent career by selling that skill. In the case of a contractor with an independent career, it may be implied that the contractor is able to conduct their own business using those skills. This was highlighted in Hollis v Vabu at paragraph 48, where the court said in relation to bicycle couriers hired by Vabu: The couriers were not providing skilled labour or labour which required special qualifications. A bicycle courier is unable to make an independent career as a free-lancer or to generate any 'goodwill' as a bicycle courier… | Detailed Reasoning - Application of the test to the facts provided: The Company contends the agents/workers have the right to refuse the job or task, to work for others, to choose their own ours of work, select jobs at their preferred location and are responsible for the cost of assets, equipment and other tools they need to complete their work. As mentioned previously with the exception of complying with the requirements set up in the Procedures Guide the agents/workers are not required to follow any other policies, guidelines or directions, for example, wear uniforms, display signage or logo of the Company or attend Company meetings. The agents/workers are required to hold a current licence that does authorise them to perform the type of work they were engaged for. They also operate under their ABNs and are responsible for their invoicing and taxation obligations. While the Agreement specifies that the worker has some scope to make decisions on behalf of the Company, such as the acceptance of payment arrangements, these are subject to the terms stated in the Agreement and the worker must make reports to the Company within a specified time period. It is not clear in the Agreement whether the reports are for the monitoring of the progress of the work or based on the nature of the work. There is no evidence that the Company reimburses the worker for any expenses. It is also noted under the Authority that the worker must have completed the Company's training prior to commencing work. Even though, some of the conditions have the character of integrations on balance, the Commissioner is satisfied that the facts and evidence in this test are more indicative that the relationship between the Company and the agents/workers is that of a principal/independent contractor relationship. | Detailed Reasoning - 4. Results test: Under a results based contract, payment is often made for a negotiated contract price, as opposed to an hourly rate. The meaning of the phrase 'producing a result' means the performance of a service by one party for another where the first mentioned party is free to employ their own means (that is, third party labour, plant and equipment) to achieve the contractually specified outcome. The essence of the contract has to be to achieve a result and not to do work. Satisfactory completion of the specified services is the result for which the parties have bargained. That is, a payment becomes payable when, and only when, the contractual conditions have been fulfilled. Where the substance of a contract is to achieve a specified result, there is a strong indication that the contract is one for services. The production of a given result is considered to be a mark of independent contractor status ( World Book (Australia) Pty Ltd v. FC of T (1992) ATC 4327). 'Results' contracts describe traditional principal/independent contractor arrangements where a specific identifiable task is performed. The consideration is often a fixed sum on completion of the particular job as opposed to an amount paid by reference to the hours worked. In a contract for services (whether written, oral or implied), the contract specifies the services to be performed in return for an agreed payment. Satisfactory completion of the specified services is the result for which the parties have bargained. Conversely, under a contract of service, payment is not necessarily dependant on, or referable to, the completion of the specified services. While the notion of 'payment for result' is expected with a contract for services, it is not necessarily inconsistent with a contract of service. The High Court in FC of T v. Barrett & Ors found that land salesmen, who were engaged by a firm of land agents to find purchasers for land entrusted to the firm for sale and who were remunerated by commission only were employees and not independent contractors. Likewise, the High Court in Hollis v. Vabu (2001) 207 CLR 21 considered that payment to the bicycle couriers per delivery, rather than per time period engaged, was a natural means to remunerate employees whose sole purpose is to perform deliveries. Further, the Full Court of the Supreme Court of South Australia in Commissioner of State Taxation v. The Roy Morgan Research Centre Pty Ltd found that interviewers who were only paid on the completion of each assignment, not on an hourly basis, were employees and not independent contractors. Accordingly, the contractual relationship as a whole must still be considered to determine the true character of the relationship between the parties and what the worker was hired to do. | Detailed Reasoning - Application of the Law to the facts provided: The Company contends that the agents/workers are engaged to complete a specific result that requires the agents/workers to complete one or more of the following activities: 1. To serve any writ, claim, application, summons or other process. 2. To collect debts or request payment of debts. 3. To locate a person using only ethical and proper means. 4. To repossess any goods or chattels that he is entitled to repossess under any lawful and binding agreement. The Company contends that the agents/workers are generally being paid 60% of the outgoing invoice on the work they complete. Generally where a worker is paid a set amount per task, this is a clear indicator of a contract for result, typical of a principal and independent contractor relationship. However, it should be also noted at this point that payment for result it is not necessarily inconsistent with a contract of service . Conversely, giving the nature of the industry a payment per completed file may be a convenient or natural way to measure and remunerate work performed by recovery agents/workers (a piece rate basis). This is similar in nature to Hollis v. Vabu where bicycle couriers sole purpose is to perform deliveries. These types of arrangements are more common when engaging employees to perform work on a casual, non full-time, basis. Additionally, a contract to achieve a specified result would generally be formulated on an individual basis. On the other hand, you advised us that in this case the agents/workers are able to renegotiate their pay and would receive only a minimal fee where they are unable to collect on the debt or complete the relevant file. thein this test, while some of the facts indicate and employer/employee relationship other facts indicate that the relationship is one of principal/independent contractor therefore the result of this test is inconclusive. | Detailed Reasoning - 5. Delegation: The unlimited power to delegate or subcontract work is an important factor in deciding whether the worker is an employee or independent contractor. If an individual has unlimited power to delegate the work to others (with or without the approval or consent of the principal), this is a strong indication that the person is being engaged as an independent contractor. Delegation is generally implied in a contract for services where the emphasis is on result rather than person. However, delegation clauses are considered in the context of the contract as a whole to determine if they are consistent with the apparent essence of the contract or if they are merely self-serving statements. Delegation is not simply the delegation of task from one employee to another or the ability to swap shifts or request a fellow employee to perform some duties; it is the ability to freely subcontract or employ others to perform the work. | Detailed Reasoning - Application of the test to the facts provided: The Agreement is silent on matters delegation however both the 'Procedures Guide' and the 'agent authority form' indicate delegation is possible. The Procedures Guide lists requirements that will have to be complied with in cases where the agents/workers decide to delegate their work to their staff. All contractors and their staff must complete the Company training with respect to the legal and procedural requirements of the provision of services offered by the Company. Based on the documents there is a scope the following activities can be delegated to authorised third party: 1. To serve any writ, claim, application, summons or other process. 2. To collect debts or request payment of debts. 3. To locate a person using only ethical and proper means. 4. To repossess any goods or chattels that he is entitled to repossess under any lawful and binding agreement. Based on the facts and evidence available the worker does have the right to delegate certain services. Although the staff of the worker is required to complete a training course with the Company this is to ensure that the staff of the worker follows the principles that must be followed when undertaking this type of work. Accordingly the Commissioner considers that the agents/workers have a right to delegate and that the results of this test are indicative of a principal/independent contractor relationship. | Detailed Reasoning - 6. Risk: Generally speaking, employers are vicariously liable for negligence and injury caused by their employees. However a principal will not be liable for negligence or injury caused by an independent contractor. The higher the degree to which a worker is exposed to the risk of commercial loss (and the chance of commercial profit), the more they are likely to be regarded as being independent. Typically, a worker who derives piece rate payments and sustains large outgoings would be so exposed. The higher the proportion of the gross income of the worker which is required to be expended in deriving that income, and the more substantial the assets which the worker brings to the tasks, the more likely that the contract is for services, or a contract with an independent contractor. Another consideration of risk is the liability for the cost of rectifying faulty work. That is, the key underlying consideration is whether the individual is exposed to commercial risk in terms of a liability to cover the cost of rectifying defective work. This is consistent with the focus on the chance of profit and the risk of loss as a traditional indicator that a worker is an independent contractor conducting their own business. | Detailed Reasoning - Application of the test to the facts provided: The Company contends the agents/workers are responsible for any rectification of work at their own cost and also bear a financial risk where they fail to complete the relevant file. In addition they are required to hold current Licence applicable to the type of work they perform and insurance in relation to Workers Compensation. In addition, the agents/workers are to ensure their actions are within the parameters of the relevant legislation as they responsible for any criminal action which may cause termination of their agreement. The payment from the Company to the worker for each job was stated to be generally X% of the invoice. In this case while the worker may bear some form of loss in relation to equipment the worker generally does not stand to make a profit or gain above the agreed rate of payment. It also cannot be said that the worker has an expectation of realising commercial profit or from generating any goodwill for themselves through their work for the Company. In addition it appears that the Company would bear any detriment or fall-out from the actual work not being completed. The facts of this test indicate the Company will bear the majority of the risk therefore this is indicative of an employer/employee relationship. | Detailed Reasoning - 7. Capital: A worker who has been integrated as an employee into the business is more likely to be provided with the tools and equipment required for his work by the employer. Furthermore, the employer is often also responsible for the business expenses incurred by the worker, since the worker has been integrated into the employer's business. Independent contractors carrying on a business for themselves often pay and provide for their own assets, tools, equipment, maintenance costs and other expenses. As stated by McKenna J in Ready Mixed Concrete (South East) Limited v Minister of Pensions and National Insurance (1968) 2 QB 497 at 526: …the ownership of assets, the chance of profit and risk of loss in the business of carriage are his and not the company's The investment of capital, the maintenance of capital and risk of loss of capital in the event of an unsuccessful venture must be of a significant nature to deem a worker not an employee. | Detailed Reasoning - Application of the test to the facts provided: The Company contends the agents/workers are responsible for the purchase and maintenance of any assets required to complete his work. Some of these required assets are, a Licence; motor vehicle; telephone, etc. There is no reimbursement to the worker for the use of their own assets/tools. In the absence of any evidence to the contrary, it is considered that the worker will not bear any substantial costs in relation to their services to the Company. Therefore the results of this test are indicative of an employer/employee relationship. | Detailed Reasoning - Conclusion - Common Law: Please note that all factors of contractual relationships must be considered as a whole as often there are small differences between the relevant factors as shown in Commissioner of State Taxation v. The Roy Morgan Research Centre Pty Ltd , where it was determined workers engaged for result were employees and not independent contractors . Thus, upon review of the relationship as a whole the Commissioner considers that the relationship between the agents/workers and the Company can be characterised as one of a contractors engaged in a contract for service for each assignment they accept. The Agreement provides the terms of engagement of agents. The agents/workers are able to refuse a particular file, job or task, can choose their own hours of work, the time they take to complete a particular file (provided it is reasonable), can negotiate their pay and delegate their work to others. In addition, the agents/workers are required to have a Work Cover insurance, hold a current Licence that is necessary for their work and are also responsible for their own taxation. They are only paid on completion of the allocated file/assignment and bear the financial risk where they fail to complete it. It has also been determined that the Company would make any profit and bear the greater risk in relation to the work. It was also considered that the Company would be responsible for the maintenance of capital and the risk of loss to capital. However, considering the totality of the relationship, there are no significant indicators under the general terms of the engagement to consider that the agents would be common law employees of the Company. Please note that as it is determined the agents/workers are not common law employees, further consideration must be given whether these agents/workers would be employees under the extended definition in subsection 12(3) of the SGAA. | Detailed Reasoning - Extended definition of employee under subsection 12(3) of the SGAA: The extended definition of employees under subsection 12(3) of the SGAA states: If a person works under a contract that is wholly or principally for the labour of the person, the person is an employee of the other party to the contract. The first section of subsection 12(3) of the SGAA is that it requires the individual to be working wholly or principally for the labour of the person. The Superannuation Guarantee Ruling (SGR) 2005/1 provides further guidance on this issue and states at paragraph 11 that: Where the terms of the contract indicate that: · the individual is remunerated (either wholly or principally) for their personal labour and skills; · the individual must perform the contractual work personally (there is no right of delegation); and · the individual is not paid to achieve a result, the contract is considered to be wholly or principally for the labour of the individual engaged and he or she will be an employee under that subsection. Each of the above three limbs must be met to consider a contract to be wholly and principally for the labour of the individual. Based on the facts and evidence provided there is no indication that the agents/workers are being paid for anything other than their labour. The second requirement of subsection 12(3) of the SGAA is that it requires the labour of the individual personally. That is, the worker does not have the right to delegate or subcontract the work to another party. Even if the contractor has no intention to delegate or subcontract the work and actually performs the work personally, the contract itself is still not for the labour of the person if there is a possibility of delegating the work to another person. Paragraph 49 of SGR 2005/1 states that where a worker is engaged under contract: If an individual power to delegate the work to others (with or without the approval or consent of the principal), there is a strong indication that the person is being engaged as an independent contractor. Under a contract for services, the emphasis is on the performance of the agreed services (achievement of the result).Unless the contract expressly requires the service provider to personally perform the contracted services, the contractor is free to arrange for his or her employees to perform all or some of the work or may subcontract all or some of the work to another service provider. In this case, the agents/workers are able to delegate their work to others even if this delegation is limited as it requires the agents/workers obtain prior authorisation from the Company before they engage their delegates. The third and last requirement of subsection 12(3) of the SGAA is that the payments received by the worker must not be in relation to the production of a given result, but instead should be for their labour. As previously discussed, this requirement is inconclusive as the facts neither support nor oppose a view the payment per file is a payment for a result As the workers do not meet the second requirement, as they are not required to perform all the work personally, the agents do not meet the extended definition of employee as set out under subsection 12(3) of the SGAA. | Detailed Reasoning - Conclusion: Upon review of the relationship as a whole, the Commissioner is satisfied that the agents/workers are not employees of the Company for the purposes of the SGAA neither under the common law definition nor under the extended definition under subsection 12(3) of the SGAA. Accordingly, the Company has no obligation under the SGAA to provide superannuation contributions on behalf of these independent contractors.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns. | This advice applies for the following periods: Quarter ended 30 September 2010 | Quarter ended 31 December 2010 | Quarter ended 31 March 2011 | Quarter ended 30 June 2011