ABN vs TFN.
The Differences between Employees and Contractors.
First, watch this quick
video.
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Video
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Check out a more in-debt
explanation below.
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⚠️ All the following points are general rules.
It may vary depending on the specific agreement you have with Spades or any employer.
♠ For Spades specific policies consult your allocator ♠
Take home
points
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*The description below pertains exclusively to ABN workers hired for result-based or outcome-based work, not including employees on ABN.
▶ You are a Independent Contractor. It is like you're running your own business. You do not have employee rights or benefits.
▶ You should manage your own tax and expenses. Your employer (a client in this case) does not withhold any tax. At the end of the financial year, you should declare your income, deduct expenses, and pay taxes. You must manage your business expenses and keep accurate financial records for tax and business purposes.
▶ You should manage your own superannuation. Your employer (or client) does not make contributions to your superannuation fund. You must manage the contributions yourself.
▶ You should have your own insurance. In case you get hurt, you may have to cover your own hospital costs. If damages are caused due to your negligence, you may have to pay for it.
▶ You are responsible for your own work. The outcomes of your job as well as your performance are your responsibility. You are responsible for correcting any mistakes in your work.
▶ You should be paid more than an employee. Naturally, the pay rates for contractors (ABN workers) are higher since you should be compensated for managing your taxes, superannuation, and insurance. You are also free to quote for jobs execution.
▶ You must have your own PPE and tools. Contractors are required to provide their own Personal Protective Equipment (PPE) and tools necessary for job execution.
▶ You can subcontract work. You are your own business and you're free to subcontract other workers as long as it is approved by Spades.
▶ No exclusivity requirement. You are free to work with other companies while you work with us, as long as there are no conflicts of interest.
▶ Invoice options. You can use Spades' platform for invoicing or issue your own invoices if our platform doesn't suit you. You handle your own work schedule.As a contractor, you have the flexibility to manage your own work schedule and deadlines, provided you meet the agreed-upon timelines and deliverables.
▶ Professional Independence. You are expected to complete tasks independently, without direct supervision from Spades, though Spades will support scheduling and client interactions.
Take home
points
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▶ You are an employee. You may or may not have benefits considered if you're hired as a full-time, part-time, or casual employee.
*Spades only first hires casual employees. You may get promoted to part-time or full-time later on.
▶ Your employer covers your tax. Every payday, you will receive a payslip that lays out how much you made and how much is withheld as taxes. At the end of the financial year, you may claim part or all of your taxes back.
▶ Your employer contributes to your superannuation. In every payment, there should be contributions to your retirement superannuation fund. If you don't have one, they will create one for you. This info should be on your payslip.
▶ You are insured by your employer. Your employer should have Public Liability and Workers Compensation insurance. These should cover any work-related accidents.
▶ Your work is your employer's responsibility. Your employer, as a company, is responsible for the outcome of your work, not you personally.
Why contracts are important?
Firstly, contracts allow insurers to properly assess the risk associated with a company, which often results in lower insurance premiums.
For contractors (ABN), this means that they can receive higher payment, though you may take more responsibility.
For employees (TFN), it means that they are covered for any possible circumstances that occur on-site.
Having a contract in place also helps to prevent issues with ATO, fair work and Immigration in the future.
In summary, having a contract in place provides security and clarity for all parties involved in a work arrangement.