Should You Hire Housekeepers as Contractors or Employees?

Should you hire your housekeepers as contractors or employees?

If your housekeepers are working in the same way an employee would you should hire them as an employee.

Hiring someone who should be an employee as a contractor can be classified as Sham Contracting and considerable fines can be imposed on your motel.

Sham Contracting in Australia – A Simple Overview

What is it?
Sham contracting is when a business hires someone as an "independent contractor" but treats them like an employee to avoid paying things like superannuation, leave entitlements, and taxes.

Why is it a problem?
It’s illegal because it takes away rights and protections workers would normally get as employees.

Common signs of sham contracting:

• The person works regular hours and only for one business.

• They’re told when and how to work.

• They can’t subcontract or delegate the work.

• The business supplies the tools and equipment.

What the law says:
Under the Fair Work Act 2009, it’s illegal for a business to:

• Misrepresent an employment relationship as a contract.

• Pressure someone to become a contractor.

• Dismiss an employee and rehire them as a contractor.

Penalties:
Heavy fines apply for employers who engage in sham contracting.

In short:
If someone is working like an employee, they should be an employee—calling them a contractor doesn’t change the legal reality.