My boss has asked me to get an ABN

Alanna asks: I  work as a permanent staff member in the kitchen out the back of a gourmet shop making cakes and biscuits, which are sold in the shop. I’ve been paid my wages every week but last Friday my boss asked me to get an ABN. He said I  could do the same hours but instead of paying my wages by the hour he’d buy what I’d made from me if he needed stock. I don’t know what this means. Why would he want to do that suddenly? He says it’s a really good opportunity for me but I’m not sure.

Hi Alanna,

What your boss is asking you to do is to stop being an employee and to become an independent contractor. Some of the factors that determine whether you’re hired as an employee or an independent contractor are:

• An employee has tax deducted from their wages by their employer. That’s why you would’ve filled out a Tax File Number Declaration form when you started. An independent contractor pays their own tax and GST directly to the Tax Office with whom they’ve lodged an ABN.
• Someone who is an employee usually gets paid every pay cycle be it weekly, fortnightly or monthly. An independent contractor submits an invoice for the result achieved, usually when the job is finished.
• A person who’s employed usually has to work as directed by the boss and they tell you what hours you’ll be working. An independent contractor decides when and how to work, subject to negotiation with the person who hires them. Hire a contractor to paint your house and they will decide how to do the job and work out when they can come that suits you both.

These are just a few of the things which dictate whether someone is hired as an employee or an independent contractor.

So this brings us to the 10 million dollar question: why would your boss suddenly decide you have to take out an ABN? I know I sound really cynical but I’m willing to bet it’s because he wants to save some money – at your expense. As an independent contractor your boss would no longer have to pay you sick leave or holiday pay. They could also be trying to avoid paying you superannuation. In some cases independent contractors are eligible for superannuation, but there are specific criteria which must be met.

This all sounds like  it could be a case of sham contracting. Sham contracting is when you are treated like an employee – having no say over when or how you work – but with none of the security. This isn’t fair and it’s not lawful.

Are you a member of a Union? If so you need to call them straight away. Don’t panic if you’re not; you can give us a call on our toll free hotline 1300 486 466. We can go into some more detail with you about what’s going on and give you some general advice about what action you can take. Your boss will never know you’ve spoken to us – it’s a free and confidential service. Why not give us a call?

The best way to stand up for your rights is to join your union