13/07/2016
So you're a Tradie and you run a small business, you've got more work than you can poke a stick at and you need to source new staff. Below are a few factors that come in to play when considering employee or contractor?
Your most important factor with growth, is to remain liquid financially, so your growth would need to be restricted by how many crew you can pay without falling behind, even if one or two of your clients fall behind in their payments.
An equally important factor would be site safety and whether your safety plan would need to be adjusted for hierarchy, you can't expect to be everything to everyone, so you need to ensure you delegate crew members who will ensure safety regulations are being adhered to by all staff at all times.
Next would be quality assurance and workload efficiencies. It can be difficult to maintain your quality standards when employing multiple new staff without having a fool proof quality assurance checklist and policy to ensure steps are in place to offer your clients consistency.
Regarding efficiency, you may find as I did, that loyalty takes time to establish with your long term crew, newer members may not be (probably won't) as mindful of material wastage, time wasted on longer smoko or lunch, arriving late, leaving early, phone calls, chatting too long, watching, general time wasting. You must have someone (remembering you can't be all to everyone) you can delegate to step up, someone who has good people and leadership skills, but doesn't need to be everyone's friend, they are prepared to call out slackers and have the authority to let someone go if they are not working out.
When deciding between employees and contractors. There is no grey area relating to contractors who are indeed employees. In fact, if you run the gauntlet and convince yourself they're contractors (very few actually are), you can easily wind up with huge Superannuation, Workcover and PAYG bills, if for one reason or another one of the departments audit you and determine they are in fact employees.
Contractors must not be doing more than 80% work for the one business, you must ensure you have copies of their licensing and insurances and ensure they are kept current. Regardless of their employment status, you must include them in your public liability insurance and will be responsible to your clients for their mistakes. Depending on what trade you are in, in most instances tradies will use their own tools regardless of whether they are employees or contractors, so this may not impact their eligibility as a genuine contractor either. Be really, really sure they meet ALL criteria as a contractor before you commit.
A contractor can come back and bite you, if you let them go and it's not amicable, they can complain to tax department or unions etc. They may suggest they were unaware of what you meant by contracting and thought you were putting aside their tax and super, on their behalf, then it could be near on impossible and very expensive and time consuming, for you to prove otherwise. A decision may be enforced on you to back pay their PAYG, Workcover and Super and this could cripple your business, just keep in mind this looms over your head for everyone who's status is not iron clad contractor.
I would recommend tapping into the resourses that Group Apprentice employers offer. The premium you pay is minimal, when you can have pre screened, part trained or 3rd and 4th yr apprentices who you can hold onto if they perform well, or send back if they are not what you are looking for. Often Group Training Orgs' will offer you a fortnight or monthly account, which can help you scale up, or catch up on short term busy periods. And their on costs (insurance, super etc) are drip fed in the hourly rate, so you aren't trying to set money aside for the larger quarterly bills. Keep in mind that GST is not an additional cost, you pay the GST, but then you claim the GST input credit, just the same as materials, it does not make them more expensive. But tapping into these apprentices can offer opportunities to source good staff with genuine references at short notice and for short term.
Hope this helps :)
