Better For Contractors, Better For Business, Better For Your Bottom Line

Benefits - A Better alternative

Small to medium enterprises have particular business needs. Majority costs usually concern:

  • employment,
  • on-costs of related compliance, and
  • administration responsibilities.

Our FRM services can enhance your business performance in all these areas and improve your profitability.

The inquiry by the Senate Employment, Workplace Relations and Education Reference Committee into small business employment (ISBN 0 642 71206 9) identified, amongst other matters, the following as particular concerns that adversely impact effective SME operations:

  • Economic implications of taking on staff as employees (salary + on-costs).
  • Cost of managing compliance issues and their complexity (eg, workers’ compensation, taxation, superannuation, payroll tax, and industrial relations, etc.). Responding to interventions or requirements of regulators was considered a burden, time consuming and costly.
  • The need for higher levels of management and administrative skills on the part of SME’s. It was assessed that over 80% of SME’s did not allocate the time or resources to comply with employment and related compliance requirements. Legal and Consultant services used on an as required basis were costly.
  • Need for flexibility in managing employee resources in order to respond to changes in service levels and cash-flow.
  • Legal costs associated with employment - contract/award administration and especially unfair dismissals.
  • Employees were often seen as the “high risk” component of SME’s business activities.

These implications are axiomatic, but not easily managed. In current circumstances the evolving environment arising from the Fair Work Act and Modern Awards has created greater complexities for SME managers with increased exposure to liabilities and penalties. See Fact Sheets relating to employer obligations, conditions of employment, national employment standards and workplace rights at

Benefits for the Business

FRM services provide businesses with a superior system for resourcing their activities and managing their workforce. It offers strategic and operational advantages and provides the scope for efficiencies, flexibility and effectiveness in business operations. Compare:

  • No employer liabilities or responsibilities
  • Independent contractor resources can be matched to your operational needs.
  • Total resource costs are clearly identified and cash flows facilitated.
  • Your business has no payroll, compliance liabilities or related record keeping responsibilities.

If your business directly contracts with contractors, can you be certain that your contractual arrangements will not be considered to be employment? This is a "relationship of risk"  as distinguishing between a contractor and an employee can be complex. Lexology Hopgood Ganim March 2011. It is inadequate to rely on an approach where your contractor has an ABN and invoices your business for their services. Should these direct arrangements come under challenge the authority (courts/tribunals/ombudsman) will likely determine such two party relationships to be employment. John Barrett v Create (Geelong) Inc T/A Create {2010} FWA 5576 (28 July2010) and On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation 2011 FCA 366 (13 April 2011).

Considerations of “Sham Contracting” may also be raised. The legal and pecuniary risks to your business can be significant.

Independent Contractors engaged through FRM services have no contract with your business and the courts have determined they are not employees of the sites where they provide their services. Fox v Kangan Batman (AIRC Print SO253 of October 1999) Replacing existing “two party” contractor arrangements with FRM services removes risk and provide your business with certainty. You can also be assured that the FRM services independent contractors are meeting their compliance responsibilities (eg. withholding tax, GST, public liability insurance, workers’ compensation, etc.) as the FRM Group agency manages those matters for the contractors. There is no likelihood of their errors or omissions, or later claims to be employees, becoming your liability.

Benefits for the Contractor

FRM services provide significant benefits and opportunities for contractors. The FRM Agency removes the administrative and compliance hassles often experienced by Contractors in providing their business services. Where financial considerations are involved Contractors are advised to seek licensed or professional advice. Benefits include:

  • No joining, contribution or exit fees.
  • Payment for services provided are guaranteed on a weekly basis.
  • No invoicing of clients or related administration.
  • No more BAS, GST compliance or having to put aside money for PAYG tax.
  • Contractors can be engaged as sole traders and don’t require company, partnership or trust structures. If there is an entity involved, that’s Ok also.
  • Contractors may be eligible for tax offsets such as the Entrepreneurs Tax Offset which can reduce a contractor’s tax liability by up to 25%.
  • As sole traders FRM Agency contractors are not bound by the “personal services income rule (the 80/20 Rule)” that applies to contractors trading through an entity.
  • Access to business deductions is available, subject to validation.
  • All contractors are covered by the Agency’s workers’ compensation policy and any claims are administered by the Agency.
  • Access to Public & Product Liability coverage in the amount of $20m. Premiums are deducted on a weekly basis and are tax deductible.
  • Superannuation contributions are administered under Section 12(3) of the SGA Act
  • Availability of annual statement of business earnings, and if required period reports, outlining weekly payments, taxes paid, insurance deductions, superannuation, etc.

Contractors can concentrate on providing their services and leave the administration of their business compliance to the FRM Agency.