Benefits
Benefits. A better alternative.
Small to medium enterprises have particular business needs. Majority costs and risks usually concern:​
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employment, and employer responsibilities
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on-costs of related compliance
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administration responsibilities
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statutory responsibilities and liabilities
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Our FRM services can enhance your business performance in all these areas and improve your profitability.
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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:​
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Economic implications of taking on staff as employees (salary + on-costs).
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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.
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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.
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Need for flexibility in managing employee resources in order to respond to changes in service levels, organisation of the work, and cash-flow.
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Legal costs associated with employment - contract/award administration and especially unfair dismissals and general protection disputes.
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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 legislative changes, Modern Awards, National Standards and continual changes in employment entitlements and conditions has created greater complexities for SME managers with increased exposure to liabilities and penalties. For a quick outline of employer obligations, conditions of employment, national employment standards and workplace rights, see Fact Sheets at:
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www.smallbusiness.fairwork.gov.au
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Our FRM services offer a better alternative to employment arrangements.
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:
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No employer liabilities or responsibilities
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Independent contractor resources can be matched to your operational needs.
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Total resource costs on a weekly basis are clearly identified and cash flows facilitated.
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Your business has no payroll, statutory and compliance industrial relations liabilities, or related record keeping responsibilities.
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If your business directly contracts with contractors, or that was the intention, 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. It is inadequate to rely on an approach where your contractor has an ABN and invoices your business for their services or that you adopt template contracts. Should these direct arrangements come under challenge the authority (courts/tribunals/ombudsman) will likely determine such two party relationships to be employment.
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The distinction between an employee and contractor has long been the subject of judicial analysis. For the past 30 years the approach under general law has been to analyse the overall circumstances of the totality of the relationship by giving considerations to the elements of control, right of refusal of work, entitlement to leave, engagement under an ABN or ACN, integration of worker into the business, manner of the performance of a contract and associated conduct of the parties, etc. This became known as the “multifactorial test” or “multiple indicia test”.
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However, in two decisions handed down in February 2022 (Construction, Forestry, Maritime, Mining and Energy v Personnel Contracting Pty Ltd {2022} HCA 1 and ZG Operations Australia Pty Ltd v Jamsek {2022} HCA 2) the High Court has modified the above approach. Now in determining the status of a worker as either a contractor or employee the primacy of the written contract between the parties is emphasised. Whilst the Judges did not all agree on matters of detail the High Court has stated clearly that where the parties are bound by a valid written agreement that clearly stipulates their respective rights and obligations, their relationship will not be impacted by the conduct of the parties if they are complying with the provisions of the written contract. This means that if a written contract is clear and obvious and the parties are acting as set out in their contract then a court should primarily rely on that written contract in deciding whether a working relationship is employment or independent contracting.
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Some examples of the application of the new themes of the High Court’s approach can be observed in the following decisions:​
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Pruessner v Caelli Constructions Pty Ltd {2022} Fed C Fam C 2G 206 – Construction contracting.
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JMC Pty Ltd v Commissioner of Taxation {2022} FCA 750 (29 June 2022) – Higher Education Lecturer.
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Course v Wavin Technologies {2022} FWC 1977 28 July 2022) – Tech Start-up.
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Nicholas Waring v Hage Retail Pty Ltd {2022} FWC 540 23 March 2022 – Retail.
As an alternative, the FRM Group contracts have been evaluated by the courts in various cases, including the High Court. When properly administered and applied the FRM contractual documents comply with the approaches now determined by the High Court and our clients do not have the potential of incurring employer liabilities or penalties. An important aspect being that our independent contractors are not directed or controlled, by their contract with the FRM Group, in providing their services to our clients.
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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.
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.
However, under respective legislation, site managers remain responsible for OH&S and Respect @Work matters.
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 their own licensed or professional advice. Benefits include:​
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No joining, contribution or exit fees as FRM Group contractors.
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Payment for services provided are guaranteed on a weekly basis.
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No invoicing of clients or related administration.
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No more BAS, GST compliance or having to put aside money for PAYG tax.
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Contractors can be engaged as sole traders and don’t require company, partnership or trust structures. If there is an entity involved, that’s also Ok.
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As sole traders FRM Group contractors are not bound by the “personal services income rule (the 80/20 Rule)” that applies to contractors trading through an entity.
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Access to business tax deductions is available, subject to validation.
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All contractors are covered by the Agency’s workers’ compensation policy and any claims are administered by the Agency.
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Access to Public & Product Liability coverage in the amount of $20m. Premiums are deducted on a weekly basis and are tax deductible.
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Superannuation contributions are administered under Section 12(3) of the SGA Act
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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.