As a great many of our readers will know, the Fair Entitlements Guarantee (“FEG”) is a safety net of last resort that assists eligible employees with payment of their entitlements in circumstances where their employer has gone into liquidation or bankruptcy.
I have written about FEG in the past and you can refresh yourself on the ins and outs of FEG here: HLB Insolvency Insights
FEG has provided us with some guidance about answering the age old question about employees versus independent subcontractors.
Remembering that only employees are eligible for advances under the FEG scheme, FEG has provided the list below as a guide for determining if a claimant is in fact, an employee:
- does ongoing work under the control and direction of the other party
- is not responsible for the financial risk of the business in which they work
- works exclusively for the other party
- is restricted from working for others or themselves
- does not have the right to employ or delegate work to another worker or trainee
- uses tools and equipment provided by the other party
- is represented as an employee within the company and to the public (may have uniform, business card, company email address)
- works the hours they are told to work by the other party
- applied for a publicly advertised position and is personally engaged by the company (not through an ABN)
- is paid regularly (weekly, fortnightly, monthly) and generally with reference to time worked rather than completion of task (noting that some employees are engaged on a piecework or commission-only basis, depending on the governing instrument)
- the other party has made employer superannuation contributions
- has been paid minimum wages, and has accrued paid leave (if they are not a casual employee)
- has income tax taken out of their pay by the other party
- is covered by the other party’s public liability insurance and workers compensation insurance
Conversely, the list below are usually indicative of an independent contractor relationship:
- decide how to do their work and what skills and resources (including other people) they need to do it
- carry the risk of making a profit or loss
- decide whether to engage someone else to do the work, or is permitted to delegate work to others and engage subcontractors or their own employees
- decide what hours to work, and usually negotiate the amount they charge the other party
- use their own tools and equipment
- are engaged using a commercial contract with working arrangements which differ from those of an employee in a variety of ways
- pay their own superannuation, insurance and tax, including GST
- represent themselves to the Australian Taxation Office as a sole trader or an employee of their personal business
- invoice for their work or get paid at the end of the contract or project
- do not get paid leave
FEG advises that these factors are not totally determinative and the context of the relationship will be assessed by FEG at the time of the claim.
It has always been a vexed issue and a tricky area, so we do not envy FEG’s job in assessing claims in which an individual has a foot in both camps.
The process for employees to apply to FEG for assistance has evolved over the years in order to keep pace with changes in technology. Gone are the days of printing off a 20-something page form and mailing it in to FEG (or GEERS as it was back then…).
The latest update from FEG aims to modernise its FEG Online service and the FEG claim form itself.
The key changes will be:
- Introducing a new, smarter platform that is more responsive to mobile devices (such as smart phones and tablets) which is all about increasing the ease for effected employees to lodge their claim information.
- Streamlining the FEG Online service, making it easier for employees to update their details, update FEG on entitlements that they receive from the Liquidator / Trustee in Bankruptcy and importantly, to track the all-important progress of their claim.
Our role in the FEG process is to inform employees of the scheme and how to make an effective claim and assist employees by providing details of their entitlements.
At HLB Mann Judd Insolvency WA, we welcome any measures that make the process to claim entitlements simpler and easier for employees affected by the liquidation or bankruptcy of their employer.
About the author
Greg Quin is a Director at HLB Mann Judd Insolvency WA and has been with the team for 10 years. Greg oversees the daily operations of the many insolvency appointments managed by the HLB Insolvency team and looks after the operations of the practice.
If you have any queries about insolvency matters, please feel free to contact Greg on 08 9215 7900, 0402 943 091 or via email to email@example.com.