Employees must have a contract, they are entitled to certain benefits, including a minimum wage, and they must pay tax on their earnings. As the employer, you also need to make contributions on behalf of the employee.
In most cases, it is easy to set up the employee payment schedule and then automatically submit the relevant payments to the authorities. Most of the work is done in the beginning and the right software will help to ensure you get everything right, avoiding a nasty shock for you or your employee.
What Makes Someone A Household Employee?
You need to understand the guidelines in order to decide if someone doing work in your home is an employee or not.
In some cases it’s simple, a contractor doing electrical work is just passing through and cannot be considered an employee.
It’s also true that if you hire someone through an agency, such as nanny services, Sydney, they are unlikely to be an employee. To decide whether they have employee status you should review the following:
Who they work for
The first question is simple, do they work for you or the agency? This should be easy to answer as the agency will advise if you are using their services or if they are providing you with an employee.
You can usually tell if the agency is the employer because you are paying them as a business for a service. The agency will also have provided you with a contract between you and the agency, not between you and the household worker.
If the contract is between you and the household worker then they should be considered an employee.
It’s worth noting that if someone works solely for you they cannot be considered self-employed.
Whether you pay them direct
Another way of telling if someone is a household employee or not is to look at who you pay. If you make regular payments to the agency for their services then you’re not an employer. Of course, this does mean you can get an alternative household worker if your regular one is unwell or o holiday.
Equally, if you pay the worker directly then they are either self-employed or an employee. Again, if they only work for you they can’t be self-employed.
The application process
If you have independently looked for a household worker and advertised the position as an employed or permanent position then you are undertaking a contract between you and the worker.
Ideally, you should create a physical contract to back up your relationship. Regardless of whether you do or not, creating that contract with someone who will work just for you means that you are employing them.
Top Tip
If you do have a household employee make sure you register everything properly. You are supposed to withhold part of their pay to cover tax contributions. If you don’t you may be liable for them, and that’s not a desirable outcome. Speak to a specialist to ensure you know all the facts regarding registering and paying a household employee.