Keep Checking Your “ACN Contractors”

I wonder if the message is getting through to labour hire providers, yet, that the reason why all four Australian labour hire licensing schemes need an “incorporated worker exemption” is that all those companies that their “ACN contractors” are working through are supplying their people to other people to perform work.

In short, they’re micro labour hire firms.

There are probably thousands of them – maybe tens of thousands.

So, the regulations and exempt worker declarations exclude some individuals who are supplied to perform work through their own companies from the definition of “worker“.

And because you can only be a labour hire provider under a supply arrangement if you suppply a “worker” as defined, excluding them from the definition means that the individuals are not “workers” for their own companies, which therefore don’t need licences.

Pretty cool work-around when you think about it. But there’s a hitch.

The exemptions are very technical and they differ from jurisdiction to jurisdiction. Basically, that can mean that your ACN Contractor mightn’t need a licence in, say, Victoria; but could need one in the A.C.T.

The sort of factors you need to consider include:

  • how many directors the company has;
  • how many individuals it supplies to perform work for other people;
  • whether the individuals have a management role or share in profits.

You also need to check how the individuals actually get paid by their ACN entities, because not all payments are payment for the work performed. Some are share dividends; others are trust distributions; some payments might be by way of directors fees – all of which might not be able to be characterized as payments for the work performed.

So, keep checking the arrangements that your ACN contractors have with the individuals who perform the work.

And keep in mind that circumstances can change. Someone’s mother is appointed as a director and suddenly the maximum number of directors required for the exemption to operate is exceeded; or someone’s little brother starts freelancing through the Contractor’s entity, and the maximum number of workers required for the exemption to operate is exceeded.

Before you know it – and perhaps without knowing it – you’re involved in an unlicenced labour hire supply arrangement.

You wouldn’t want that, would you?

Andrew C. Wood

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