Employee Vs Subcontractor
When you hire trainers and or assessors, you must check if they are employee or contractor.
The wrong classification may attract penalty and charges. An employee works in your business while a subcontractor runs his/her own business.
Having an ABN does not mean that a trainer/assessor can be a subcontractor.
It would help if you considered the factors including:
Basis of payment: If you pay trainer a set amount such as award rate, annual salary or an hourly rate for the time they work, they are employees. If you pay a trainer/assessor for delivering a particular unit, they are subcontractors.
Equipment and tools: If your RTO is responsible for providing the equipment such as a computer and the devices to enable the trainer to deliver the course, the trainer is an employee. Whereas if the trainer is responsible for organising equipment and tools, the characteristics are of a subcontractor.
Commercial Risk: The employee does not take the commercial risk and is legally not responsible for the training deficiencies. A subcontractor is liable for the shortcomings in training and assessment.
Ability to subcontract: If unavailable, a subcontractor can pay and delegate the task to another trainer/assessor. If an employee is unavailable, the RTO organises the replacement staff.
Control over the work: Subject to the terms of the contract, a subcontractor decides the training and assessment schedule. An employee follows the procedure and plan provided by the employer.
Independence: A subcontractor trainer/assessor can work for several RTOs while an employee works exclusively for your RTO.
These factors, taken together, determine whether a trainer/assessor is an employee or contractor for tax and super purposes.
Also, If you delegate the task to another RTO entity, they are always subcontractor.