Employees vs Contractors

is the difference really that clear?

I have spent much time working with employers in recent years who engage contractors on a regular basis in their business to assist with both operational and core business functions.

This has always been seen as a flexible way to engage people into their businesses, without the commitment, and sometimes cost, and overall management of hiring employees.

However, I have noticed more and more so in the last 12 months the use of contractors has seemingly become more common in many of the small businesses I speak to, and the line between what constitutes a contractor seems to be less clear now than ever.

It’s an important point to understand, because it’s an issue the ATO looks carefully at, and, should it be bought to their attention, and you as an employer are found to be treating a contractor as an employee, then effectively it is possible that they can rule that they are in fact an employee, leaving you liable for payments you hadn’t anticipated, such as superannuation and tax.

So how do you tell whether the people you engage in your business are in fact contractors or employees? Admittedly for many businesses the line is not that clear cut, and there are arguments on either side for their situation.

The first thing I encourage you to do is review the details on the ATO website, which can be found at www.ato.gov.au

The specific page you are looking for is found at http://www.ato.gov.au/businesses/distributor.aspx?menuid=0&doc=/content/00232435.htm&page=2#P39_2762

On there you will find a handy little table (pictured here) which helps to clarify the boundaries for you.

At the heart of it, here are the key rules (please note though these are not black and white, and there is some grey area in each):

1) A contractor is typically paid to perform a task, not for the time they work. An example might be a contractor is paid to complete a retaining wall at your house. They are paid when finish the job, not for the number of hours). Whereas an employee must be paid for the hours they work, regardless of the output.

2) As a contractor they typically have the ability to outsource the work to another party

3) As a contractor they control how the work is completed, within the terms of their agreement with the payer, and usually provide their own resources, such as computer, printer, office supplies etc

4) Contractors bear their own legal risks, and provide their own insurances

5) A contractor has the ability to accept or decline projects, assignments and contracts as offered to them.

At the heart of it is the issue of control – if, as a business owner or employer you want to very tightly control the people you engage in your business, to the point that you want to require them to work certain hours,
perform work in a specific way within strict guidelines, and expect them to work exclusively for you then it’s quite likely they are an employee – no matter how you might be actually paying them.

There are undoubtedly needs for both contractors and employees in the modern workplace, and contractors continue to provide an exceptional way to gain new resources into your business, without the burden and commitment of having employees. But I encourage you to know what you need in your business, and what will achieve the best result for you, and above all else be aware of the structure as set out by the ATO to protect yourself and your business from being liable for additional costs either now or in the future

Recruitment 101 – The Basics To Making Your First Hire

Sometimes just knowing where to start when hiring your first staff member can be the most daunting thing. For many of us, hiring the first staff member into our business is a huge step – not only because it means exciting things like growth and opportunity, but it often also means we need to let go of some control, trust someone else with our ‘baby’ and let this person in to our business world.

So to help those who find themselves in this position, here is what I call my Recruitment 101 – the basic things to focus on when making your first hire:

1)   Know what you are looking for:
Before you even start the hiring process, sit down and take a good look at your business. Write out all of the tasks that need doing in the business, and try and put them together into some logical positions and structures.

Now take the tasks you want or need to continue doing, and put these into your role, and have a look at what is left. From the tasks that are left, take a look at the tasks which are most important to the business being able to function – and which tasks do you most desperately need help with – you now have a focus for your new position, so write yourself a Position Description for the role (there are lots of templates available either online or from a HR service provider)

2)   Know your target market:
After figuring out what sort of role you want to fill, and the type of candidate you want to fill it, start to think about where your ‘ideal applicant’ is looking for work.

There is no point advertising for someone in the local paper, if you know your ideal applicant probably doesn’t read the paper. Think about where your applicant looks for work, the sort of mediums they use, the location they will be in and the other people they are likely to come into contact with.

3)   Write the right ad
Writing an ad that attracts the right sort of candidates, and lets readers know what are the essential components for the role will save you time by ensuring your applicant pool is generally better suited to what you are looking for. To get the best people for your role you will need to sell the role, and the company to the reader, and make it clear what you are seeking in regards to their skills, experience and qualifications.

4)   Use Your Networks:
Advertising is one way to find potential new employees, but don’t forget to think outside the box and use your networks, referral groups, industry associations and any other groups you have access to letting them know you are looking for someone.

5)   Conduct Structured Interviews:
By conducting interviews where there are a number of questions which are set and asked standard to all applicants you will have a common set of responses by which to assess and compare them by after the interviews. You should also allow time for free talk, discussion and questions within each interview to help you understand those non tangible factors such as team fit and personality style.

After each interview reflect objectively on each one and make notes – it saves confusing multiple applicants after all the interviews are done.

6)   Use Other Screening Tools:
Interviews are great and very important, but there are other tools available to help you make your decision – don’t forget about reference checking, skills testing, checking qualifications, psychometric assessments, aptitude tests, and the full range of other recruitment tools available to assist you.

Being the sole decision maker in a recruitment process can sometimes be difficult as you spend time thinking over your decision trying to make the right choice. By sharing the decision making process with other people you can cut the time spent doubting yourself and potentially losing great candidates. Seek assistance from advisors, mentors, or other key people who help you in your business.

7)   If you are not sure – seek help:
Don’t be afraid to get help from a Recruiter, or HR Consultant if you think you need, or would like, some help

8)   Recruitment is Only Step 1:
Whilst recruiting the right person is really important, don’t forget that this is only the beginning of the process. Making sure the person has the right training, induction and ongoing management will give them the best chance for success in the role.

This is by no means an exhaustive list, but hopefully these tips will help you make that first hire a successful one for you and your business.

Providing Reference Checks

Many of you who have hired, supervised or managed staff in the past will, at some stage or another, find yourself being asked to be a referee. If the employee was a ‘star’ you will usually have no hesitation in providing the prospective new employer conducting the reference check with all the information they need to confirm they should hire the person.

But what about when the employee was less than perfect? And let’s face it, very few are completely perfect – do you provide constructive criticisms to help the potential employer make the decision or hire the person? Or do you gloss over the details, not wanting to say anything negative or impact the chances of the individual getting the job?

As a ‘Recruiter’ we get to see the full gamut of responses, because we conduct more than the average number of reference checks when screening our candidates. From this experience I have seen referees who were trying to be nice, giving feedback which resulted in the employee getting a role they were destined to fail in, right through to the most glowing – and conversely most critical references, our responses have spanned the full range.

So what’s the best thing to do when faced with a reference check call on an employee who could have used some improvement, or simply wasn’t right for that role? Here are my top tips to being a ‘great referee’:

1) Be honest – you are doing no one a good service by lying during a reference check, or omitting details which could be important for the prospective employer to know.

2) Stick to the facts – sometimes it can be hard, but try and leave the emotion out of it. If you need to provide some criticism of the employee, stick to facts which can be easily supported by documentation – things like excessive sick leave, performance issues which were being managed, conflicts with other staff or customers etc.

3) Use examples – if you can give the reference check examples of how the behaviour or skills miss match effected their work performance, and the impact it had on the organisation, this will help them to make a decision about whether it would be relevant to their business or not.

4) Take a balanced approach, give examples of both the positives and the negatives, sometimes it can be easy to get ‘caught up’ and focus on the positives, and forget to mention any potential negatives, and vice versa

5) Think about what you would like to know if it was you asking for the reference check. If you were the potential employer would you want / need to know feedback about their performance, work ethic, skills or experience? If it’s relevant to you, it may well be relevant to the potential employer you are speaking to.

6) Remember that your feedback is not the only tool the potential employer is using to make a decision – so don’t feel guilty by being honest.

7) You are not helping the employee by setting them up to fail. If the employee is not right for the role, then you are not doing them any favours by telling a potential employer they are the perfect applicant. In the end they will not succeed in the role which may in fact be more damaging for their confidence and employment opportunities by providing a reference check suggesting they can do a role which you know from your experience they are not best suited to.

Avoiding the Common Recruitment Traps

Is it possible that a successful recruitment project can come about less because of your exceptional planning and structures, and more because you knew where the traps were – and most importantly how to avoid them?

Here are some of the most common traps employers fall into when recruiting staff- and my tips on how to avoid them!

1)   The ‘anyone is better than nothing’ trap:
When you need to hire a new staff member – you typically don’t have time on your side. So you are either refilling a position because someone has resigned, you are flat out busy or a new project has just landed on your lap – so getting things done quickly is often a priority. But falling into the trap that anything is better than nothing is not the right thing to do. Of course you need someone in the role, but assuming that just
‘anyone will do’ is a dangerous trap. Getting the right person for a role is critical to the long term success of the position, otherwise you’ll find yourself consistently managing the person, and filling the role time and time again. So resist the urge to fill the role with just ‘anyone’ and look at alternate solutions – like temps, casuals or outsourcing to help you through the immediate staff, while you take the appropriate time to find your perfect new employee.

2)   The ‘no one will do the role as good as I can’ trap:
As business owners we are invested in our business, both financially and emotionally, more than we can ever expect anyone else to be. So we therefore assume that no one else could possibly do a task as well as we can. This is one of the traps which impacts on successful recruitment projects – sometimes employers need to learn to let go, and hire someone who can do the role almost as well, and train them up to their level from there.

3)   The ‘I’ll make the role up to suit them’ trap:
This is a really easy trap for small businesses to fall into when hiring staff, because there is often so much which could be passed onto someone new, that you think you can make up a role to suit a candidate who you really like. Unfortunately this trap can lead to longer term issues when the team or the business is growing. Understanding your future business structure, and the specific roles you need before you start recruiting
is paramount to avoiding this trap – know what you need from the role and the person performing it, and stick to it! Of course some flexibility is great, but if you are too flexible, you’ll only do yourself a disservice in the longer term by creating a structure which doesn’t work for the business, all because of one person.

4)   The ‘reference checks are a waste of time’ trap:
Many employers decide to take ‘short cuts’ in the recruitment process by deciding that reference checking, or other critical parts of the process like interviews and skills testing, are a waste of time, and think they can trust their gut feel to get them through and save some time. There is no doubt that your gut feel is very important, but by failing to do the appropriate checks and assessments, leaves you open to the risk of hiring
someone who does not have the skills, experience, attitudes, reliability and behaviours you need in the role.

5)   The ‘her sister is looking for work’ trap:
Failing to properly asses the best candidates in the market is one of the biggest traps I see employers, particularly in small business, fall into. They hear of, or know of, someone looking for work, and thinks this gives them a quick fix to their staffing levels and busy workload. When recruiting staff you need to hire the people who know the roles best, and have the right skills and experience – not someone who knows your team well. Aside from the complications this trap creates to do with inappropriate skills and experience, there is the added complication of the ‘personalities’ involved – when they have a falling out with their friends who
got them the job, the workplace can become very negative place with distractions and personal issues taking precedent over getting the job done!

Meet Kim


She’s a HR Peopleologist

Kim joined the Footprint HR team in 2012 with much enthusiasm. After moving from Sydney to Newcastle and then to the coast within a matter of 12 months with her husband’s work, they very happily settled here on the coast about 3 years ago. One thing that has been constant in that time is the ongoing rumblings from fellow ‘coasties’ about the lack of a good Human Resources service provider here – enter Footprint HR. Kim is very excited to be able to use her 12 years’ worth of industry knowledge to support and guide her new clients in their human resources needs.

Kim has an interesting background catering to her creative urges and her love of people. Her mum was a great dressmaker and teacher of sewing and from a very young age, Kim would sit next to her and create spectacular outfits. Yes picture the scary early 80’s. From her love of designing and sewing, she completed her Advanced Certificate in Fashion Technology and had a great career in fashion both working for others to having her own successful business. Working in retail, like many people has also played a big part in Kim’s life.   Fast forward to 1997 and Kim has an urge to change careers, so she packed her bags and moved from her home town of Newcastle to Sydney to undertake her studies in Human Resources.

Kim has worked in varying industries in HR in Sydney. These include retail, financial services, government departments and resources. These roles were a great learning curve for Kim and exposed her to so many different sections of HR. She can now keep her passion alive for helping businesses and people to understand the role of HR in their organisations from both a commercial and people management point of view. Kim really enjoys working for different businesses, is a continual thinker and likes to be doing more than one thing at a time.

On a personal note Kim lives with her hubby and 2 crazy kids (a sports nut son and a curly haired dancing princess) at Green Point. Hubby still travels to North Sydney daily for work. Kim has trouble remembering when they last had a weekend doing nothing. They are a very active family spending most of the time together down at Terrigal surf club. 

Meet Matt


Meet Matty

We call him a Peopleologist.

Matt has a passion for people and has always worked within ‘people centric’ roles, having had careers in both hospitality and retail before deciding to go back to study Human Resources in 2007. Since then he has worked for both small and large Sydney based organisations growing his HR career to what it is today, even expanding into project management to add to his professional repertoire.  After deciding that the ‘commute’ to Sydney everyday was not for him, Matt has moved his career back up to the Central Coast in the hope that he can use his skills helping the local businesses and community.

Matt’s philosophy’s for life is that ‘life is to short’, and ‘life isn’t a dress rehearsal’.  He is a big believer in karma, and doesn’t like to sweat the small stuff!

On a personal note Matt recently bought a house in Umina Beach with his partner and is trying his hand at renovating the cute 1950’s beach house himself (to those who know Matt well, they find this very amusing). Matt has a 10 year old daughter Isabella, who also keeps him busy with her many gymnastics competitions and training sessions. Matt loves to cook and believes a perfect way to spend time with friends and family is by sharing a meal and some vino together.

Managing Counter Offers

When recruiting staff, particularly in candidate short markets where finding the right person for your role in your business can sometimes feel more like a detective mission than a hiring process – a counter offer can be the most frustrating and disappointing outcome.

A counter offer in its basic sense is when the applicant you have offered the position to is, usually upon resignation with their existing employer, offered more money or better benefits in an effort to keep them with that company.

So when a counter offer situation arises, how do you know whether to go in fighting, or walk away and start again?

1)   Be objective. Recruiting people for business, especially when it’s your own business, can be emotional, and feel personal. You become more invested in the process and the people involved, which sometimes leads you thinking you need to
‘fight’ for them. It’s really important to remain objective and leave your emotions aside, so you can use your sound judgement and the facts at hand to make your decisions.
2)   Know your market before you begin. Recruiting staff, like anything else in business, isn’t a guessing game. If you understand your market, know how common or rare the skills you want or need actually are, and what their real value is in the market, means you are educated and informed. Like all decisions, those you make from an educated and informed perspective are always better.
3)   Know your limits – there is no point getting into a ‘bidding war’ with a candidate and their existing employer if you simply can’t afford them. Let’s face it we all want the best people in our business, but sometimes what we need to look at
is what is the best person we can afford for this role at this time?
4)  Ask the right questions at interview. We all would like to think that the candidates want our job above all others, but do they? By asking questions at interview about their reasons for wanting to leave their current role, their motivations, their goals and objectives, both personal and as a career you get a better understanding of whether what you have to offer really fits in with their future plans at a base level. The other important question to ask at interview is about what they need in their next role to make them happy – it could be about the industry, the company, the size of business, the team, the location, the opportunities or anything at all.
5)   Keep the communication lines open. The reality is when faced with a counter offer, the current employer gets the last word, they are in their face, they know them, they have the opportunity to excerpt pressure, create feeling of guilt
and ultimately make things happen. As the potential new employer you need to keep the communication lines open so you are still in the picture

If you walk into the process with all of these things in place, you are in a much better situation to handle the news of a counter offer. If you know that the role you are offering ticks all the boxes for the candidates motivation and future goals, go in fighting (in the nicest possible way), remind them of the feedback they gave at interview, the reasons they wanted to leave the current role, and what you are prepared to offer. If you know however that you can’t afford them, or the offer they have is a better match to their motivations and goals, walk away and start again – it will be a better decision for you and your business in the longer term.

Is there a needle in this haystack?

I found myself watching one of those ‘property search’ style shows the other day and was reminded just how similar the search for employees can be to that search for the elusive, ideal property. I think particularly for small businesses the similarities are even more clear and here’s why:

1) You, the purchaser / employer start out with a lengthy and perhaps not all that realistic ‘wish list’.
2) You quickly learn that you will need to compromise, but in what area, by how much and at what cost?
3) It’s personal – typically you’re recruiting a new staff member for your own business, your brand, your ‘baby’. Just like typically when you purchase a house it’s your money and you’re spending it for you.
4) The risks are high if the decision is wrong.
5) You are ultimately the one who deals with the consequences of a wrong choice, or wrong compromise.
6) At the end of the day you’ve worked your backside off to get to this point, and you want to have your cake and eat it to, you don’t want to compromise – you want it all!

So how do you know whether you are looking for a rare needle in a haystack, or in fact you are looking for an impossible dream and need to compromise and move on?

- Walk into the process with a clear understanding of what you are looking for and why. It sounds odd, but understanding why you need or want certain skills will help you to further drill down and understand which skills, experiences and competencies are essential and which others would be great to have, but you could ultimately live without
- Write yourself a values document for the new hire. This is something I never learnt in my years as a recruiter, but a rather clever business advisor shared this with me and having used it myself in my own small business I think it’s fantastic! What you do is make up a list of the values, beliefs, experiences, skills, qualifications etc that your ideal new hire would have. What this does is allows you to clarify in your mind those ‘warm and fuzzy’ traits which will be most important to the individuals success within your business and your role, and gives you a great framework to assess all your applicants against. Let’s face it, you will often find yourself saying that you liked a number of applicants, but each of them holds different strengths and weaknesses in terms of their experience. This is where this sort of document can make all the difference. If their values and beliefs don’t align, no matter how good their experience is it would be destined for disaster.
- Know where your target market is – and where to find them there. What I mean is, know where your ideal applicant looks for work, which websites they trawl, which publications they read and what networking meetings and groups they’re likely to be at. But timing can also be everything, advertising for a role targeted at a ‘mum wanting school hours who used to have a high end corporate career’ in the middle of school holidays is probably not ideal – they’re busy!
- Allow a realistic amount of time. Of course we all always want everything immediately, but sometimes it can take days, and possibly even months to find the right person. Perhaps a temp or contractor can help you get through the urgent stuff in the meantime.
- Be open to change and think outside the box! You have your wish list, but does it all have to be done by one person? Or can the tasks be broken up and completed by two or more part time, casual or contract staff? Sometimes it can be better to have people working in their areas of expertise, rather than trying to do all the tasks you want, some of them not always that well.

How to Manage a Counter Offer

For some, the ‘job seeking’ process is confronting, challenging and scary. But for others, it’s not the hardest part of changing jobs, it’s the resignation process which fills them with the most dread and fear!

This is most often the case for those:
-      who are leaving a team of people who they really like working with
-      who have been in their current position for a long period of time
-      who know that their resignation will leave the employer or team under staffed or under skilled

If this sounds like you, then for you and many others, no matter how excited about the new role you are, the resignation process is never fun!

This can get all the more complicated when the employer is so redescent to see you leave, they counter offer you.

A counter offer, simply speaking, is when your existing employer tries to entice you into staying with your current employment, after you have resigned. The aim is simple, they don’t want to lose you from the organisation.

Counter offers are sometimes expected, but often come completely out of the blue to the employee. Typically they are based on the offer of more money, but the counter offer can also involve a change in role, promotion, more flexible hours or working conditions or a change in structure.

Whether expected or not, the counter offer can be very flattering. It’s human nature that it’s nice to feel wanted and valued by the employer, but have you been valued to this extent before you resigned?

Statistics show that approximately 90% of employees, who accept a counter offer to stay with their current employer, end up leaving anyway within 12 months.

Here are some keys to dealing with a counter offer:
-      Consider whether the offer on the table is purely a knee jerk reaction to the resignation – will your employer be able to follow through with their promises? Eg they have offered to restructure the team so you don’t have to deal with that manager anymore, but is this practical? Will you end up reporting to them again within a couple of months?
-      Reflecton the real reasons you were looking for other work to begin with. If your job search was never about the money, than an offer of an extra $5k per annum from your existing employer shouldn’t lure you into staying. You will end up very quickly feeling the same way and seeking alternate work
-      Don’t be pressured into accepting. Because you are still on site with your existing employer, and your ‘new employer’ you have often only met once or twice, it can be easy to feel pressured by your current boss. You are seeing them every day, which gives them ample opportunity to consistently make their case as to why you should stay
-      Consider what will change if you do stay. Often after accepting a counter offer the dynamics of the team around you change. Perhaps your colleagues will show resentment towards you because your manager went to so much trouble over
keeping you, perhaps you don’t feel the same about the role anymore, perhaps with the new increased salary comes higher expectation of you from management. Either way, it’s quite likely that the dynamics will never be quite the same.

No matter what your decision, to accept a counter offer or not, your decision needs to be weighed up carefully and with a clear mind. Ensure that you are clear about why you were leaving the role to begin with, why you accepted the new role, and how the counter offer will change this decision.

If you decide to accept the counter offer, relay this to the new employer as quickly as possible, so they can get on with starting the recruitment process over, and apologise for wasting their time, and explain the situation to them. They are probably not going to be too happy anyway, but if you handle the situation with honesty and professionalism it will be appreciated.

If you decide not to accept the counter offer, be firm with your existing employer, thank them, but explain your reasons for declining and let them know your decision has been made. They may not like to hear it, but this is your career and future, and you need to take control of it.

New Year, New Career.

‘New Year New Career’ is a term well used by employers and recruiters alike in job ads during the lead up to, and aftermath of, the Christmas and New Year period. And there is a simple reason for this – it works.

Many employees who have become disengaged in their workplace, roles, and careers during the year find themselves taking stock of what really matters and what they really want to achieve in the year ahead – and they do all of this whilst on their Christmas break.

As they sit with family and friends, and start discussing New Year’s resolutions, and the achievements of the year just gone, it dawns on many people that they are unhappy in some aspect of their lives, and the quickest fix seems to be to get a new job! They return from their Christmas leave and one of three things will generally happen:

1) They stay put, waiting for a ‘sign’, some motivation, inspiration or for something to change. These people generally remain disengaged from their responsibilities and do just what’s needed to get through the day flying under the radar.
2) They promptly hand in their resignation on their first day back and commence job hunting.
3) They start searching for that great new role, giving little if any focus and commitment to their current workplace until they inevitably resign.

None of these are ideal situations for a business of any size to face at the beginning of the calendar year, but what, if anything, can you do to avoid these times and minimise the impact they have on the operations and profitability of the organisation?

1) Look for the signs of staff who have began to disengage from their roles or the organisation. These signs generally involve a shift in behaviour and some classics include taking more than the usual amount of sick leave; leaving work right on time every day, when they used to be the sort of person to work back whenever needed; not putting their hands up for those special projects they previously have been dead keen to be involved in; withdrawing from groups within the workplace; taking long lunches and in general being a different person in the office.
2) Don’t wait until after the New Year to start re-engaging these employees. By having regular reviews and appraisal systems in place, you will more easily be able to identify and manage these employees. Also coordinate more casual and off-the-record catch ups with staff to encourage open communication.
3) Keep employees engaged in the vision through regular team and company meetings – sharing with them goals and visions and allowing them the ability to provide ideas as to how they can contribute to the success and achievement of company goals.
4) Reward staff who are doing a great job! It doesn’t have to be grand or expensive, nor does a big fuss have to be made – a small gesture goes a long way.
5) Know what motivates your people – when you understand this you have the best possible chance of keeping them engaged and committed.

At the end of the day, staff will always leave organisations, and in some cases there is nothing you can do to prevent this, but you can ensure you manage the process to minimise the impact it has on the rest of the team.

If you have open and honest communication channels with your staff, and they feel they can come to you with honest feedback, you will be in the drivers seat when these situations arise. If they come to you indicating they are seeking alternate work, and there is nothing more you can do to keep them should you want to, give them your blessings, help them to find something new and start he replacement process yourself internally straight away.

The longer an unhappy employee stays with you, then more detriment it will have on your team and ultimately your business. Don’t try and delay the inevitable, nip it in the bud and move on.