Tutoring Organisation Wants to Hire Me as a Subcontractor Rather than an Employee. I Need Some Help Understanding The Contract

Lohrehman on 29/11/2019 - 08:25

I'm only looking for about 10 hours of work every week, as a full time uni student.

Is it worth it to be a subcontractor? How long would it take to manually make tax and super payments myself? Would there be any other difference compared to being a casual employee?

Should I just apply to other places and get hired as a actual employee?

Some things from the sample contract/ deed they sent me struck me as odd:

  1. In consideration for the services [COMPANY] provides to the Tutor the Tutor agrees to pay to
    [COMPANY] a Service Fee which is an amount equal to the difference between the Client Fee and
    Tutor Amount which is the amount referred to in Schedule 2. [COMPANY] shall be entitled to keep the
    Service Fee for the sole personal use and benefit of [COMPANY] as the fee to [COMPANY] in providing the
    Services to the Tutor.

  2. After deduction of the Service Fees due to [COMPANY] under clause 10, [COMPANY] must remit
    to the Tutor on a monthly basis the balance of the total Tutor Amount for that month that are
    directly referrable to the tutoring rendered by the Tutors.

  3. [COMPANY] must make available to the Tutor the total of all Client Fees charged for tutoring
    services provided to Clients by the Tutor and details of the total Service Fees charged by [COMPANY]

What's that all about? It seems kind of fishy to me. Should I keep applying elsewhere? I'm not desperate to find work just yet.

Education & Work

Comments

  • sahh on 29/11/2019 - 08:32
    +2

    Seems like the tutoring company will take a cut of any money you earn from clients. I think this is pretty standard?

    • ohrehman on 29/11/2019 - 08:38

      They would definitely take a cut, but I'm wondering why it's worded as a service fee. I just don't want to be roped into something where I'll end up paying for unexpected things (e.g. new client fee, resources fee, training fee, etc.)

      • HighAndDry on 29/11/2019 - 09:15
        -1

        Unless those are mentioned they can't charge them.

  • loke on 29/11/2019 - 08:41
    +1

    Looks like all it says is that they collect a service fee and remit to you the net amount

    Anyway lookup the definitions of subcontractor (provide own tools, rectify mistakes/issues, etc etc) vs employee.

    Very commonly they choose to make you a subcontractor to avoid payment of 9.5% super (also if you are an employee they'll talk about salary package of 55k inclusive of super). Does your contract specify that you are entitled to super?

    As far as I have seen, good compliant employers/payers will also pay super for you under a subcontract:

    See https://www.ato.gov.au/Business/Super-for-employers/Working-…

    • ohrehman on 29/11/2019 - 09:16

      They specifically mention in the deed/ contract that they won't be making any super contributions. As a subcontractor then I'd have to do that myself?

      • loke on 29/11/2019 - 09:31
        +1

        No you don't have to make super contributions at all,

        In more cases than not an arrangement for your labour e.g. hourly rate per hour etc will make any subcontractor they hire 'an employee for super guarantee purposes'. Try the super guarantee decision rule as linked above, as it is very likely they are not compliant with the super guarantee act / rulings and can be made liable for paying super (e.g. ato super audit, or fairwork)

        (and the above 'salary package' was just an example I'm giving where they include total remuneration, the opposite is usually e.g. ~50k 'plus super')

        • ohrehman on 29/11/2019 - 09:50

          Thanks for that, I'll have to email them about this.

  • HighAndDry on 29/11/2019 - 09:16

    It's a tutoring place - most if not all basically operate using this or a similar structure, it's pretty standard.

  • brad1-8tsi on 29/11/2019 - 10:30

    Is the service fee a flat fee regardless of hours/clients or is it a percentage of revenue?

    • ohrehman on 29/11/2019 - 17:06

      That's the other thing I included in the email

  • Ugly on 29/11/2019 - 13:39

    Making you a subcontractor saves the company money as, (depending on the state - each state has slightly different rules.), you may not be covered under their workers' compensation insurance, so their premiums are lower.

    You may need to factor in paying for your own insurance, as you may not be covered in the event you get injured while working as a contractor.

    • ohrehman on 29/11/2019 - 17:07

      I don't think I'll get insurance for myself, but I will certainly look into whether or not my car insurance covers something like this. Thanks for the reminder.

  • [Deactivated] on 29/11/2019 - 16:23

    It's the same as I remember it when I was a tutor 20+ years ago. I guess things haven't really changed that much.

    It's not glamourous, but it's better than nothing. It gives you something to talk about in your interviews. In the end it gives you a glance into how businesses operate and whether you want to at the end of the day be working for yourself in the future.

    Own my business now, albeit not in the education sector. So I've come a long way.

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