In the recent decision of Olias Pty Ltd as trustee for the Storer Family Trust and Commissioner of Taxation, the Administrative Appeals Tribunal (AAT) found that a “contract” music teacher fell within the ordinary definition of ‘employee’, and was therefore an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (Cth) (SG Act).

Here, a music school, that was run through a discretionary trust, provided music lessons to children, including private tuition for students. Private lessons were provided on a term basis, and weekly time slots were reserved exclusively for individual students.

The music school engaged an individual as a “contractor” to provide private lessons for guitar and singing to students. The music school’s position was that it engaged the individual as an independent contract, not as an employee.

The AAT found that the individual was a common law employee. Some factors indicating an employment relationship were:

• There was no written contract between the parties, but the contractual arrangement between them was akin to that of a casual employment agreement;

• There was no negotiation in relation to pay, and the individual was refused a pay increase when he tried to renegotiate one;

• The music school had a large degree of control over the individual in relation to the duration and location of lessons, the fees paid for lessons and the uniform to be worn;

• It was clear that the individual was providing services on behalf of the music school and not on his own behalf (ie, he was not conducting his own independent enterprise);

• The individual was required to deliver the lessons personally, and had no right to delegate;

• The bulk of the commercial risk lay with the music school; and

• The individual was provided with all tools and equipment that he needed for lessons.

Following the decision in Dental Corporation Pty Ltd v Moffet [2020] FCAFC 118 (discussed here), this is another case which should cause employers to review their relationships with contractors and be mindful of their potential super guarantee obligations, as significant penalties, charges and interest apply for late/underpayment of super guarantee.

To discuss or for further information please contact:

Phil Broderick
Principal
M +61 419 512 801 | T +61 3 9611 0163  
E: pbroderick@sladen.com.au           

Philippa Briglia
Senior Associate
T +61 3 9611 0173
E pbriglia@sladen.com.au