FORWARD. Good luck on completing your apprenticeship and for the future. Russell Holtham General Manager - Operations HIA Apprentices

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2 FORWARD I am delighted to provide you with the following information, WHAT NEXT I am sure it will be of considerable benefit to you and will help you with your future plans. Since HIA Apprentices inception we have been committed to providing the best opportunity for young people to gain recognised skills and qualifications. Making decisions on your future career path will be paved with all sorts of options from being directly employed to being self employed. HIA recognises that one of the concerns when commencing your chosen vocation is identifying whether to become an employee or an independent contractor and then knowing what and where to gain help. Issues such as taxation, superannuation, and insurance and workers compensation are critical when working out your charge rates if working as a independent-contractor. Our commitment to being the best in the business would not be complete without providing you with this guide. I trust you will find it a valuable and useful resource. Good luck on completing your apprenticeship and for the future. Russell Holtham General Manager - Operations HIA Apprentices Version 8 February

3 This booklet has been produced to provide completing HIA Apprentices with some guidance for their future direction. All the material presented is of a general nature only and you should do further research and follow up with the relevant authorities for specific advice. Remember at the completion of your apprenticeship you remain a member of the HIA for a further 12 months. That means that all the services and advice that the HIA has to offer are available to you. The topics covered are Introduction Page 4 Employment approach Page 7 Trade contracting Page 21 The pitfalls Page 41 Not staying up to date Page 42 Continuing your career development Page 43 Growing a sub contracting business Page 50 Where to get advice Page 53 Version 8 February

4 So you re completing your apprenticeship. Congratulations What's next? When you have successfully completed your apprenticeship or traineeship, there are a number of pathways you can take on your way to a rewarding career. Your qualifications will be nationally recognised. Ongoing employment If you have been happy working with your current host, and they are willing to keep you on, you can become a full-time or part-time employee. On completing your apprenticeship or traineeship, your wages will need to change to the appropriate rate for qualified workers in your occupation. However, your host is not obliged to offer you ongoing employment. Getting a job with another employer You can use the skills you have acquired through your apprenticeship or traineeship to get a job with another employer. Your training record, your Apprentice Experience Register and the qualification you obtained through completing your apprenticeship or traineeship can be used as evidence of your skills and knowledge when applying for jobs. Be prepared When applying for a job, you need to make a good impression. An up-to-date resume that is professional and free of errors is a must. If you are invited for an interview, you will need to make sure you arrive on time, are well presented, and have a good idea of what you are going to say. Have some evidence of the type of work you have been doing, your Apprentice Experience Register is a good place to start. Search these websites for more tips on how to get a job: Version 8 February

5 Finding a job: 1. Search the Internet - more jobs are advertised on the Internet than anywhere else. Some sites to try include: Apply for jobs advertised in the newspaper - search the careers or jobs section of your local newspaper. 3. Contact employers directly - you can do this either in person or through a letter 4. Use personal networks - talk to your family, friends or teachers to see if they know anyone who has a job vacancy 5. Contact a Job Service provider - these organisations can provide you with a list of job vacancies in your local area. Telephone or visit Providers.aspx Starting your own business On completion of their apprenticeship, some qualified tradespersons choose to set up their own business and work for themselves. Those people who have completed a traineeship may also have the option of using the skills they have acquired to start their own business. It is important to be aware of your legal, regulatory and financial obligations when starting a business. It is a good idea to get specialist advice and training in the day-to-day operations of a business, including record keeping, sales and marketing, and managing staff. Some of these areas will be touched on in the following pages. You should also contact the HIA and talk with the Workplace Advisor/IR Legal and visit for information on basic issues you need to know about when you re new to business. Visit hia.com.au and check out the Introduction to Business Plans hia.com.au/hia/content/is/bis/bp_bus_plan.aspx Version 8 February

6 Further study On completion of your apprenticeship or traineeship, you will have received a certificate-level qualification for example, Certificate III in Carpentry. You can use this qualification to help you go on to further study by gaining credit towards a higher level certificate or diploma course. Your record of skill development and work experience may also help you if you apply for a university level course. The HIA also provides courses in topics that may be of interest that will help improve your knowledge of the industry. Certificate IV in Building is a good place to start. Contact HIA Training Services in your region. Work licensing Will you need a work licence? In some states you will be required to obtain a trade contractors licence to be able work in the housing and construction industry. If you are undertaking an electrical apprenticeship or a plumbing and draining apprenticeship, you may need to apply for a work licence before the end of your apprenticeship. You can contact the HIA and talk with the Workplace Advisor/IR Legal and your state and territory licensing bodies for further information. Australian Capital Territory New South Wales Queensland Victoria South Australia Western Australia or Builders Licensing Australasia and follow the links: Version 8 February

7 The Employment Approach Version 8 February

8 Introduction When you were employed as an apprentice with HIA Apprentices you had all your employment conditions and needs looked after. Once you complete your apprenticeship with HIA you will need to find your own employment or start your own business. If you decide to seek employment it is important that you understand how you are going to be employed and the employment conditions that will apply. How will you be employed? As an employee, you will be employed in one of the following categories: (a) (b) (c) (d) daily hire employee; full-time weekly hire employee; part-time weekly hire employee; or casual employee. At the time of engagement an employer should inform you, in writing, of the terms of their engagement and in particular whether you are to be a daily hire, full-time, parttime or a casual employee. Daily hire employment A daily hire employee will generally be entitled to the same terms and conditions as a weekly hire employee (described below) however a daily hire employee can be terminated on one day s notice because of this, daily hire employees normally receive a special loading as a part of their pay to compensate them for periods of unemployment between engagements. Full time weekly hire employment A full-time weekly hire employee is an employee who works an average of 38 ordinary hours per week. A weekly hire employee will generally work on a regular and systematic basis and will have an expectation of ongoing employment. Full time weekly hire employees are entitled to receive minimum entitlements such as paid annual leave and personal leave (which covers sick and carer s leave). Version 8 February

9 Part time weekly hire employment Part-time weekly hire employees are much the same as full time weekly hire employees but work fewer than 38 ordinary hours per week and have reasonably predictable hours of work. Part-time employees will generally receive paid leave entitlements that are proportionate to the hours worked. Casual employment A casual employee is ordinarily someone who is employed on an irregular basis, with no set roster or routine. There is no guarantee of ongoing employment and staff are usually retained on a as needs basis. Casual employees are paid by the hour and have no entitlement to paid annual leave, sick leave or some benefits associated with continuous full time employment. There is also no entitlement to, notice of termination. A casual employee can also refuse offers of work at any time due to other commitments. Most awards and agreements attach a casual loading to the standard hourly rate to compensate the employee for the loss of sick and holiday benefits. Under the Modern Building and Construction General On-site Award 2010 (which currently covers on-site employees of Pty Ltd companies, and employers in the building industry in Victoria, the ACT and Northern Territory) the casual loading is 25% (subject to transitional arrangements). Where the work of a casual employee becomes regular and systematic and where there is an expectation of ongoing employment, then they may become permanent employees. The Building and Construction General Onsite Award gives employees who are working on a regular and systematic basis the right to convert their employment to permanent status after 6 months of continuous service. Individual state and territories may vary please check with your local Industrial Relation Department or call HIA for advice. Fixed term employment Another type of employment situation may apply if you are employed under a fixed term contract. This means that your employment will come to an end on the expiry of the term of the contract. Version 8 February

10 Labour hire Labour hire is a more complex form of employment relationship. It is where an agency supplies employees to work at a workplace controlled by a third party (the host), usually in return for a fee from the host. With labour hire arrangements, the three-way relationship between host, agency and worker will continue for the period of the assignment. Workers may be engaged under labour hire as employees or non-employees (independent contractors). Labour hire workers may be denied access to the benefits of the collectively negotiated labour agreements of the principal business and these businesses may deny responsibility for the welfare of this class of worker, particularly in the areas of health and safety and training. The problems for injured labour hire workers are compounded in that they are less likely to have a specific work site that they can return to for rehabilitation and return-to-work duties. Workers may be engaged under labour hire as employees or non-employees (independent contractors or dependent contractors). Employers gain considerable benefits from engaging workers as non-employees. Workers engaged this way are not entitled to forms of paid leave and cannot contest an unfair dismissal; employers do not need to provide superannuation or workers compensation cover. But the labour hire agencies do.. Employment conditions As an employee it is important to understand your employment rights and responsibilities. Your conditions of employment will depend on who your employer is and the employment instrument which covers your employment. Whether your employer is incorporated (a company) or unincorporated (sole trader or partnership) and which State or Territory they operate in will determine whether your employment conditions are governed by the federal industrial relations system or the state industrial relations system. The federal system Since 01 January 2010 the new National Employment Standards (NES) apply to all employees with the exception of employees of unincorporated businesses in Western Australia. What are the National Employment Standards? The National Employment Standards (or NES ) are a set of ten minimum employment standards that all employees are entitled to, even managerial or non-award staff. These minimum standards are summarised below. Version 8 February

11 Can the NES entitlements be changed? Terms in awards, agreements and employment contracts cannot exclude or provide for an entitlement less than the NES, and have no effect. What if an award or an agreement applies that provides an entitlement which is greater than the NES entitlement? Awards and agreements may provide for additional annual leave entitlements over and above those provided in the NES. If this is the case, your employer must provide the greater entitlement to you. 1. Hours of Work You do not have to work more than the following number of hours in a week unless additional hours are reasonable: full time employees 38 hours; other employees the lesser of: o 38 hours; and o your ordinary hours of work in a week. 2. Flexible Hours If you are a parent, or have responsibility for the care of a child, you may make a written request for a change in working arrangements to assist in caring for the child if the child: is under school age; or is under 18 and has a disability. Your employer may only refuse the request if you have reasonable business grounds to do so. 3. Parental Leave An employee is entitled to 12 months of unpaid parental leave if: the leave is associated with: o the birth of a child of the employee or the employee s spouse or de facto partner; or o the placement of a child with the employee for adoption; and the employee has or will have a responsibility for the care of the child. 4. Annual Leave All employees (except casual employees) are entitled to: 4 weeks annual leave for each 12 months of service; 5 weeks annual leave for some shift workers for each 12 months of service. Version 8 February

12 5. Personal/Carer s Leave and Compassionate Leave Paid personal/carer s leave All employees (other than casuals) are entitled to 10 days paid personal/carer s leave for each year of service. You can take this leave: if you are not fit for work because of personal illness or injury; to care for or support a member of your immediate family or household who requires that care or support due to personal illness or injury or an unexpected emergency. Unpaid personal/carer s leave You are entitled to 2 days of unpaid carer s leave for each occasion if paid personal/carer s leave is not available to you (i.e. because you have exhausted their paid entitlement or are casuals). Paid compassionate leave Employees, other than casuals, are entitled to 2 days of paid compassionate leave for each occasion when a member of their immediate family or household: gets an injury a personal illness that poses a serious threat to his or her life; or dies. Compassionate leave can either be taken as: a single continuous 2 day period; or 2 separate periods of 1 day each; or any separate periods to which the employee and his or her employer agree. Unpaid compassionate leave A casual employee is also entitled to take compassionate leave in the circumstances described above, however this entitlement is unpaid. 6. Community Service Leave An employee is entitled to be absent from work if they engage in a community service activity. This includes: jury service (including attendance for jury selection); a voluntary emergency management activity such as an activity involving a natural disaster where the employee is a member of an emergency services body (e.g. fire fighting, civil defence, rescue body) and the body requests assistance (or it would have been reasonable for such a request to have been made had circumstances permitted this). If you are is absent from work on account of jury service and you are not a casual employee, you are entitled to payment at your base rate of pay for your ordinary hours of work for the period of leave for up to 10 days in total. Version 8 February

13 The amount that you would normally receive from your employer would be reduced by the total amount of jury service pay that has been paid, or is payable to you. 7. Long Service Leave For a transitional period, employees will generally be entitled to long service leave in accordance with State or Territory long service leave laws. Eventually, long service leave entitlements will be covered by a uniform national long service leave standard. 8. Public Holidays Employees are entitled to be absent from work on a day that is a public holiday in the place where the employee is based for work purposes. Permanent employees will be paid at their base rate of pay for the employee s ordinary hours of work on the day/part-day. Can I be asked to work on a public holiday? You can be asked to work on a public holiday if the request is reasonable. You may refuse the request if it is not reasonable or the refusal is reasonable. 9. Termination and Redundancy The NES also sets out special entitlements to redundancy and termination pay however your entitlements will depend on your type of employment and whether there is an industry specific redundancy scheme in your award. 10. Fair Work Information Statement The Fair Work Ombudsman has published a Fair Work Information Statement which details the rights and entitlements of employees under the federal system and how to seek advice and assistance. Your employer must give you the Fair Work Information Statement before you start or as soon as soon as practicable after you start. You can download the Fair Work Information Statement from the Fair Work Australia website: As you can see there is more to employment than just getting a wage. Version 8 February

14 While the NES applies nationally, unincorporated businesses in Western Australia remain outside of the NES. If you are in WA you will need to look at your employer s business structure and if they are an unincorporated business, the relevant industrial relation legislation which applies in the state and the relevant award for your industry will determine your minimum employment conditions. General Award Information What are awards? Awards are legally binding documents outlining the wages and conditions of employment for groups of employees in an industry or occupation. Awards can be negotiated by unions, employees, one or more employers, or an employer association. What do awards contain? Awards may contain a variety of matters that include but are not limited to: 1. Who the award applies to; 2. Pay rates and penalty rates; 3. Job classifications covered by the award; 4. Hours of work for full-time, part-time and casual employees; 5. Leave entitlements; 6. Allowances. Awards are legally binding Employers and employees cannot contract out of an award by agreeing to lesser conditions or agreeing to ignore their award. Agreements providing for pay and conditions in excess of the award are allowed. Version 8 February

15 Individual Flexibility Agreements Under the Modern Award, employers and employees have the opportunity to enter into individual flexibility agreements (IFA), to vary certain terms of the applicable Modern Award provided the employee covered by the IFA is better off overall. In particular, flexibility terms within modern awards allow IFAs to vary: Arrangements for when work is performed (such as working hours); overtime rates; penalty rates; allowances; and leave loading. An IFA made under an enterprise agreement can only vary the matters set out in the flexibility term of the agreement which will be determined when the agreement is made. However it is important to note that an IFA cannot contain unlawful terms, such as terms that may be discriminatory. An IFA must: Be in writing, name the parties to the agreement and be signed by the employer and the individual employee (and, if the employee is under 18 years of age, the employee s parent or guardian); State each term of the award/agreement that the employer and the individual employee have agreed to vary; Detail how the term has been varied; State the date the agreement commences to operate; and Detail how the agreement results in the employee being better off overall. Considering whether an employee is better off overall on the IFA compared to the Modern Award or enterprise agreement the IFA varies will usually involve a comparison of the employee s financial benefits under the IFA with the benefits under the award or enterprise agreement. The employee s personal circumstances and any non-financial benefits may also be considered. An IFA can generally be terminated by agreement or by either party giving the required notice. The Modern Award requires 28 days notice however this may be different in an enterprise agreement (but no more than 28 days). An IFA will end if a new enterprise agreement begins operating. Version 8 February

16 Enterprise Agreements (EA) Enterprise Bargaining in brief Enterprise Bargaining is about introducing change in the workplace - with everyone sharing the benefits. It is an opportunity for an employer and their employees, either directly or through their union representatives, to undertake cooperative negotiations. Enterprise bargaining is a way to discuss how work is performed, conditions and productivity improvements that will benefit both employer and employees. This can foster a culture of change in the workplace which can be a valuable tool in the process of continuous improvement. It can assist in the creation of vital, responsive and flexible enterprises and improve productivity and efficiency. Enterprise Agreements Negotiating an Enterprise Agreement is a very difficult and prescriptive process and may require legal advice or the appointment of a bargaining representative. Both employees and employers have the right to appoint a bargaining representative. Enterprise Agreements set out the minimum conditions of employment for employees engaged in particular types of work in the same way as an award does. They have the same legal force as an award and must be approved by Fair Work Australia. However, unlike most awards, enterprise agreements are specific to a particular enterprise or project and can be tailored to suit the special needs of that enterprise. Enterprise agreements are negotiated voluntarily between an employer and the employees concerned, or the bargaining agents for the parties (which may include a union). There is a detailed process for setting up an enterprise agreement involving notification, negotiation, preparation, voting, and approval by Fairwork Australia. More information is available at Other entitlements However this is not where the employment relationship stops. Aside from the industrial instruments, employers also have responsibilities with respect to: workers compensation; long service leave; superannuation; PAYG withholding. Version 8 February

17 Things to consider if being employed Completing an apprenticeship opens the way for you to make choices about how you are going to work and progress your career. You should look at all employment options and decide what is best for you. However you should ensure that you are employed correctly and that the minimum standards are being met. You can contact the HIA and ask the Workplace Advisor /IR Legal person, or you can access information on rates and conditions through the governments Departments of Employment and Industrial Relations. Federal Western Australia Contractor/Employee If you have decided to work as an independent contractor, you will need to work out what you should be paid. There are many things to consider. The first thing is, are you really a contractor? If you are told to get an ABN you will need to ensure that you are in fact a independent contractor and not an employee. It is always good to seek advice by first talking to a HIA Workplace Advisor /IR/Legal Advisors or by going to Giving an ABN does not automatically mean you are a contractor, so you will need to consider the nature of your employment. It is important to determine how you are employed because there are different taxation obligations depending on whether you are an employee or an independent contractor. Visit the ATO web site and check out What is Personal Services Income?-sole trader. You can then self assess using the results test to determine if you are an independent contractor for tax purposes If you are intending on running your own business, this opens up a wide range of compliance obligations and it is recommended that you contact an HIA Workplace Advisers to learn more about your obligations. As an employee, whoever you are working for will be responsible for withholding tax on your earnings, paying superannuation, holiday pay, sick leave, the long service leave levy and providing workers compensation insurance. Version 8 February

18 To find out what you should be paid go to the relevant websites listed below: Version 8 February

19 Calculating your worth Many apprentices start out in business as a contractor without taking into consideration what they should really be charging or being paid. So where should you start? Imagine your ex- host says, come and work for me and I will pay you $20 an hour What will you earn out of that once you have taken out all your expenses? Don t forget, as a contractor you don t get paid if you don t work. The best way to calculate an hourly rate is to work out the number of billable hours you will work over the year. There are 52 weeks in a year which you need income for, but when you take away holidays, sick leave and public holidays you actually earn your income in 46 weeks and that is if you are not sick. Remember working as a sole trader you will have to maintain records, pay your tax and contribute to superannuation. It is advisable to have an accountant do your tax returns. Say you work for 52 weeks, no holidays etc what would you earn? Remember if you don t work you don t get paid. Version 8 February

20 Income 52 weeks based on a 38hr week= 1976 hours Superannuation Guarantee 9% 4 th year Self $20.00/hr $15.50/hr $30, $39, Paid by employer $ Rules apply you pay $3, Taxable Income $33, inc travel $35, Income Package including super $36, $39, =/hr $18.54 Net 52 = 1976hrs $28, =/hr $14.48 Tax on taxable income $ Medicare Levy $ Leave Provisions net 4/52 $ $0 Sick Leave Provisions net 2/52 $ $0 Public Holidays net $ $0 average 8 per year Workers Compensation Insurance or Income protection insurance Paid by employer Income protection paid by you $ Public Liability insurance/ Tools and equipment insurance As at 28/07/08 from HIA Insurance $ Services Tool and Equipment costs nil Cost to you Administration costs E.g.(Raising invoices, Accountant and Bank fees) Running Costs based on Automobile Association figures assuming you have a Ford/Holden Ute on hire purchase /petrol/ servicing/insurance/rego approx $ 200 a week over 52 weeks. If you own your car/ute = $137 a week over 52 weeks. nil Travel allowance 5 days x 52 weeks $ Cost to you A cost against your business $ Net $28, You will have to work this out depending on individual circumstances. *Medicare levy is calculated on taxable income **Tax is payable on Gross Income less your business expenses. Version 8 February

21 The Trade Contracting Approach Version 8 February

22 Who is an independent contractor? An independent contractor is someone who: Is usually engaged for a specific task or period of time. Would usually operate under a business or company name. Would usually operate for a range of clients. Would usually advertise and market their services, e.g. telephone book entry, membership of business associations. Would usually be free to determine when and where they undertook their work. Are free to accept or reject work offered to them. Provide their own insurances i.e. Workers Compensation, Public Liability, Professional Indemnity etc. Pay their own superannuation. Provide their own equipment, stationery, vehicles, phones etc. Paid for completed jobs. Rather than retainers or time. Issue invoices for payment rather then timesheets. If primarily contracting to one principal, have PPS tax deducted. Are free to engage other people to undertake the task, subject to that person being qualified and capable. Are responsible for rectification if any damage, poor work standards etc. No additional payment to rectify situation. Is entitled to decide when he leaves work. If working at a principal s premises a lease/management fee applies for floor space, power etc. Not entitled to paid leave. Sick Leave; Annual Leave; Public Holidays etc. Profits from sound management of work undertaken. Set their own pricing structure. Is, broadly speaking, in control of their activities and does not form an integral part of the business of the principal Visit HIA website view Introduction to Business Structures hia.com.au/hia/content/is/bis/bp_bus_guide.aspx Version 8 February

23 What do you need to do to be called a Sub Contractor Employee or Independent Contractor? The first thing you need to do is determine if you are an independent contractor or an employee. As a general rule, independent contractors are established in their own business, they supply materials, plant and equipment to complete work for an all up price. Employees on the other hand, are workers who are engaged to work on a labour-only basis at the direction and under the control of an employer. As mentioned earlier you can check that out yourself by going to and completing a series of tests. They are; 1. Results Test 2. Unrelated Clients Test 3. Employment Test 4. Business Premises Test If you don t pass the results test, you need to apply an additional rule called the 80% rule to work out if 80% or more of your income comes from one client. 80% Rule According to the ATO if 80% or more of your Personal Services Income comes from one client, your business will need to apply for a personal services business determination from the tax department. Where a contractor does not receive more than 80% of their income from one source they can make selfdetermination by applying the results test themselves. Version 8 February