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1 INDEPENDENT CONTRACTOR PACKAGE (INDIVIDUALS ONLY) IndContPkge Version: 1.7 Updated: 18 Jul. 03

2 Contents Preface 2 Checklist 3 Helpful Hints 4 Frequently Asked Questions 5 Agreement with an Independent Contractor 6 Statement by a Supplier (Reason for not quoting an Australian Business Number (ABN) to an enterprise) 16

3 Preface This package has been designed as a self help tool for University of Melbourne departments who engage individuals (not companies) as independent contractors to provide services (excl. goods) to the University. All engagements of independent contractors must be supported by the completion of a standard University contract. Individuals engaged as independent contractors are required to hold business insurance policies covering public liability and professional indemnity of $5 million each. Insurance questions should be directed to The Risk Management Office ( ) Legal questions relating to the contract should be directed to the Legal Office ( ) Any other questions regarding the content of this package should be directed to either Julia Kosmynina ( ) or Phillip Stokes ( ) in Financial Operations.

4 Checklist Is the individual a contractor or an employee? refer Helpful Hints contractor or employee If the individual is a contractor are they required to complete a standard contract and hold business insurance? Some engagements by the University do not require contracts because there is no expressed contractual obligation on either party. (Refer Taxation - Julia Kosmynina x45993 or Phillip Stokes x46041) If Yes, o Have you confirmed that the contractor holds current insurance policies (Public liability & Professional Indemnity)? Documentary evidence must be sited by departments. Copies of documentary evidence must be included with contract. o Has the contractor completed a University standard contract? Standard University contract available within package. Does the contractor hold an Australian Business Number (ABN)? If contractor does not hold an ABN, does he/she come within one of the exclusions refer Statement by Supplier (Reason for not quoting an Australian Business Number (ABN) to an enterprise) form.

5 Does the contractor have a supplier record on Themis? If contractor does not have a record on Themis a New Supplier form needs to be completed. Before any payment can be made to the contractor, the following documents must be sent to Accounts Payable: New Supplier form (Where required) Contract (copy acceptable), incl. proof of insurance (Where required)

6 Helpful Hints! 1. Contractor or Employee a) Authority to command University has the right to direct the manner of performance of work Employee Individual works to provide a given result in terms of a contract. He/she works on his/her own account - Contractor b) How is the work performed? Tasks are performed at the requests of the University Employee Individual maintains a high level of discretion and flexibility as to how the work is to be performed - Contractor c) Risk University is generally responsible for any loss occasioned by poor workmanship or negligence of the individual Employee Individual stands to make a profit or loss on the task. He/she bears the responsibility and liability for any poor workmanship or injury sustained in performance of the task. Expected to carry their own insurance policy - Contractor d) Hours of work Individual generally works standard or set hours Employee Individual sets their own hours or work.* - Contractor * Contractors engaged for extended periods of time with the same payer (greater than 90 days in a year) may be deemed employees. Payments may attract workcover, payroll tax, etc. e) Payment Individual is generally paid an hourly rate, piece rates or award rates Employee Invoice submitted by individual to University. Payment to individual based upon performance of the contract - Contractor f) Expenses Individual is generally reimbursed for expenses incurred in the course of employment Employee Individual generally incurs their own expenses as per contract - Contractor g) Termination The University reserves the right to dismiss an employee at any time (subject to State or Federal legislation) - Employee An individual is contracted to complete a set task. The University may only terminate the contract without penalty where the worker has not fulfilled the conditions of the contract - Contractor h) Delegation An employee has no inherent right to delegate tasks to another, except where the individual has the power to delegate some duties to other employees Employee A contractor may delegate all or some tasks to another person, and may employ other persons Contractor 2. To avoid Pay-As-You-Go (PAYG) withholding (currently at 48.5% of gross payments), an independent contractor must either quote a valid Australian Business Number (ABN) or submit a completed Australian Taxation Office (ATO) declaration titled

7 Statement by Supplier Reason for not quoting an Australian Business Number (ABN) to an enterprise 3. Contractors engaged by the University of Melbourne must hold current insurance policies that cover them for: Public Liability ($5 million) Professional Indemnity ($5 million) 4. Separate copies of the documents contained in this package can be accessed at the following web addresses: Statement by a supplier (Reason for not quoting an Australian Business Number (ABN) to an enterprise)

8 Frequently Asked Questions 1. Is a contractor required to sign a written contract and hold business insurance? Ans: An independent contractor (excluding companies) engaged by the University in most cases is required to complete and sign the standard University contract contained in this package. Whilst the contractor is engaged by the University he/she is required to hold both public liability and professional indemnity insurance ($5 million each)* * Note: In some circumstances the requirement to hold professional indemnity insurance may not be warranted. To confirm whether both types of insurance are required, contact Bill Boucher ( ) from the Risk Management Office. Any changes to the indemnity and insurance clauses need to be approved by Risk Management Office. Reference: Risk Management Office Copies of the standard University contract are available within this package or on the web. Original copies are to be forwarded to Accounts Payable. 2. I need to make changes to some of the clauses in the standard University contract. I do I do this? Ans: The standard University contract can only be altered by Legal Services. If clauses in the contract need to be altered / removed (eg. Indemnity clauses) contact Legal Services for assistance. Reference: Legal Services 3. Are there any circumstances where the completion of a contract and requirement for business insurance would not be applicable? Ans: Under certain engagements, where there is no contractual obligations between the individual and the University, a contract and business insurance may not be required. Eg.An individual who volunteers their services with no expectation of financial compensation (Refer Taxation - Julia Kosmynina x45993 or Phillip Stokes x46041)

9 4. Does the University have a liability to pay payroll tax in connection with the engagement of a contractor? Ans: Contractors engaged to provide services only to the University may trigger a payroll tax liability. However there are several exemptions. If the payment to the contractor satisfies any one of the seven exemptions, then the engagement will not be subject to payroll tax. One of the exemptions concerns the situation where a contractor provides services to the one principal on no more than 90 days in a financial year (1 July 30 June. Financial Operations recommend that this exemption be utilised by the University when engaging contractors to ensure a liability for payroll tax does not arise. Reference: Payroll Tax and contractors 5. Does the University have a liability to pay workcover premiums in connection with the engagement of a contractor? Ans: The University may have a liability to pay workcover premiums where a contractor is considered a deemed worker based on tests provided by The Workcover Authority. However, it is generally recognised that a contractor will not be a deemed worker where the contractor does not provide personal services to the University that in total exceed 90 days in a financial year (1 July 30 June). 6. Does the University have a liability to provide superannuation support to a contractor? Ans: A contractor (not incorporated) may be deemed an employee for superannuation purposes under certain conditions. Generally a contractor will be deemed an employee where they are contracted principally (greater than 50%) for their labour. Where a contract allows a contractor to employ other persons to carry out the work under the contract then the contractor will not be deemed an employee for superannuation purposes. Whether the contractor actually employs other persons is irrelevant. It is the right to employ that is important. Reference: SGR 93/1

10 7. Is a contractor required to provide an invoice to be paid under the contract? Ans: Yes. All payments made to a contractor must be supported by an invoice / tax invoice (where contractor is registered for GST). Invoices must not be prepared by University departments on behalf of contractors in any circumstances. 8. Is a contractor entitled to an allowance or reimbursement? Ans: No. Allowances and reimbursement are only paid to employees. Payments to contractors should be paid as per the terms of the contract. Additional unforeseen payments can be made if approved and supported by an invoice / tax invoice. 9. Does the University pay GST on payments made to contractors? Ans: Where a contractor is registered for GST, generally any supplies made by the contractor will be subject to GST. Note it is not up to the University to decide whether the contractor should / should not charge GST. Where a contractor does charge GST, then a valid tax invoice must be submitted to the University by the contractor before payment will be approved. 10. Does the University pay fringe benefits tax on benefits provided to contractors? Ans: No. Contractors are not employees of the University. They are regarded as clients under the Fringe Benefits Tax regime. 11. Can an honorarium be paid to a contractor? Ans: By definition, an honorarium is a token gesture payment made to an individual who provided their services without expectation of payment. The payment or gift is small in value and does not represent the commercial value of the service provided. Generally the terms of contract with a contractor will include payment for services rendered. There is an expectation that the University will make payment at a commercial rate and thus the payment is not an honorarium.

11 AGREEMENT WITH INDEPENDENT CONTRACTOR (individual only) NOTES ON COMPLETING THIS AGREEMENT COMPLETE THE SCHEDULE - Ensure that all items in the Schedule are filled out. DELETE COMMENTS AND FRONT PAGE - Prior to printing the final version to be signed by the Contractor, delete all comments highlighted in yellow in the Schedule and remove this page. This page of notes will not form part of the agreement. SIGNING If the value of the contract is less than $60, (inclusive of GST) the agreement should be signed by the head of department. If the contract value is higher than this, check the authority levels set out in Regulation 17.1.R6 to see who should sign. That Regulation can be found at: Parties should sign 2 copies of the agreement where indicated on the last page before the Schedule. The last party to sign must also insert the date of signing on the front page (the date that the last party signs becomes known as the date of the agreement). Each party should retain a fully signed original of the agreement and the University s original should be sent to Accounting Records which will make a copy for its purposes and forward to Central Records for safe-keeping. The Department should keep a photocopy of the original agreement if needed. The Execution Page (signatures) has two options for the Contractor to sign the first is to be used if the Contractor is a company and the second is for when the Contractor is an individual. The Legal Services Office can assist with any queries about the signing process. Please contact Legal Services on CHANGES TO TERMS - If you or the Contractor wish to change any of the terms and conditions of this agreement, contact the Legal Services Office to discuss and to obtain approval (phone: ). SPECIAL CONDITIONS Approval must be obtained from the Legal Services Office before any special conditions are added in item 6 of the Schedule. Legal Services can assist with drafting any required special conditions (phone: ). 90 DAY WORK LIMIT To avoid a Contractor being deemed to be an employee by the State Revenue Office or Australian Taxation Office, Contractors should not work for the University for more than 90 days in total in any financial year (1 July to 30 June). The 90 day total includes any work under this agreement PLUS any work undertaken by the Contractor under any other agreements that the Contractor enters into with the University. University Departments must discuss this with the Contractor prior to engaging the Contractor.

12 INDEPENDENT CONTRACTOR S AGREEMENT THIS AGREEMENT is made on BETWEEN: THE UNIVERSITY OF MELBOURNE of Victoria, 3010 (the University) AND THE CONTRACTOR SPECIFIED IN ITEM 1 OF THE SCHEDULE BACKGROUND (the Contractor) A B The University requires the Contractor to perform the services detailed in the Schedule to this Agreement. The parties have agreed that the services will be provided on the terms and conditions contained in this Agreement. OPERATIVE PROVISIONS: 1 INTERPRETATION 1.1 In this Agreement, unless the contrary intention appears from the context: "Agreement" means this document, the Schedule and any annexures to this document; "Confidential Information" means information that: (a) is by its nature confidential; (b) is designated by the parties as confidential; or (c) the parties know or ought to know is confidential; and includes without limitation the terms of this Agreement and all information about the University, its employees, agents, research, property, policies and operations which is made available or which becomes known during the term of this Agreement or as a result of executing this Agreement but does not include information which: (a) (b) was in the public domain at the time of its provision by the University; or became part of the public domain after its provision by the University, otherwise than through a disclosure by the Contractor or any person to whom it has disclosed Confidential Information; Contractor means, for the purposes of this contract, an individual (not incorporated) operating as a business providing services to the University. "Schedule" means the Schedule attached to this Agreement; "Services" means the services to be provided by the Contractor as set out in item 6 of the Schedule;

13 2 PERIOD OF CONTRACT This Agreement will begin on the Commencement Date set out in item 2 of the Schedule and continue for the Term set out in item 3 of the Schedule. 3 CONTRACTOR S OBLIGATIONS AND WARRANTIES 3.1 The Contractor agrees: (a) to provide the Services to the University in accordance with this Agreement; (b) to perform its obligations under this Agreement in a competent and professional manner and to ensure that all staff employed or sub-contracted to carry out the Contractor s obligations are of a standard sufficient to satisfy the above obligation; (c) to comply with all reasonable instructions and directions issued by officers of the University; and (d) to comply with all occupational health and safety requirements of the University and all equal opportunity and other work place policies of the University. The University s Environmental Health and Safety Manual can be viewed at: 3.2 The Contractor warrants that the use by the University of any products or materials provided in connection with the Services will not breach third party intellectual property rights. 3.3 The Contractor warrants that it has the appropriate licences, rights and/or title to any products or materials provided in connection with the Services. 4 CONTRACT PRICE 4.1 The University agrees to pay the Contractor the fees set out in item 5 of the Schedule in the manner described in item 6 of the Schedule within 30 days of the end of the month in which the Contractor submits the relevant tax invoice subject to the following sub-clause. 4.2 Despite anything set out in this Agreement or any other arrangement, the University will not be obliged to pay any fees or expenses to the Contractor until reasonably satisfied with the Services provided by the Contractor. 4.3 The fees stated in item 5 of the Schedule are inclusive of taxes, duties and charges imposed or levied in Australia in connection with the supply of the Services, including GST. 5 OWNERSHIP 5.1 If the Services require the Contractor to create or produce data, information, materials or anything which may be subject to copyright or which constitute intellectual property of whatsoever nature ("Contract Materials") those Contract Materials are owned by the University as and when they are created or produced. 5.2 The Contractor undertakes to execute all documentation and do all things necessary to assign to the University the Contractor's interest in Contract Materials and to give effect to this clause. 6 INDEMNITY AND INSURANCE 6.1 The Contractor indemnifies the University against all claims, demands, charges or expenses made against or incurred by the University as a result of any breach by the Contractor, its employees, agents or contractors, of this Agreement or any negligent or wilful act or omission by the Contractor, its employees, agents or contractors. 6.2 The liability of each party for loss suffered by, or damage to, the other party must be reduced proportionately to the extent of the other party s failure to comply with its obligations under this Agreement or the other party s negligent acts or omissions. 6.3 The Contractor agrees to take out and maintain Public Liability Insurance to cover the performance

14 of its obligations hereunder to the amount of not less than five million dollars ($5,000,000) and must provide proof of maintenance of the Policy to the University on request. 6.4 The Contractor agrees to take out and maintain Professional Indemnity Insurance to cover the performance of its obligations hereunder to the amount of not less than five million dollars ($5,000,000) and must provide proof of maintenance of the Policy to the University on request. 7 CONFIDENTIALITY AND PRIVACY 7.1 The Contractor covenants to keep confidential and ensure its employees, agents and contractors keep confidential, all information provided by the University to the Contractor for the purposes of this Agreement and all information created as a result of this Agreement, and not to disclose such information without the prior written approval of the University. 7.2 The Contractor agrees to comply with the Information Privacy Principles contained in the Information Privacy Act 2000 (Victoria) and all other Privacy Principles established under the Privacy Acts where applicable and with the University's privacy policy and guidelines as amended from time to time in respect of any personal or health information held by the University which the Contractor becomes aware of or has access to in connection with this Agreement and any personal or health information collected, held, managed, used, disclosed or transferred by the Contractor in connection with this Agreement. The University s privacy policy can be located at: 7.3 The expression "personal or health information" used above means personal information as defined in the Information Privacy Act 2000 (Victoria) or health information as defined in the Health Records Act 2001 (Victoria). 7.4 The term Privacy Acts used above means the Privacy Act 1988 (Commonwealth), the Information Privacy Act 2000 (Victoria) and the Health Records Act 2001 (Victoria). 8 TERMINATION 8.1 Either party may terminate this contract by notice in writing to the other party if the other party is in breach of a term or condition of this Agreement and the breach is not remedied within fourteen (14) days of service on the other party of a written notice specifying the breach and requiring it to be remedied. 8.2 If the Contractor breaches any provision of this Agreement, the University may after seven days written notice to the Contractor, suspend the payment of any amounts otherwise due under this Agreement until the breach is remedied by the Contractor. 8.3 Either party may terminate the Agreement immediately if the other party: a) enters into any arrangement between itself and its (or any class of its) creditors; b) ceases to be able to pay its debts as they become due; c) ceases to carry on business; d) has a mortgagee enter into possession or disposes of the whole or any part of its assets or business; e) enters into liquidation or any form of insolvency administration; or f) has a receiver, a receiver and manager, a trustee in bankruptcy, an administrator, a liquidator, a provisional liquidator or other like person appointed to the whole or any part of its assets or business. 8.4 Termination of the Agreement (for whatever cause) will not affect any right or cause of action which has accrued to the party which terminates the Agreement at or prior to the date of termination. 9 RELATIONSHIP 9.1 This Agreement constitutes a relationship of Principal (on the part of the University) and Independent Contractor (on the part of the Contractor) and no employment, partnership or joint

15 venture relationship is hereby constituted. 9.2 The Contractor is responsible for its own staff and carries out the Services at its own risk. 10 DISPUTE RESOLUTION 10.1 Any dispute or difference between the parties arising from or in connection with this Agreement, which cannot be settled by negotiation between the parties must forthwith be referred for determination by a person appointed for that purpose by the parties and, failing agreement, appointed by the President of the Institute of Arbitrators & Mediators Australia (Victorian Division) Any determination made under the above sub-clause is binding on the parties and the Commercial Arbitration Act (1984) applies to the determination except to the extent otherwise agreed by the parties. 11 SPECIAL CONDITIONS 11.1 This Agreement is subject to the Special Conditions (if any) set out in item 7 of the Schedule In the event of inconsistency between the Special Conditions and the provisions of the Agreement, the Special Conditions apply. 12 GENERAL 12.1 This Agreement is made under and governed by the laws of the State of Victoria and both parties exclusively submit to the jurisdiction of courts of this State and their respective appellate courts Notices to or by a party delivered in person are deemed to be given by the sender and received by the addressee when delivered to the addressee: if by post, 3 Business Days from and including the date of postage; or if by facsimile, when transmitted to the addressee provided that if transmission is on a day which is not a Business Day or is after 5.00 pm (addressee's time) on the next Business Day Any provision or the application of any provision of the Agreement which is void, illegal or unenforceable in any jurisdiction does not affect the validity, legality or enforceability of that provision in any other jurisdiction or of the remaining provisions in that or any other jurisdiction A waiver of a breach of the Agreement or of any right, power, authority, discretion or remedy arising upon a breach of or default under the Agreement must be in writing and signed by the party granting the waiver A party may only assign the Agreement and any rights under the Agreement with the prior written consent of the other Neither party will be liable to the other for the consequences of any delays or failures of its performance which are caused by any event beyond the first party s reasonable control, including without limitation acts of God, fire, flood, accident, terrorism, strike and riots and either party may terminate the Agreement if such an event occurs and continues for a period of 30 days or more.

16 EXECUTION PAGE SIGNED for and on behalf of the UNIVERSITY OF MELBOURNE by its authorised officer:.. Authorised Officer SIGNED by the CONTRACTOR in the presence of:. Contractor Witness Name Address

17 SCHEDULE ITEM 1 CONTRACTOR NAME: ABN: ADDRESS: ITEM 2 COMMENCEMENT DATE: ITEM 3 CESSATION DATE: ITEM 4 TERM: ITEM 5 FEES 1 : (If insufficient space, attach additional information) 1 Describe what fees are payable & when. Fees may be expressed as one lump sum or as an hourly rate with a total maximum amount payable. State how often payments are to be made (eg by monthly instalment) & include dates where known. If the Contractor is registered to collect GST, the fees should include GST and state clearly what component of the fee is GST.

18 ITEM 6 SERVICES TO BE PROVIDED: (complete in as much detail as possible refer to any attached specifications) (If insufficient space, attach additional information) ITEM 7 ADDITIONAL SPECIAL CONDITIONS (if any): (If insufficient space, attach additional information)

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