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Why your contractor could be putting your business at risk

While many high performing sales agents prefer to be hired as contractors rather than employees, the vast majority of contractor agreements leave agencies open to liability, should the relationship end.

O*NO Legal founder and legal strategist Kristen Porter said she’d only seen one or two contractor agreements that had been drawn up correctly, suggesting many agencies who hired contractors were putting themselves at serious risk.

“Contractors are used widely in the real estate industry, especially high performing sales people, who wish to access the tax advantages,” Ms Porter said. 

“But if those agreements aren’t set up properly, and most of them are not, that person can be deemed an employee regardless of the contract, and can then claim leave, superannuation and any other entitlements usually owed to an employee.”

Ms Porter said many real estate agencies preferred to offer the option of contractor agreements, because failing to do so turned many high performing agents away.

“It’s very common in this industry to have these agreements, mainly to attract and retain staff,” she said.

“If the agency doesn’t offer this option, they may lose high quality agents.”

Problem is, most agencies are doing it wrong. Making matters worse, in Ms Porter’s experience many principals know they’re doing it wrong, but are happy to take the risk.

“But what happens is that when someone leaves, especially if it’s on bad terms, they’re able to use that against you,” Ms Porter said.

For a contract to be done right, Ms Porter said it had to show the contractor was running their own real estate business, rather than just providing a service.

On the flipside, some agencies won’t take the risk at all, refusing to take on contractors and only accepting employees to avoid potential future costs. 

But Ms Porter said there’s no need to be scared of hiring contractors. 

“You just need to know how to do it properly,” Ms Porter said.

“And we have a framework to tell you how to do just that.”

O*NO Legal is holding a webinar, exclusive for members, covering exactly how agencies can hire contractors, without putting their business at risk. You’ll also get access to a contractor’s agreement template.

If you’re not a member already, it’s easy to join, and the cost is $97 per month.

“Hiring contractors will give your agency access to more agents. Doing it properly will allow you to do it, but without the risk.

“You’ll be protecting yourself, while still attracting and retaining talented agents.”

To join O*No Legal’s Real Membership and be eligible to attend the webinar, head to https://real.onolegal.com.au/real-membership.

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Nicole Madigan

Nicole Madigan is Senior Journalist and Content Producer for Elite Agent.

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