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Avoid contractor misclassification risk

Governments are increasingly tightening rules around worker classification. Misclassifying contractors as employees (or vice versa) can expose your business to financial penalties, back taxes, and legal challenges.

Our compliance risk tool shows where your business may be exposed and how to stay compliant. Answers are confidential, no personal information required.

1
Can the contractor determine how they will complete the work?
2
Does the contractor need to have specific skills to meet the assignment requirements?
3
Is the contractor paid by deliverables or services agreed in a statement of work rather than via regular salary payments?
4
Can the contractor delegate work to other individuals provided that they have the relevant skills?
5
Can the contractor choose their own hours?
6
Is the contractor helping your business temporarily for a short period of time?
7
Is the contractor free to work for other businesses?
8
Does the contractor publicly describe themselves as self-employed?
9
Will the contractor be using their own equipment and tools to perform the work?
10
Is it the first time that you are engaging the contractor in the last 24 months?
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Outcome

Low Risk

Based on your answers, your business is currently at a low risk of contractor misclassification. While this is a positive sign, employment laws continue to evolve, and it is important to keep your compliance practices under regular review. Staying proactive will help you avoid future penalties and maintain confidence in your contractor management.

Speak to our experts today to understand how you can reduce your compliance risk.

Outcome

Medium Risk

You may have potential gaps in how you are classifying contractors. While not immediately severe, these issues could still leave you open to penalties and compliance challenges if not addressed. Now is the right time to tighten your processes, review contracts, and ensure compliance before risks escalate.

Speak to our experts today to understand how you can reduce your compliance risk.

Outcome

High Risk

Your responses indicate a high risk of contractor misclassification. This means your business may not be meeting local employment regulations, leaving you vulnerable to significant fines, penalties, and legal disputes. Addressing this risk quickly is essential. Consider reviewing your contractor agreements and classification processes to protect your business.

Speak to our experts today to understand how you can reduce your compliance risk.

The content on this page is not intended to serve as legal or professional advice, and it should not be construed as such. We recommend seeking legal or professional advice before making any business decisions or relying on the information presented here. We reserve the right to modify, update, or discontinue the information on this page without prior notice. It is your responsibility to check for updates and changes to ensure you have the most current and accurate information.

Frequently Asked Questions

Contractor misclassification happens when a worker is incorrectly labeled as a contractor instead of an employee, or the other way around. Each country has its own rules for determining worker status. Misclassification can lead to unpaid taxes, penalties, and legal disputes.

Misclassification can expose your business to significant risks. These include fines from tax authorities, reputational damage, back payments for benefits or social contributions, and even legal action. Ensuring the correct status for every worker protects your business from costly mistakes.

Risk often depends on factors such as how much control you have over the work, whether the contractor can work for multiple clients, and whether they use their own equipment. Our contractor compliance risk tool provides an initial indication of your risk level based on common misclassification factors.

No. This tool is designed to give you an indication of your potential risk level. It does not replace legal or professional advice. For a thorough review of your contractor arrangements, we recommend speaking with our compliance experts or seeking independent legal guidance.

Employment laws and tax regulations are constantly evolving. It is good practice to review your contractor arrangements regularly, particularly when entering new markets, signing new contracts, or making changes to your workforce model. Staying proactive helps reduce your risk.

If authorities determine that contractors have been misclassified, your business may face back taxes, fines, and penalties. You may also be required to provide benefits or compensation retrospectively. In some cases, this can result in legal action and reputational damage.

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Calculating your risk level