2019 Australian Small Business Champions

Collins Hume finalists announced
All manner of small businesses across the country, from professionals to retailers to service providers, are contenders as 2019 Australian Small Business Champions. 

Australian Small Business Champions 2019Now in its 20th year, Precedent Productions this week announced the finalists in the 2019 Australian Small Business Champion Awards saying it has become the most prestigious and comprehensive program that recognises small businesses throughout the nation.

"The Australian Small Business Champion Awards is the pinnacle of business success," awards founder Steve Loe said. "We recognise the values associated with successful small businesses. These values include service, commitment, leadership, endurance, courage, innovation, performance, persuasion and generosity."

Offering a unique opportunity to highlight Australia's most outstanding small businesses, the awards seek to recognise the hard work that business owners contribute to the local community in generating employment for millions of Australians, as well as their contribution to the Australian economy.

Small Business Entrepreneur Finalist, Peter Fowler, said this was especially evident in both submissions put forward by Collins Hume, also an Accounting Services category finalist.

"There are so many amazing accounting firms all around Australia who take part each year," Peter said. "We have a special team who we cannot thank enough for everything they do and who always have our clients' best interests at heart." 

"When you get to work with a great bunch of people who share a common purpose, it makes every workday a joy, especially when we all set out to help our clients and community to get across the line." 

The Australian Small Business Champion Awards once again attracted hundreds of entries from a diverse range of industries.

"Many finalists are driven by improving the lives of others and making a contribution to our communities, whether via an invention, innovation, experience or other means and Collins Hume is no exception," Peter said.

"Through our efforts in the Northern Rivers, we aim to exemplify our region's entrepreneurial spirit, pro-business mentality and wider global outlook."

The 2019 Australian Small Business Champion Awards are presented by Precedent Productions and sponsored by Nova Employment and Castaway. The winners will be announced at the Gala Dinner on Saturday, 6 April in Sydney.

Financial Life Plans

Financial Life Planning instead of retirement planning
On average, we are living longer and that's creating a set of new financial challenges for individuals and couples who need to accumulate sufficient wealth throughout their lives to generate adequate income to ensure a quality lifestyle in later years.

Research by the Stanford Center in the US focused on Gen Xers born between 1961 and 1981 and concluded that having a financial life plan rather than just a retirement plan is more important than ever.

It may be worth making mid-life adjustments to give this generation the best chance of not just living long, but living well, the report notes, and that may mean looking beyond superannuation for sources of income.

Income for life
Savings outside of super – money in the bank or a term deposit, a share portfolio or property investments – is the term now coined as 'income for life'. However with more of us holding multiple jobs or contracting in the gig economy, super contributions could be overlooked. 

The same goes for anyone opting to rent long term and not having capital in home ownership which could be freed up later to generate retirement income. Changes in work, savings and investment behaviours means uncertainty in retirement because our finances are less structured.

Instead, having a holistic wealth strategy from a young age is a good workaround, typically home ownership, building savings and generating tax effective post-work income preferably using professional advice not only from a Financial Planner but also including an accountant and solicitor for estate planning information.

There's no universal route to financial security in retirement, but there are common steps in the journey that puts control in your hands, not the government's. One way to start is with a financial life plan. 

To examine new retirement planning ideas or to further define or discuss your ongoing financial matters, simply call 02 6686 3000 or email adam.vermillion@collinshume.com.au. The first meeting is free and Adam believes there is always scope to do something better.

Essential Wealth and Retirement Pty. Ltd. ACN 603 149 837 is a Corporate Authorised Representative of GPS Wealth Ltd. ABN 17 005 482 726 | AFSL 254544 | Australian Credit Licence 254544

Contractor vs employee

The implications of misclassifying a worker

If a business misclassifies an employee, it impacts on superannuation guarantee (SG), PAYG withholding, workers compensation, and payroll tax. 

contractorsThese entitlements will often need to be met even if the misclassification was a genuine mistake. 

For SG obligations, there is no real time limit on the recovery of outstanding obligations. However, the ATO will generally only go back 5 years unless the individual employee can prove an entitlement beyond this point. 

Remember that employers that fail to make their superannuation guarantee payments on time don't just pay the outstanding superannuation but are subject to the SG charge (SGC) and lodge a Superannuation Guarantee Statement. 

SGC is made up of:

  • The employee's superannuation guarantee shortfall amount; 
  • Interest of 10% per annum; and 
  • An administration fee of $20 for each employee with a shortfall per quarter. 

Unlike normal superannuation guarantee contributions, SGC amounts are not deductible to the employer, even when the liability has been satisfied. 

The implications of misclassifying a worker go well beyond industrial relations. Getting it wrong can be a very costly exercise particularly if the error is evident over a number of years. Just call us on 02 6686 3000 if you have any concerns.

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Help from a Virtual Chief Financial Officer

Need a Virtual CFO in your life?

Predicting the financial future of your business is not easy

virtual CFOMost businesses understand the need to price their products or services so they cover costs and make a profit. Understanding your business's fixed and variable expenses is the first step in performing a break-even analysis. 

What sets higher performing businesses apart is how they use that information. In understanding your business, it is crucial to know what the numbers are telling you. 

Sleep better at night, knowing your numbers are right!
A lack of accurate financial information is a major cause of stress and concern for business owners and their families.

Appointing a Chief Financial Officer (CFO) in your business is one way to fix this problem, but many small businesses can't justify having a full time, experienced CFO.

Collins Hume's CFO Program gives you that access to the knowledge and expertise of an external or virtual CFO so you can focus on the critical financial elements of running a successful business including growing sales, managing key operating costs and improving profit and cash flow.

Unique Features of our CFO Program include:

  • Annual budgeting and forecasting
  • Accurate financial reporting
  • Benchmarking and KPI analysis
  • Regular meetings
  • Access to specialists
  • Goals and action plans

Planning and financial forecasts assist business owners to meet their performance objectives and to set realistic, achievable goals in order to have meaningful data and timely access to the information they need to plan.

Read more or download our factsheet here

The key outcome of our CFO Program is to provide you with accurate financial information in a timely and affordable way, so you can focus on growing your business. Let us know if we can work with you and help improve both the performance and success of your business.

Contractor or employee?

Contractor or employee? 

Defining workers in the gig economy

foodA former Foodora Australia delivery rider, Joshua Klooger, recently won an unfair dismissal claim despite a service agreement that classified him as an independent contractor. We explore the implications of the case. 

Pivotal to the Fair Work Commission's decision was the classification by Foodora of Mr Klooger as an independent contractor. The "Corporate Rider" was employed under a service agreement titled "Independent contractor agreement". At the initial rate of $14 per hour and $5 per delivery, corporate riders would log into an app (the shifts app) which, at predetermined times each week, displayed available shifts. The shifts identified start and finish times and a specific geographical location where the delivery work would be undertaken. The riders could then decide what shifts they wanted. 

The riders undertaking shifts were provided with a Foodora branded insulated box, and other Foodora branded attire and equipment. Once the shift started, the riders would receive notifications through the app of an order to be picked up from a restaurant. Once the order had been collected, the rider would confirm the pick up, then the deliveries app would advise the delivery address.

In 2016, Mr Klooger's friend and fellow Foodora delivery rider had his visa cancelled. As a result, Foodora suspended the friend's access to the shifts and deliveries app. Instead, Mr Klooger gave his friend his access to the Foodora app allowing him to select and fulfil shifts. Over time, three other individuals did the same. Mr Klooger would reconcile his account, deduct tax and a further 1% for his involvement, then pay the substitutes. While the Foodora contract allowed for substituting, it required prior written consent. However, when Foodora became aware of the substitution scheme it took no steps to stop it and instead commended Mr Klooger for his "entrepreneurial initiative."

The rates Foodora paid to riders and the way in which shifts were allocated changed over time. In July 2016, the hourly rate for new riders/drivers was reduced to $13 plus $3 per delivery, and a $1 per delivery payment for Friday, Saturday and Sunday night work. Towards the end of 2016, Foodora removed the hourly rate for new riders completely, fixing a flat $10 per delivery payment. The flat rate was progressively reduced further and by February 2018, the rate for new delivery riders had dropped to $7 per delivery. In addition, a new "batching system" was put in place which established a fortnightly assessment process that ranked individual delivery riders and offered shifts according to rank. The highest ranked riders were offered shifts well before lower ranked riders.

When determining whether a worker is a contractor or an employee, the courts say "… the distinction between an employee and an independent contractor is rooted fundamentally in the difference between a person who serves his employer in his, the employer's business, and a person who carries on a trade or business of his own."

The factors identified by the commission, in this case, are helpful indicators:

How work is fulfilled. The commission determined that while the riders had the choice to accept the shifts, the shift start and finish times and geographical locations were fixed by Foodora. Despite the ability to self-select shifts, the commission saw that the "process for engagement is similar to a variety of electronic and web-based systems that are frequently used to advise, in particular, casual employees of available shifts that are offered." While the system is not as prescriptive as naming particular employees, the commission saw the results as essentially similar.

What the contract said. While the Foodora service agreement attempts to establish a relationship of principal and contractor, the commission found that, "The service contract contains many provisions which are similar in form and substance to those that would ordinarily be found in an employment contract document." These included clauses dealing with rostering and acceptance of jobs, the attire to be worn when on shift, the specific nature of the engagements to be undertaken including requirements that the contractor is to comply with all policies and practices of the principal. 

Who had control? Foodora had "… considerable capacity to control the manner in which the applicant performed work." The commission also noted that the batching system meant that to maintain a high ranking, riders had to perform a certain number of deliveries during a shift, work a minimum number of shifts in a week and work a number of Friday, Saturday and Sunday shifts. 

Generating business. In Foodora's favour was the fact that it did not prevent its riders from working for other companies or delivery platforms. However, in this case the commission compared this ability to casual restaurant staff working for more than one restaurant.

Is the contractor operating separate to the principal? One of the aspects of many contractor versus employee cases is whether the individual holds themselves out to the public as a separate business in their own right – do they have their own place of business. In this case, Mr Klooger worked exclusively for Foodora.

Supply of tools of trade. Mr Klooger's only investment as a contractor was his bicycle which he also used privately. An asset which the commission points out does not require a high degree of skill or training.

Delegation of work. One of the factors that determines whether someone is a contractor or employee is their capacity to delegate work to others. The substitution scheme operated by Mr Klooger was a significant factor in this case as he was delegating work. However, in this instance, the commission saw that the substitution scheme was a breach of Foodora's own service agreement not evidence of delegation despite their eventual acceptance of the scheme by Foodora

Identifying as Foodora. Riders had to identify as being from Foodora. Clause 4 of the service contract established an expectation riders dress in Foodora branded attire, and utilise equipment displaying the livery of the Foodora brand.

Tax, leave, and remuneration. As Foodora classified the riders as independent contractors no tax was deducted from payments made. Riders were not entitled to holiday or sick leave. When Foodora paid Mr Klooger, they would generate a recipient created invoice. Once Mr Klooger had reviewed the invoice and made any corrections, the invoice would be paid. 

Reputational damage. If the riders did not perform to the standard expected by customers, it was Foodora that faced reputational damage not the riders. 

While Mr Klooger won his case and was awarded $15,559, Foodora appointed voluntary administrators on 17 August 2018, well before this case came before the commission. The commission pursued the case on public importance grounds.

Foodora is by no means the first company to fall foul of the definition between contractor and employee; there are a litany of companies that have stepped over the definitional boundary but it is one of the first to test platform based work relationships in the gig economy.

However, not all gig economy businesses engaging with workers using a platform are at risk. 

In December 2017, an unfair dismissal claim against Uber was dismissed. Many of the factors evident in the Foodora case were not evident in Uber's model. Interestingly, the commission noted that current laws that determine work for wages and the nature of employment relationships "… developed and evolved at a time before the new "gig" or "sharing" economy. It may be that these notions are outmoded in some senses and are no longer reflective of our current economic circumstances. These notions take little or no account of revenue generation and revenue sharing as between participants, relative bargaining power, or the extent to which parties are captive of each other, in the sense of possessing realistic alternative pursuits or engaging in competition. Perhaps the law of employment will evolve to catch pace with the evolving nature of the digital economy."

Pre-empting the commission's warning on the gig economy was the 2017 Senate report that asked whether the gig economy is "hyper flexibility or sham contracting." In addition to exploring the model of organisations like Deliveroo, the Senate committee demonstrated how apps like AirTasker are being used by businesses for ongoing roles without the burden of employment. The fee Airtasker takes is charged only to the worker. Posters deposit payment into an account managed by the company, and Airtasker then releases 85% of that money to the worker, once the job poster declares the work to be complete.

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