Channel 7 reality TV show House Rules has lost a recent case regarding whether a contestant was an employee or a contractor.
House Rules contestants had to sign a contract. Part of the contract states that the contestants had to acknowledge that their participation in the program is not employment, does not create an employer/employee relationship between them and the TV Channel. It also states that the contestants will not be subject to any award or collective bargaining or workplace agreement and does not entitle them to any wages, salary, corporate benefits, superannuation, workers compensation benefits or any other compensation.
According to Channel Seven, the contestants primary reason for being on the show was to attempt to win the $200,000 prize money. However, in Australia, employment status cannot be avoided by contractual disclaimers unlike in the US. Additionally, the contract detailed how much control Channel Seven exercised over the contestants.
The ATO outlines six key factors that indicate whether someone is an employee or a contractor.
- Ability to subcontract / delegate
- Basis of payment
- Equipment, tools and other assets
- Commercial Risks
- Control over the work
- Independence
The judge’s conclusion was “In my view, the relevant indicia are overwhelmingly in favour of the relationship giving rise to the applicant being a worker. In no way can it be said the applicant was performing work as an entrepreneur who owns and operates her own business. Rather, she and the other contestants were representatives of the respondent’s business while they were engaged on the show, and indeed afterwards when they were required to carry out promotional activities.”
This judgement didn’t just open up Channel Seven to worker compensation but also the possibility of a claim for minimum wages and superannuation guarantee. The current minimum wage in Australia for a 38 hour week is $740.80, significantly less than the $500 payment and given filming is day and night there would be overtime to pay as well. This is a massive change for Reality TV shows but also a warning to check out contractors and ensure the relationship isn’t actually one of an employee.
Learn more about this case and how to distinguish between an employee and a contractor from Effective PD’s webinar. Subscribe to Effective PD at www.effectivepd.com.au. Effective PD offers an innovative way for busy accountants to be on top of their game with continuing professional development in a brief, flexible and easy way.
