The nature of the relationship between an employer and a contractor has been the subject of much scrutiny from the ATO and Courts, with both institutions finding that contractors can be deemed employees for taxation and other legal purposes despite the contractual relationship between the parties.
Private medical practices and some hospitals engage medical practitioners as independent contractors under Service Agreements, mainly due to tax and insurance purposes. It is industry standard that General Medical Practitioners (GPs) are engaged as independent contractors. Locum doctors may work for hospitals as contractors. The Services Agreements are deliberately drafted to avoid the deeming of an employment relationship between medical practices and doctors.
All migrants sponsored under the subclass 482 and 186 programs must work for the sponsor in a relationship of employment. However, legislative Instrument IMMI 18/035 exempts medical practitioners from employment relationships for 482 Nominations, and this exemption carries forward to Subclass 186 Temporary Residence Transition Nominations.
However, there is currently no similar express statutory exemption for medical practitioners sponsored under the Subclass 186 Direct Entry program.
As a consequence, it has been the view that a Subclass 186 Direct Entry nomination is not possible under these types of contractual agreements.
Regulation 5.19 (5) (j) states that Subclass 186 Direct Entry nomination application must identify a “need for the identified person to be employed in the position, under the direct control of the nominator”. The Regulation 5.19 procedural instruction provides that ‘direct control’ exists within a employment relationship, and is not typically a feature of principal / contractor engagements.
The Regulation 5.19 procedural instruction tabulates ‘direct control’ indicia, such as the engagement being full time, rights of dismissal, provision of tools and training and insurance coverage. In assessing the nature of “direct control”, the Department considers these indicators to establish the nature of the relationship between the principal and the contractor. Where “direct control” is proven, the Nomination of a Medical Practitioner who is a contractor can be approved.
We have recent experience of conducting successful 186 DE Nominations for General Practitioners engaged as contractors, managing both the Nomination and advising on the contract of engagement between the principal and contractor. We welcome the opportunity to talk to Health Organisations and Medical Practitioners seeking nominations in this category.