Starting up as a solo pet sitter is relatively straight forward - a professional pet sitter in Queensland will obtain an ABN and register a unique trading name (this is not the same as trademarking a name, which costs thousands of dollars).
A professional pet sitter will take out a public liability insurance policy, which may or may not cover pets under their care.
A solo pet sitter (and business owner) will most likely opt to operate as a sole trader. An alternative is to structure their business as a company, which has greater set up costs and accounting requirements.
The pet sitting business owner will often choose to be available to work 7 days per week, 365 days per year. There are seasonal fluctuations, typically with high peak times at holiday times such as christmas and easter. The rest of the year can be unpredictable.
Many solo sitters have no back up plans for emergencies. Others have an arrangement to contract the services of another sitter if required (and most likely will pay the full client fee to the contracted sitter). This is not an ideal arrangement for peak holiday times, as both sitters are likely to have full schedules.
Pets are depending on them to be fed, so the sitter needs to turn up even if they are feeling unwell. A pet sitter needs to be comfortable with working on weekends and when others are on holiday. If the pet sitter would like to take time off, whether a day off each week or a week or two each year, they have the choice of letting their clients know they are unavailable (and possibly losing them to another pet care service) or hiring help.
As a solo pet sitter, I decided to investigate my options for hiring help. It would be nice to have extra help for peak periods, as well as a reliable backup. I'd like my business to operate 365 days per year even if I have some days off. I currently work part-time in my business and full-time over peak periods. I didn't want to wait until I was working full-time and getting burnt out as many pet sitters do before exploring my options.
Paying per job gives the business owner greater control in managing their expenses - they are not paying extra if a staff member is caught in traffic or spends longer with the pets. A pet sitter in the US typically pays approximately 50% of the client fee to the IC or employee. Some pay a flat rate per sit instead. Some will pay a mileage allowance but not usually time between sits.
An employee has their liability insurance covered by the business owner. An IC is typically responsible for their own insurance. A business owner can be prosecuted for misclassifying an employee as an IC in both Australia and the US.
Pet sitting is still relatively new in Australia. Many pet sitters model their businesses on the US, including the way they hire, whether it is legal or not. The employment laws are different in Australia. What is legal in the US is not necessarily legal in Australia.
Here are some typical differences between an IC and an employee:
- the IC is responsible for their own tools, insurance, travel costs, taxes, superannuation whereas these costs must be met by the business owner for an employee
- an IC has an ABN and operates their own independent business where as an employee works for the business owner and doesn't require an ABN
- the business owner can tell the IC what requires doing, but cannot tell them how to do it. An employee can be trained and made to follow procedures.
- An employee can be made to wear uniform, an IC can refuse
- An IC legally has the right to send a substitute in their place
- employees are covered by employment awards which specify a minimum wage; contractors agree to payment for a job done
- an IC can refuse assignments. A casual employee is 'on call' and needs to be available as agreed
- IC pays their own public liability insurance. Employee is to be insured by business owner.
- IC pays their own taxes, super and mileage. Business owner is responsible for this for employees.
No one factor defines an IC or employee. Just because a worker is made to get an ABN and made to pay their own super and taxes, does not mean that they are necessarily an IC. A common illegal practise is sham contracting, where and employee is disguised as an IC to avoid obligations such as penalty rates, allowances for using one's own vehicle for work and reimbursing expenses.
When I enquired with a number of pet sitting businesses, some were happy to tell me about their staffing arrangements.
One said they used employees to ensure their staff were covered by public liability insurance.
They said they hire under the Federal Generic Award (which no longer exists). They pay their employees 50% of each job (which doesn't include travel time between jobs) and they charge clients a public holiday surcharge to pay staff an extra 25-50% on public holidays. It's the feasible way to grow into a large pet sitting business like themselves, but is it legal?
A casual employee has a 25% loading on the base rate (of at least the minimum wage) as a substitute for holiday pay and sick pay. The public holiday rate is 250%, which for most pet sitters will be more than the client pays.
The Miscellaneous Award does not cover piecemeal type arrangement such as pet minding (private boarding) or overnights (staying at the client's home overnight). There is no minimum period of engagement under the Misc Award, but employees are to be paid per hour (which works out to be more than $20 per hour for an adult).
Others used ICs and typically paid per job. One wanted to specialise in overnights, which she felt was most profitable for her business. She covered a large territory and to pay an employee the travel allowance of 74 cents per kilometre plus all the penalty rates etc was too expensive for her. Pet minding and overnights are not paid 'per hour' as the client would have to pay much higher to meet the minimum wage.
Another had employees and paid a percentage like the US. She switched all her employees to ICs because she wanted to keep paying them a percentage.
Some other companies were more like agencies - they didn't consider their workers to be employees or ICs. They were minding pets in their own homes as a 'hobby' and received a small 'donation' or 'allowance' of $8- $10 per day to indulge in their hobby, which specifies daily dog walks.
Slave labour or fair compensation for allowing a person that can't afford to commit to a pet to care for a pet 'part-time'? Clever avoiding of legal loopholes or taking advantage of pet lovers for profit. I've seen a few large companies like this - it's easy to be profitable when hiring labour cheaply. When it comes to pets, hundreds of people are lining up to do it for practically nothing, even if it means the business owner is reaping a tidy profit from a workforce made entirely of volunteers. Franchises are available for purchase too.
I enquired with a contracting consultant, Fair Work Australia and the Australian Tax Office. The contracting consultant said that if using an IC, then one would need to pay a much higher rate than an employee to allow for the fact that they must pay their own insurances etc. Also the IC must be a true independent business owner, not just work for the pet sitting business.
They said it would be safer to use an employee, to avoid the risk of prosecution for misclassifying an employee as an IC (the fine is something like $30,000 plus backpay). They said the sitters paying low rates etc were sham contracting.
The government agencies weren't really sure whether a pet sitter should be classified as an IC or an employee, or whether a pet sitter employee was under the Misc Award or award free (no requirement to pay penalty rates, travel allowance etc, but need to pay minimum wage). They said if one goes award free, they could be liable for backpay etc to meet the Misc Award requirements. They suggested seeking legal advice.
The business owners in the scenarios earlier said they all sought legal advice. One said she got some 'free' advice while at a business networking function. Another got advice of what appeared to be a labour hire consultant (and outsourced to a lawyer of some sort).
I balked at the idea of how much a lawyer would cost (hundreds of dollars per hour), but I wanted to know for sure what is required with hiring legally. A general lawyer would not do, it would have to be an employment specialist. I wasn't particularly happy about having to cough up all my easter revenue in legal fees while my business was still getting off the ground, but I wanted to know for sure.
A business owner may not have taken out worker's compensation for an IC and if the IC were injured (say a dog bite), not only could the business owner be liable for damages over the dog bite, but also could be prosecuted if the IC was really an employee.
Jacque's professional opinion was that pet sitters doing home visits (like I do) were covered by the Misc Award. He recommended not to hire staff to do 'per job' type arrangements like overnights and pet minding (private boarding) as he could not see any way to legally do this. He considered all of the sitters above (except the one using the Misc Award) to be sham contractors (ironically, these sitters insisted that they 100% legal).
The Miscellaneous Award is very expensive for a business like a pet sitter, even with keeping a very small territory to travel. I was hoping the verdict would be that pet sitting was award free, so they were paid at least the minimum wage and a more affordable rate for public holidays and travel (ie pay at least their petrol costs and they could claim the rest of the travel allowance back at tax time).
Jacques said he had also checked with another consultant and they agreed with his verdict. He suggested I enquire with Fair Work Ombudsman. Fair Work Ombudsman had already determined that dog groomers belong under the Misc Award. They weren't sure about pet sitters. They agreed to research it. It took over a month, and the decision came back that pet sitters come under the Misc Award, just as Jacques had determined.
A few clients said they would not be keen on someone else turning up to care for their pets. If I hire, my clients would be given the opportunity to meet the employee.
I received a letter from WorkCover Queensland. It said that employing workers must be covered by workers compensation and this can include subcontractors too (some pet sitters I've talked to think they are exempt from paying worker's compensation insurance as they have not classified their workers as 'employees').
A sole trader must pay the worker's compensation of another sole trader used as an independent contractor, as well as employees. A company must pay workers compensation for everyone working for them, whether employees or not. So if I hired the services of another sitter as a backup (or an employee), then I would have to pay nearly $300 for the year additional for worker's compensation.
Apparently if I use my husband as an emergency backup and I don't pay him money, then I don't have to pay worker's compensation for him, just make sure he is covered by my public liability insurance policy. Workers compensation is only for paid workers.
As stated at the beginning of this post, this post is to educate and to inform. Employing pet sitting and pet minding staff is complicated in Australia and it is not wise to model on the US without seeking legal advice. All it takes is a complaint from a worker and a business may be investigated and prosecuted (even a business that has been operating for years).
I take no responsibility for any possible disputes that may arise from me freely sharing this information arising from my research. I recommend seeking legal advice (from an employment specialist) for your own situation.