This holiday season, as Santa gears up for his chimney-descending marathon, Australian business owners face their own daunting challenge: properly classifying workers. While Saint Nick’s employment status makes for amusing satire, the real-world consequences of misclassifying locum pharmacists are no laughing matter. Just as the ATO would scrutinize Santa’s working arrangements, they’re actively cracking down on businesses that pay locums on personal invoices under the cover of having an ABN without using a licensed labour hire agency—a practice that could land you with massive penalties.
The critical takeaway from Pharmacy SOS is stark: If you directly engage and pay a locum pharmacist on their personal ABN invoice, and you meet the definition of a “host” under labour hire licensing laws, you are likely breaking the law and engaging in sham contracting. Let’s unwrap why both Santa and your locum setup fail the compliance test.
The Sham Contracting Checklist: Santa vs. Your Locum
The ATO and fair work authorities use a multi-factor test. Here’s how both iconic figures measure up:
| Factor | Independent Contractor Reality | Santa’s Status | Your Locum’s Likely Status |
|---|---|---|---|
| Control | Has autonomy over how, when, and where work is done. | FAILS. Schedule, route, and method (chimney-only) are dictated by global demand. | FAILS. You likely set their shifts, roster, and require them to use your pharmacy’s systems and procedures. |
| Delegation | Can send another qualified person to do the job. | FAILS. Children demand Santa personally. No substitution allowed. | FAILS. The locum must perform the services personally. You hired them, not their company. |
| Tools & Premises | Provides their own significant tools and works across multiple sites. | MIXED. Provides sleigh but must use the client’s chimney. | FAILS. They work at your pharmacy, using your dispensary software, your equipment, and your drugs. |
| Financial Risk | Bears commercial risk, can make a profit/loss, and advertises services. | FAILS. No profit motive, no advertising. Paid in cookies. | FAILS. Typically paid a fixed hourly rate. Bears no commercial risk for the pharmacy’s profit/loss. |
| Licensing Law Test | Engaged through their own legitimate business structure. | N/A (But the elves’ workshop is unlicensed!). | CRITICAL FAIL. In states with licensing (VIC, QLD, SA, ACT, NT), you are breaking the law if you don’t use a licensed agency to supply the pharmacist. |
The Real-World Consequences: More Than Just Lumps of Coal
The Pharmacy SOS article highlights severe implications that go far beyond Santa’s theoretical superannuation shortfall:
For Your Pharmacy (The “Host”):
Substantial Fines: Breaching labour hire licensing laws can result in six-figure penalties for corporations.
Back-Pay Liabilities: You are liable for superannuation, unpaid entitlements, and payroll tax you failed to pay, plus penalties.
Sham Contracting Charges: The ATO can pursue you for deliberately misclassifying an employee as a contractor.
Reputational Damage: Being named for non-compliance is terrible for business.
For the Locum Pharmacist:
No Workers’ Compensation: If injured at your pharmacy, they have no coverage. You could be personally liable.
No Leave or Protections: They miss out on sick leave, annual leave, and the safety net of modern award minimums.
Tax Complications: Being treated as a contractor when they are an employee creates a personal tax mess.
The Compliant Path: How to Stay Off the ATO Naughty List
The solution is clear and compliant. To legally engage a locum pharmacist, you must follow one of two pathways:
Hire Them Directly as an Employee: Put them on your payroll, pay super, cover WorkCover, and provide payslips. This gives you control but also full employer responsibility.
Use a Licensed Labour Hire Agency: This is the only legal way to engage a locum as a contractor in licensed states. The agency is the employer, manages all compliance, payroll, and insurance, and supplies the worker to you.
This is the core message: Simply paying a locum on their own ABN invoice is not a legal loophole; it is a major compliance risk. As Pharmacy SOS stresses, the use of a licensed labour hire provider is not optional in many states—it’s the law.
Conclusion: Give the Gift of Compliance This Year
The tale of Santa as an employee is a whimsical way to illustrate a very serious and costly issue facing pharmacy owners today. The rules are complex, but the principle is simple: if you control the work, the worker is likely your employee. Attempting to contract around this reality by paying on invoice without a licensed agency is a high-stakes gamble.
Don’t let your pharmacy’s compliance be haunted by the ghosts of audits past, present, and future. Review your locum arrangements now. Seek professional advice to ensure you are on the right side of fair work, tax, and labour hire licensing laws. It’s the best gift you can give your business for a prosperous and penalty-free new year.
Disclaimer: This blog post is for informational and satirical purposes only and does not constitute legal or financial advice. You should seek professional advice for your specific circumstances regarding worker classification and labour hire licensing obligations.