These examples show the differences between employees and contractors in various industries:
Domestic painting
Clarissa is an employee |
Vince is a contractor |
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A domestic painter, Clarissa, works for a painting business on an ongoing basis. The business has told Clarissa she will be painting the interior of home units at a local retirement village for the next four weeks. |
A domestic painter, Vince, has been engaged by a local retirement village to paint the interior of some of their home units. |
Control over the work Employee characteristic – the painting business has control over the work. |
Control over the work Contractor characteristic – Vince has freedom in the way the work is done, subject to the specific terms in the agreement. |
Ability to subcontract/delegate Employee characteristic – Clarissa cannot subcontract/delegate the work. |
Ability to subcontract/delegate Contractor characteristic – Vince can subcontract/delegate the work. |
Basis of payment Employee characteristic – Clarissa is paid for the time worked. |
Basis of payment Contractor characteristic – Vince is paid for a specific result based on the quote he provided. |
Equipment, tools and other assets She drives her own ute to and from the worksite each day. The painting business requires Clarissa to have her own transport. Employee characteristic – the painting business provides the equipment, tools and assets required to complete the work. The ute is not being used to perform the work. |
Equipment, tools and other assets Contractor characteristic – Vince provides the equipment, tools and assets required to complete the work. |
Commercial risks
Employee characteristic – Clarissa takes no commercial risks. |
Commercial risks Contractor characteristic – Vince takes commercial risks. |
Independence Employee characteristic – Clarissa is not operating independently of the painting business. |
Independence Contractor characteristic – Vince is operating his own business independently of the retirement village. |
Road transport
Ralph is an employee |
Toni is a contractor |
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A truck driver, Ralph, works for a food manufacturing business and transports their products long distances to retail outlets across Australia. |
A truck driver, Toni, who leases a refrigerated truck, enters into a contract with a local seafood business to transport their products during the busy Christmas period. |
Control over the work
Employee characteristic – the food manufacturing business has control over the work. |
Control over the work Provided the deliveries are made on the required day, Toni can determine how and in what order the deliveries are made. Contractor characteristic – Toni has freedom in the way the work is done, subject to the terms in the contract. |
Ability to subcontract/delegate Employee characteristic – Ralph cannot subcontract/delegate the work. |
Ability to subcontract/delegate Contractor characteristic – Toni can subcontract/delegate the work. |
Basis of payment
Employee characteristic – Ralph is paid a price per item or activity. |
Basis of payment Contractor characteristic – Toni is paid for a specific result based on the quote she provided. |
Equipment, tools and other assets Ralph uses the food manufacturing business's fuel card to purchase fuel at participating fuel stops along the route as required. Employee characteristic – the food manufacturing business provides the assets required to complete the work. |
Equipment, tools and other assets Toni purchases fuel with her own money from any outlet she chooses. Contractor characteristic – Toni provides the assets required to complete the work. |
Commercial risks Employee characteristic – Ralph takes no commercial risks. |
Commercial risks Contractor characteristic – Toni takes commercial risks. |
Independence Employee characteristic – Ralph is not operating independently of the food manufacturing business. |
Independence Contractor characteristic – Toni is operating her own business independently of the seafood business. |
Cleaning
Catherine is an employee |
Karl is a contractor |
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A cleaning business has a contract to clean a small office building. A cleaner, Catherine, who works for the cleaning business, cleans the building. |
A cleaner, Karl, has entered into an agreement to clean a small office building for one year. |
Control over the work
The cleaning business does regular checks to ensure Catherine's work is meeting the required standards. Employee characteristic – the cleaning business has control over the work. |
Control over the work Karl is not given any direct supervision and can complete the cleaning work as he sees fit provided it meets the requirements of the agreement. Contractor characteristic – Karl has freedom in the way the work is done, subject to the specific terms in the agreement. |
Ability to subcontract/delegate Employee characteristic – Catherine cannot subcontract/delegate the work. |
Ability to subcontract/delegate Contractor characteristic – Karl can subcontract/delegate the work. |
Basis of payment Employee characteristic – Catherine is paid for the time worked. |
Basis of payment Contractor characteristic – Karl is paid for a specific result based on the quote he provided. |
Equipment, tools and other assets Employee characteristic – the cleaning business provides the equipment and assets required to complete the work. |
Equipment, tools and other assets Contractor characteristic – Karl provides the equipment and assets required to complete the work. |
Commercial risks Employee characteristic – Catherine takes no commercial risks. |
Commercial risks Contractor characteristic – Karl takes commercial risks. |
Independence Catherine needs to do any work within her duty statement. Employee characteristic – Catherine is not operating independently of the cleaning business. |
Independence Contractor characteristic – Karl is operating his own business. |
Information technology
Ahn is an employee |
Sara is a contractor |
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A software engineer, Ahn, works for a large business. He designs, develops, tests and installs software programs. |
A software engineer, Sara, enters into a contract with a retail business to design, develop, test and install a new software program. |
Control over the work Ahn must complete the work according to the business's established protocols, guidelines and quality standards. Employee characteristic – the business has control over the work. |
Control over the work
Sara is able to determine how the work is completed. Contractor characteristic – Sara has freedom in the way the work is done, subject to the specific terms in the contract. |
Ability to subcontract/delegate Employee characteristic – Ahn cannot subcontract/delegate the work. |
Ability to subcontract/delegate Contractor characteristic – Sara can subcontract/delegate the work. |
Basis of payment Employee characteristic – Ahn is paid for the time worked. |
Basis of payment Contractor characteristic – Sara is paid for a specific result based on the quote she provided. |
Equipment, tools and other assets Employee characteristic – the business provides the majority of the equipment and assets required to complete the work. |
Equipment, tools and other assets Contractor characteristic – Sara provides the majority of the equipment and assets required to complete the work. |
Commercial risks Employee characteristic – Ahn takes no commercial risks. |
Commercial risks Contractor characteristic – Sara takes commercial risks. |
Independence Employee characteristic – Ahn is not operating independently of the business. |
Independence Contractor characteristic – Sara is operating independently of the retail business. |
Building and construction
Darren is an employee |
Sam is a contractor |
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A concreter, Darren, works for a local residential business. He pours concrete at new developments on behalf of the company. |
Sam has been engaged by a local business to provide concreting services to a segment of its customer base. The business chose Sam because of his industry reputation in quality of his work and repeat business in this segment of the market. |
Control over the work Employee characteristic – the business has control over the work. |
Control over the work Contractor characteristic – Sam has freedom in the way the work is done, subject to the specific terms in the agreement. |
Ability to subcontract/delegate Employee characteristic – Darren cannot subcontract/delegate the work. |
Ability to subcontract/delegate Contractor characteristic – Sam can subcontract/delegate the work. |
Basis of payment Employee characteristic – Darren is paid a price per item or activity. |
Basis of payment Contractor characteristic – Sam is paid for a specific result based on the quote he provided. |
Equipment, tools and other assets Employee characteristic – the business provides the majority of the equipment, tools and assets required to complete the work. |
Equipment, tools and other assets Contractor characteristic – Sam provides the equipment, tools and assets required to complete the work. |
Commercial risks Employee characteristic – Darren takes no commercial risks. |
Commercial risks Contractor characteristic – Sam takes commercial risks. |
Independence Employee characteristic – Darren is not operating independently of the business. |
Independence Contractor characteristic – Sam is operating his own business independently of the business that engaged him. |
See also:
Examples of the differences between employees and contractors in various industries.