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  • How to work it out: employee or contractor

    To check if your worker is an employee or contractor, you need to review the whole working arrangement. The easiest way is to use our decision tool.

    Employee or contractor decision tool

    You can use the Employee or contractor decision tool to work out if your worker is an employee or contractor for tax and superannuation (super) purposes. Simply answer questions about the working arrangement and you'll generate a report you can keep for your records. If you answer each question accurately and honestly, you can rely on the results.

    Employee or contractor decision tool

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    Some workers are always employees

    The following workers are always treated as employees:

    • apprentices
    • trainees
    • labourers
    • trades assistants.

    Apprentices and trainees do both work and recognised training to get a qualification, certificate or diploma. They can be full-time, part-time or school-based and usually have a formal training agreement with the business they work for. This is registered through a state or territory training authority or completed under a relevant law.

    In most cases they are paid under an award and receive specific pay and conditions. You must meet the same tax and super obligations as you do for any other employees.

    Companies, trusts and partnerships are always contractors

    An employee must be a person. If you've hired a company, trust or partnership to do the work, this is a contracting relationship for tax and super purposes. The people who do the work may be directors, partners or employees of the contractor but they're not your employees.

    Labour hire or on-hire arrangements

    If you hired your worker through a labour hire or on-hire) firm and pay that firm for the work undertaken in your business, your business has a contract with the labour hire firm and they are responsible for pay as you go (PAYG) withholding, super and fringe benefits tax obligations. Labour hire firms may be called different names, including recruitment services or group training organisations. They will refer to your business as the 'host employer'.

    Hiring individuals

    If you've hired an individual, the details within the working agreement or contract determine if they are a contractor or employee for tax and super purposes. The agreement or contract can be written or verbal.

    See also:

    Last modified: 16 Apr 2021QC 33190