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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/contractor decision tool to work out if your worker is an employee or contractor for tax and super purposes. Simply answer questions about the working arrangement and you'll generate a report that 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

    Any of the following types of workers are always treated as employees:

    • apprentices
    • trainees
    • labourers
    • trades assistants.

    Apprentices and trainees do a combination of 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, which 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. The work arrangement for apprentices and trainees is employment. You must meet the same tax and super obligations as you do for any other employees of your business.

    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, then it is a contracting relationship for tax and super purposes. The people who actually 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 have obtained your worker through a labour hire (or on-hire) firm and pay that firm for the work undertaken in your business, then your business has a contract with the labour hire firm and they are responsible for the PAYG withholding, super and FBT obligations. Labour hire firms can be called different names including recruitment services and group training organisations (where your business is referred to as the 'host employer').

    Hiring individuals

    If you've hired an individual, it is the details within the working agreement or contract that determines if they are a contractor or employee for tax and super purposes. The agreement or contract your business has with the worker can be written or verbal.

    Last modified: 06 Jan 2017QC 33190