Before you hire a worker

Before you enter into a work agreement or contract with a worker:

  • check that they're legally allowed to work in Australia
    • Australian citizens, permanent residents and New Zealand citizens are legally allowed to work here
    • if you believe the worker is a foreign national (other than a New Zealander), you must carry out further checksExternal Link to confirm they have a visa with permission to work (you'll need their visa number to check)
  • check whether the worker will be an employee or contractor
    • you can use the Employee/contractor decision tool
    • it's important you get this right – it affects your tax, super and other obligations, and it's against the law to wrongly treat your employees as contractors.

Duration 5:27. A transcript of Paying workers - Is your worker an employee or contractor? is also available.

Employee – definition

Generally, an individual is an employee if they:

  • are paid for time worked
  • receive paid leave – for example, sick, annual, recreation or long service leave
  • are not responsible for providing the materials or equipment needed to do their job
  • must perform the duties of their position
  • agree to provide their personal services
  • have work hours set by an agreement or award
  • are recognised as part of your business
  • don't take commercial risks and can't make a profit or loss from the work done.

Contractor – definition

Contractors run their own business. They agree to produce a particular result for an agreed price and in most cases they:

  • are paid for results achieved
  • provide all or most of the necessary materials and equipment to complete the work
  • are free to pay someone else to do the work instead of them
  • have freedom in the way the work is done
  • provide services to the general public and other businesses
  • are free to accept or refuse work
  • are in a position to make a profit or loss.

The contractor may be an individual, partnership, trust or company.

Next steps:

See also:

Last modified: 22 Feb 2016QC 47987