Show download pdf controls
  • Do your clients hire contractors?

    When hiring workers, do your clients understand the difference between contractors and employees for tax and super purposes? Getting it wrong compromises your clients' ability to meet their tax and super obligations, and can mean their workers miss out on employee entitlements. If your clients misclassify their workers they can also be caught out with penalties and charges.

    You can help your clients understand how to correctly classify their workers, by reminding them there is no one deciding factor that makes a worker an employee or contractor. To help classify their workers, your clients must consider the whole working arrangement, including questioning their worker's:

    • ability to subcontract/delegate: can the worker pay someone else to do the work?
    • basis of payment: is the worker paid based on an agreed quote they provided?
    • equipment, tools and other assets: does the worker provide their own tools and equipment needed to do the job?
    • commercial risks: is the worker legally responsible for their work and liable for fixing mistakes or defects?
    • control over the work: does the worker decide how to do the work, subject to specific terms in the contract or agreement?
    • independence: does the worker operate their own business independently of your client's business?

    If your client answers no to some or all of these questions, they should seek further information and advice before hiring, or continuing to treat their workers as contractors.Remember, if your client is taking on an apprentice, trainee, labourer or trades assistant, those workers are always employees, never contractors.

    See also:

    Last modified: 11 Nov 2019QC 60560