If employees are wrongly treated as contractors

It's against the law for a business to wrongly treat their employees as contractors. Businesses that do this are:

  • not meeting their tax and super obligations
  • denying workers their employee entitlements
  • illegally reducing their labour costs and gaining an unfair advantage over their competitors.

They risk penalties and charges, including:

  • PAYG withholding penalty for failing to deduct tax from worker payments and send it to the ATO
  • super guarantee charge, made up of:
    • super guarantee shortfall amounts (the amount of super contributions that should have been paid into a complying fund)
    • interest charges
    • an administration fee
  • additional super guarantee charge of up to 200%.

Unlike super guarantee contributions, the super guarantee charge is not deductible.

What we're doing

We use a combination of education and compliance action to address the problem of businesses wrongly treating their employees as contractors.

We support businesses that want to do the right thing, helping them understand and fulfil their obligations to their workers.

We also use a range of compliance strategies to identify and deal with businesses that want to avoid their obligations to their workers.

Our aim is to promote a level playing field that's fair for all.

What you can do

If you know or suspect a business is wrongly treating an employee as a contractor, let us know.

The details you provide are an essential source of information to help us address the issue.

Next step:

See also:

Last modified: 22 Feb 2016QC 33198