Employees incorrectly treated as independent contractors

Penalties and charges

Businesses who incorrectly treat an employee as an independent contractor risk receiving penalties and charges, including:

• PAYG withholding penalty for failing to deduct tax from worker payments and send it to the ATO
• super guarantee charge (SGC), which is more than the super that would have been paid if the worker was classified correctly. SGC consists of:
  • super guarantee shortfall amount
  • nominal interest
  • an administration fee
• additional super guarantee penalties including the Part 7 penalty amount of up to 200% of the SGC under the Superannuation Guarantee (Administration) Act 1992.

Sham contracting - Fair Work OmbudsmanExternal Link is a contravention under the Fair Work Act 2009. Courts can impose penalties against a business or person that incorrectly tells an employee they are an independent contractor, when in fact they're an employee of the business.

For more information, see:

• Employee or independent contractor
• What to do if a worker wants to be an independent contractor

How to report a business

If you know or suspect a business is incorrectly treating an employee as an independent contractor, let us know by Making a tip-off.