Employee or contractor?
The difference between an employee and a contractor depends on many different factors. No single factor or combination of factors will determine a worker’s status.
In most cases, independent contractors:
- work for themselves and are their own boss
- are free to accept or refuse work
- control their own working times
- provide their own tools and equipment.
In contrast, employees:
- work in someone else’s business
- are subject to controls on how, where and when their work is performed
- are paid a wage
- receive employee entitlements, such as sick and annual leave.
What to do if you aren't sure if you are an employee or contractor
- If you are a worker, use our online tool to help you decide your employment status.
- If you are an employer, use the ATO’s online tool to decide if a worker is an employee or contractor for tax and super purposes.
- If you believe your employer is incorrectly treating you as a contractor, contact the Fair Work Ombudsman (13 13 94) or the Australian Building and Construction Commission (1800 003 338) if you work in the construction industry. This could be ‘sham contracting’.
- Seek independent legal advice.
Visit the Fair Work Ombudsman website for additional information on employees and contractors.
Five common employee or contractor myths busted
Myth 1 - People who do short-term work are automatically a contractor.
Just because someone is hired for a few hours or a couple of days at a time, doesn't mean they're automatically a contractor. Both employees and contractors can be hired for:
- casual, temporary, on call and infrequent work
- busy periods
- short jobs, specific tasks and project.
Myth 2 - Workers with an ABN are always contractors.
Having an ABN is not the deciding factor of whether or not a worker is a contractor. All of the conditions of the working arrangement are relevant.
Myth 3 - If someone provides an invoice for their work, it means they are a contractor.
Just because an invoice was submitted, it doesn't necessarily mean that the person is a contractor. Other factors also need to be considered.
Myth 4 - The majority of people in your industry are contractors, which means you should be too.
Just because contracting arrangements are common in the industry, it doesn't necessarily mean that a particular person should be treated as a contractor.
Myth 5 - There is a written agreement that says a worker is a contractor, so they must be one.
If a worker is legally an employee, having a written agreement will not:
- override the employment relationships or make the worker a contractor
- remove an employer’s tax and super obligations.