Is your subcontractor really an employee?


It may seem simple, but is it really?

The key aspect of an employment relationship is “control”.

A subcontractor, on the other hand, undertakes the work to produce a given result but is not under the control of the employer.

An employee works on a salary or wage.

The subcontractor gets paid on completion of the work.

There’s a number of questions you can ask yourself to determine whether your relationship with your workers is one of an employee or a contractor.

If you answer “yes” to one or more of these questions, it is likely you’re engaging an employee, rather than a contractor.

  1. Do you have control as the business owner?
  2. Does the worker use tools and equipment owned by you?
  3. Do you supply the materials?
  4. Are the hours of work set or controlled by you?
  5. Do you control leave or when hours are worked?
  6. Is renumeration usually paid weekly or fortnightly?
  7. Are there payments of leave or overtime?
  8. Can you terminate services at any time?
  9. Is the worker forbidden to rearrange or reassign the work?

What does this mean to you as the employer?

It means that you have obligations to pay superannuation, Workcover, etc for your contractors.

Just because a worker has an ABN does not rid you of all these responsibilities.

The bottom line? Building a strong financial strategy will help your business get to where it needs to be.

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