Employee or contractor? Getting it right matters
Calling someone a contractor does not make them one. If a worker is really an employee, the business may owe PAYG withholding, super, payroll tax and more. Here is a simple guide.
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Signs of an employee
- Paid for their time (hourly or salary) rather than for a result
- Told how, when and where to do the work
- Uses the business's tools and equipment
- Cannot send someone else to do the work
- Part of the business and works for it, not for themselves
Signs of a contractor
- Paid to deliver a result, often by quote
- Decides how the work is done
- Provides their own tools and insurance
- Can delegate or subcontract the work
- Carries the risk of fixing mistakes at their own cost
- Runs their own business with other clients
Different laws, different tests: Tax, super, payroll tax, workers compensation and workplace laws each have their own rules. A worker can be a contractor for one purpose and an employee for another. For example, a contractor paid mainly for their labour can still be entitled to super.
Why it matters
- Unpaid super, plus the super guarantee charge
- PAYG withholding not deducted
- Payroll tax and workers compensation
- Leave and other workplace entitlements
How UV TAX can help
- Review your workers and contracts from a tax and super point of view
- Set up payroll and super correctly
- Help fix past mistakes, including late super
- Lodge taxable payments annual reports where needed
⚠️ General information only – not tax or legal advice. UV TAX is a registered tax agent, not a law firm, and cannot give legal advice. Where legal advice is needed we will tell you so you can speak with a lawyer. Workplace law questions (leave, unfair dismissal, Fair Work) should be taken to a lawyer or the workplace regulator. This page is a simple overview as at November 2026 and does not consider your personal circumstances. Laws, rates and thresholds change, and outcomes are decided by the tax office or the courts – UV TAX cannot guarantee any result. Please get advice for your situation before acting.
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0466 268 405Frequently asked questions
Does an ABN make someone a contractor?
No. Having an ABN does not by itself make a worker a contractor. The real relationship matters.
Do I pay super for contractors?
Sometimes. If a contractor is paid mainly for their labour, you may have to pay super for them.
What happens if I get it wrong?
You may owe super, the super guarantee charge, PAYG withholding, payroll tax and penalties.
Can a worker be a contractor for tax but an employee for super?
Yes. Different laws use different tests.
Related
General information current as at November 2026.