A recent case at the Fair Work Commission (FWC) has prompted conversation around the differences between an employee and a contractor.

In the case, the FWC had to determine if a worker who was employed under his ABN was in fact an employee. If it was determined he was an employee, the employer would be liable for certain requirements.


According to Fair Work, whether someone is an independent contractor or an employee depends on a number of factors. These include:

  • The amount of control over how work is performed
  • FInancial responsibility and risk
  • Who supplies the tools and equipment
  • Ability to delegate or subcontract work
  • Hours of work
  • Expectation of work continuing

In the FWC case, the decision came down to the contract the employee had signed. As such, it is important for employers to remember that a contract can be verbal, in writing or a mix of both. Not all of the factors indicated in the list above will appear in the contract and there usually won’t be one deciding factor.

Remember, just because a worker has an ABN does not mean they are automatically a contractor.


Knowing whether you are using contractors or employees is important because there are tax and other implications for both the employer and worker concerned.

An employer is responsible for employees’ superannuation payments, so knowing if you are hiring a contractor or employee will prevent you from being charged penalties for not paying super. The worker will also need to know so that they can make their own superannuation contributions if they are a contractor.

As independent contractors provide services to another person, they need to pay their own income tax and may need to pay GST.

Adam Zuchowski is a disputes lawyer and principal at Sutton Laurence King Lawyers.

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