Are you an employee or contractor?

Generally, a contractor is someone who runs their own business and provides services to other businesses or individuals. An employee works in and is part of a business.

You should consider your whole working arrangement and take into account the following factors:

  • How much control you have over the work
  • How you are paid
  • Whether you buy equipment for the work
  • Whether you have any ability to subcontract and delegate work
  • Whether you take any commercial risk
  • How dependent or independent you are in the work arrangement

Characteristics of an employee

  • The owner/s of the business determines where, when and how you do the work. This includes the range of hours of when you must work.
  • Your employer pays you for time worked, price per item or activity or on a commission basis.
  • The business provides all or most of the equipment, tools and other assets (e.g motor vehicle) you need to carry out the work. Alternatively, if you provide all or most of the equipment, the business provides an allowance or reimburses the cost of the equipment and tools 
  • You can’t pay for someone else to do the work as you don’t have the ability to subcontract or delegate work.
  • You don’t take any commercial risk. The business owners take legal responsibility for the work performed by you and are liable for the cost of rectifying defects.
  • You work within and are part of the business – you don’t operate independently.

Characteristics of a contractor

  • It is up to your discretion as to what work you do, how it is carried out and the hours when the work is to be complete. This would be subject to the specific terms in any contract or agreement.
  • You are paid based on the quote provided
  • You provide all or most of the equipment, tools and other assets (e.g motor vehicle) needed to do the work.
  • You can subcontract or delegate work.
  • You take the commercial risk and are legally responsible for the work. You are liable for the cost of rectifying any defects.
  • You operate your own business independently. A contract or agreement specifies the services you provide and you are free to accept or refuse additional work.

When assessing your working arrangement, you need to weigh up these characteristics to see where the balance lies.

Still not sure?

If you are uncertain about your employment status, we recommend the ATO employee/contractor decision tool.

For business owners - keep your records as proof

We recommend that you keep relevant records and documents which confirm whether a worker is an employee.