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Independent Contracting Traps

This infosheet provides information about the implications of working as an independent contractor and about the legal tests which determine whether a worker is actually an employee or a contractor.

If you are an independent contractor, you are not an employee but are working for yourself. Independent contractors often register as a business. Usually in independent contracting, the emphasis is on getting a particular job finished, rather than working a particular number of hours.

There are certain types of occupations where workers may think they are employees but their boss considers them to be independent contractors. Some examples include couriers, mail delivery, cleaners, letterboxing and door-to-door sales. You might be called an independent contractor because the person you work for has decided it is cheaper or that it limits their legal obligations.

In some circumstances workers who are called independent contractors are actually considered legally to be employees. It is important to know this because many laws which protect employees’ rights do not apply to people classified as independent contractors.

Independent contractor or employee?

Some workers are called independent contractors but in certain circumstances the law may consider them to really be employees. You are more likely to be seen to be an independent contractor if:

  • you provide your own tools and equipment;
  • you have a greater degree of control over when and how you do your work — the greater the control your boss has, the more likely it is that an employment relationship exists;
  • you give the boss an invoice so they can pay you;
  • you choose the hours you work;
  • you work for more than one boss;
  • you have registered your own business and have an ABN;
  • your contract says so — the contract may be in writing or your boss may have said you would be a contractor;
  • you are free to get other people to do the work for you;
  • your pay is based on your output rather than the hours you work.

If a person is required to wear a uniform to promote the boss’ business then it is less likely that they are independent contractors.

No one of these factors is enough, by itself, to make somebody an independent contractor. All the factors are considered. If you are unsure as to whether or not you are really working as an independent contractor, then it is always good to seek advice from your union or a lawyer.

Implications for contractors

  • Workers compensation / WorkCover
  • Occupational health and safety
  • Superannuation
  • Taxation
  • Unfair dismissal
  • Wages and conditions

For more information about implications for independent contractors, download the fact sheet.

For further support

Call our Telephone Information Service on Melbourne Metro (03) 9662 1933 or Regional Victoria, Queensland and Tasmania on 1800 331 617.

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