Posted on 28 March, 2014 in Employees, Subcontractor

Employee VS Subcontractor

This is one tricky topic. I have seen a few business owners get lost in the ATO’s jargon as to what constitutes an employee to a subcontractor. I have tried to break it down below.


  • work under your (the business owner's) control;
  • paid for the time they work;
  • receive paid leave (sick, annual, long service, and so on);
  • use materials or equipment provided by the business to do their job;
  • perform the duties of the position;
  • have agreed to provide their personal services;
  • work hours which are set by an agreement or an award;
  • are recognized as part and parcel of the business; and
  • Take no commercial risk and cannot make a profit or loss from the work performed.


  • Are they paid for results achieved?
  • Do they provide all or most of the necessary materials and equipment to complete the job?
  • Are they free to delegate work to others (including subcontractors)?
  • Do they have freedom in the way the work is done?
  • Do they provide services to the general public and other businesses?
  • Are they free to accept or refuse work?
  • Are they in a position to make a profit or suffer a loss

Of course you should seek advice from your tax accountant before making any sudden changes to the way you pay people.