Sometimes a boss might ask you to get an Australian Business Number (ABN) and call you a contractor rather than an employee. 

Having an ABN, and paying your own taxes, superannuation and other costs, doesn’t automatically make you a contractor.  There are a number of factors that may contribute to determining the difference between an employee and an independent contractor. 

Although no single indicator can determine if someone is a contractor or an employee, there are some common indicators that can help you make that determination.

Who is an independent contractor?

An independent contractor runs their own business. They’re usually engaged for a specific task and they have the right to accept or decline each job / task. They generally control how the work/job needs to be done (including the choice to hire others to assist), and negotiate their own fees and working arrangements because they bear all the risks of making a profit or a loss on each job. They will usually pay their own taxes, superannuation and other costs like insurance and tools.

Who is an employee?

An employee’s work is usually directed and controlled by the boss, and they work the hours specified by the boss. They bear no financial risk and are entitled to a minimum wage and the National Employment Standards. They may also have other employment entitlements. Employees should have their income tax deducted and their superannuation paid for them by the employer. 

Why does it matter?  

If you are working as a contractor, you won’t be getting entitlements like a minimum wage, sick leave and annual leave, and you are responsible for paying your own tax. If your relationship with the boss is really an employment relationship then it’s not fair that you are missing out on these entitlements. 

Not only is it unfair but it is also potentially illegal. If your boss has told you that you are a contractor and they know or should have known that you are actually an employee, then this is called sham contracting and it is against the law.  

The Fair Work Ombudsman can help employees who think they have been wrongly asked to obtain an ABN or are in a sham contracting arrangement. 

Contacting the Fair Work Ombudsman

If you believe you might be in a sham contracting arrangement, or if you are not receiving your minimum rights and conditions at work, contact the Fair Work Ombudsman for FREE advice and assistance. 

Ask the Fair Work Ombudsman a question at www.fairwork.gov.au/register or call them on 13 13 94

You can also access information in your own language by going to www.fairwork.gov.au/languages or call the Translating and Interpreting Service on 131 450.