Employee or Subcontractor?
This information applies to employers and employees in the state industrial relations system. It covers businesses which operate as sole traders, partnerships and unincorporated trust arrangements. This information does not apply to businesses and organisations in the national industrial relations system which operate as Pty Ltd businesses that are trading or financial corporations or incorporated associations and other non-profit bodies (that are trading or financial corporations). If the business or organisation is in the national system visit the Fair Work Ombudsman website.
A subcontractor is not an employee, but rather a worker running their own independent business. If a person is a subcontractor, employment laws and WA awards do not apply to that person.
If a person is ‘engaged’ as a subcontractor but is legally considered an employee, the person could potentially be owed unpaid leave entitlements, wages (particularly overtime and penalty rates) and superannuation contributions.
Determining whether a worker is a subcontractor or employee can be complex. The table below provides an overview of the main differences between employees and subcontractors. The Employee or Subcontractor Checklist publication has more information and is also designed to assist in understanding the key aspects of each type of working arrangement.
It is recommended that you seek legal advice if unsure.
The main differences between a subcontractor and employee
|In control over the hours worked and when and how the work is performed||The employer is in control of how and when work is performed|
|Can accept and perform work for other businesses while engaged by an employer||The employee is an integral part of the business and will usually be working for that business on a regular and ongoing basis|
|Provides a rate for a specific job and an invoice for work performed||The employer pays the employee in accordance with the relevant WA award, or contract of employment|
|Supplies their own plant, materials and equipment||The employer supplies the employee with materials and equipment|
|Responsible for their own tax and superannuation arrangements||The employer is responsible for tax and superannuation and workers' compensation for the employee|
|Presents as their own enterprise||
The employee represents somebody else's business
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