How do I know if I am an independent contractor?
Before entering into a contract, it's important that you understand the differences between employees and independent contractors. Your status will affect your rights and obligations with your employer or the business you contract with. It is possible to be an employee for some work and an independent contractor for other work.
Employees are entitled to a minimum set of conditions under workplace relations law. These include payment of wages, hours of work and personal and carer's leave. Usually, the employer will have the right to direct the ways in which employees work. The employer has the lawful authority to command the worker.
There is no fixed definition of independent contractor. The Independent Contractors Act 2006 relies on the common law meaning of independent contractor. The common law is a set of unwritten legal principles, which have been developed through decisions in the courts. In order to determine whether a person is an independent contractor or an employee, a court considers a number of factors which look at the entire working relationship on balance.
Use the online Contractor decision tool to understand whether you are likely to be a genuine independent contractor under common law.
Generally, an independent contractor works to achieve the results in terms of the contract and maintains a high level of discretion and flexibility as to how the work is to be performed. However, the contract may contain precise terms as to materials used and methods of performance, and still be a contract for specific services. These are only some of the factors the courts would take into account.
If you operate via a labour hire firm, you may not need to manage your own tax or occupational health and safety requirements and other obligations, but are still classed as an independent contractor.
Other state and federal laws that define a worker
It is important to know that independent contractors can still be classed as employees under some state and federal laws. This will depend on a number of factors including the state in which the work is performed and whether the service is provided to more than one employer.
What to do...
- Visit our online Contractor decision tool page.
- Visit the Contracting essentials page on the Tax Office website or phone the Tax Office on 13 28 66.
- See the Independent contractors page on the Department of Innovation, Industry, Science and Research website.
- Find out about independent contracting in your state or territory.
- Phone the Independent Contractors Hotline on 1300 667 850 if you require further information.