This information is only relevant to employers and employees in the WA state industrial relations system – sole traders, unincorporated partnerships, unincorporated trusts and some incorporated or not for profit organisations. Find out more on the Guide to who is in the WA state system page.
If you operate or are employed by a Pty Ltd business – you can find information on this topic on the Fair Work Ombudsman website.
An independent contractor is not an employee, but rather a worker running their own independent business. They are also sometimes referred to as a ‘contractor’ or a ‘subcontractor’.
The Industrial Relations Act 1979 prohibits sham contracting. A ‘sham contracting’ arrangement may occur where an employer knowingly disguises an employment relationship by telling an employee that they are being hired as an independent contractor when they are really an employee. Visit the Prohibition on sham contracting page for more information.
The table below provides an overview of the main differences between employees and independent contractors.
It is recommended that you seek legal advice if unsure.
Some factors indicating whether someone is an independent contractor or employee
Worker has entered into a written contract with another party and agreed to be engaged as an independent contractor
|Worker has accepted a written employment contract from an employer and agreed to be engaged as an employee
|Usually in control of the hours worked and when and how the work is performed
||The employer is in control of how and when work is performed
|Can generally accept and perform work for more than one party
||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
|Paid on the completion of a task
||Paid on an ongoing basis
|Often 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