“Be your own boss.”
It sounds empowering, and for many, it is. But whether you’re becoming a contractor or engaging one, there’s more to the story than just flexibility and ABNs.
Australia’s workforce is becoming increasingly contractor-heavy, and it’s important to get the setup right because what looks simple can have serious consequences if misunderstood.
Here are some key points to think about before you dive in:
✓ Employees vs Contractors
They’re not the same. Employees work under a contract of service; contractors under a contract for services. It’s a legal distinction that affects tax, entitlements, and risk.
✓ No Shortcuts
Contracting shouldn’t be used to bypass employment obligations. True contractors run their own businesses and often have multiple clients and sometime employees of their own.
✓ Fewer Protections
Contractors don’t receive things like minimum wage, leave, or workers’ comp. That freedom comes with responsibility and risk.
✓ The Contract Matters
This isn’t a handshake deal. A solid agreement protects both sides. Get it reviewed, especially if it’s been provided by the principal contractor.
✓ Clarify the Relationship
Are you exclusive? Is it project-based or ongoing? How’s performance measured? These things shape the tone of the work.
✓ Control vs Independence
The more a principal dictates how, when, and where work is done, the more it starts to look like employment, not contracting.
✓ Payment Terms
Fixed rate or hourly? What about GST, invoicing, expenses, super, and incentives? These need to be spelled out clearly.
✓ Responsibility & Risk
Who carries the risk? Can the contractor subcontract? Do they need insurance? These choices impact cost and compliance.
✓ Ownership, Confidentiality & Restraint
Who owns the IP? Are there limits on working with others after the job ends? Don’t skip these terms, they matter.
✓ Termination & Disputes
What happens if things go south? The contract should include how and when it can end, and what happens if there’s a disagreement.
This list isn’t exhaustive, but it’s a strong starting point.
Contracting can offer flexibility, but only when the relationship is set up with care, clarity, and proper advice.
Because in business, the details matter.
