A Tradie's Guide to Correctly Classifying Your Workers

Why worker classification matters for your trade business

Misclassifying a worker as a contractor when they are actually an employee is one of the biggest risks for trade businesses. If the ATO determines your subcontractors are effectively employees, you could be liable for unpaid superannuation, payroll tax, and workers' compensation premiums.

• Does the worker have the right to delegate or subcontract the work to someone else?
• Do you provide all the tools and equipment for the job?
• Is the worker paid for time worked rather than to achieve a specific result?
• Does the worker have a high level of independence in how they complete the task?

1. Check the official employee vs subcontractor tool on the ATO website.
2. Document your findings and store them for your records.
3. Use clear written contracts that reflect the true nature of the working arrangement.
4. Review existing arrangements annually as your working relationships evolve.