Employee or Subcontractor? A Tradie's Guide to Getting It Right
20 July 2026 · 6 min read · By Heaney Accounting
For many builders and electricians, hiring extra hands is part of the job. However, misclassifying your workers is a common audit trigger for the ATO.
What makes someone an employee?
Generally, employees work for you as part of your business. You provide the tools, tell them how to do the job, and they aren't free to delegate that work to someone else.
- You control how and when they work
- They don't pay for their own insurance or equipment
- They are paid a set hourly or weekly wage
- They don't have their own business ABN
Identifying subcontractors
- Ask for their ABN and verify it on the ABR website
- Ensure they provide an invoice for their work
- Confirm they have their own public liability insurance
- Allow them to set their own quotes and methods of work
Important Note: Do not rely on a written contract alone. The ATO looks at the reality of how the work is performed, not just what the paperwork says.
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