When Contractors Aren’t Really Contractors (and hey super still counts)

Let’s talk about contractors. Or more accurately, about the workers who look like contractors on paper but, under the hood, are actually operating like employees.

In busy businesses — especially those growing quickly — it’s common to bring people in on a contractor basis. You avoid the usual entitlements, and they invoice you directly. However, this is one area where the line between convenience and compliance is becoming increasingly stricter, and riskier.

Contractor vs Employee: It’s not just semantics
Recent legal changes mean that what’s in the contract isn’t the whole story anymore. The law now looks at the actual working relationship. Are they working set hours, using your equipment, and reporting to your managers? Are they doing tasks central to your business? If so, you may have yourself an employee and all the obligations that come with it.

Key differences to consider
Here’s how genuine employees and contractors typically differ:
• Employees work under your direction, with fixed hours, use your tools and equipment, and receive wages with tax withheld. They are entitled to leave, superannuation and protections under the National Employment Standards (NES).
• Contractors, on the other hand, run their own business, invoice for services, supply their own tools, and are responsible for their own tax, super and insurance. They control how and when they do the work and may have multiple clients.

Still unsure?
In Australia, the ATO’s Employee vs Contractor Checklist is a useful tool for assessing the true nature of a working relationship. In New Zealand, contractors are not considered employees, which means they aren’t covered by the same employment laws, rights, or obligations. For more details, visit www.employment.govt.nz.

The superannuation surprise
In Australia if your contractor is invoicing you, you may still need to pay their superannuation. According to the ATO, if the contract is predominantly for the individual’s labour, and they’re not operating through a company or trust, they’re likely entitled to super. This applies even when they’re classified as contractors.

From 1 July 2026, the stakes get higher — super will need to be paid at the same time as wages, rather than quarterly. That means you’ll need to have clear systems in place to identify who qualifies for super and make those payments on time. If you miss payments, the ATO can audit back five years or more, and you could be liable for the super itself, interest, administration charges and penalties.

Getting it right early
Rather than scrambling during a dispute or audit, the smarter move is to review arrangements proactively. HR Central’s management platform makes it easier to keep track of these details, offering guided checklists, smart document storage, and alerts to help you stay compliant. Misclassifying workers as contractors might seem harmless—until it’s not. A well-meaning mistake can turn into a costly legal headache. Taking the time now to review your arrangements, ensure you’re meeting super obligations, and clarify work relationships will save you time, money, and stress down the line.

Cath Nicholson, Chief Communications Officer, HR Central

For Further information call the HR Help Desk: 1300 01 SSAA / 1300 017 722