Does having an ABN make someone an independent contractor?

No. An ABN may be relevant to the commercial arrangements, but it does not determine the legal character of the relationship.

Do invoices make a worker a contractor?

No. Invoicing is one circumstance to consider. The applicable assessment examines the relationship more broadly.

Does a written contractor agreement settle the question?

No. The agreement is important, but the applicable legal test may also require examination of the relationship’s practical operation.

Can the relationship change over time?

Yes. Changes in control, hours, delegation, payment, risk or organisational integration may alter the relationship’s practical character or indicate that the original agreement has been varied.

Which test applies from 26 August 2024?

Constitutionally covered businesses generally use the whole-of-relationship test for work performed from 26 August 2024. The start-of-relationship approach continues in specified circumstances, including certain state-referred businesses, earlier work and effective opt-out arrangements.

Can this tool provide a definitive answer?

No. It provides indicative decision support and identifies issues requiring review. Courts and tribunals may ultimately determine legal status.

The Classification Compass

Employee or contractor? Test the real relationship.

An indicative relationship assessment for Australian employers.

Calling a worker a contractor does not necessarily make them one. This assessment helps employers examine the relevant agreement, the way the arrangement operates in practice, potential sham-contracting warning signs and separate superannuation considerations.

Identify the potentially applicable legal pathway.
Compare the agreement with day-to-day practice.
Map employee, contractor and mixed indicators.
Receive a practical risk summary and action list.

About five to seven minutes. No names or personal information are required. Your answers are not saved.

Have a particular working arrangement in mind. You will need to know how the worker is paid, who controls the work, whether work can be delegated, who carries financial risk, who supplies essential equipment and how the arrangement operates in practice.

Fair Work Act relationship framework
Sham-contracting warning check
Separate superannuation check
No assessment answers saved

How this assessment works

This tool guides you through the structure and timing of the engagement, immediate warning signs and the principal characteristics of the relationship. It does not use a mathematical legal score. Instead, it identifies the direction of each factor, inconsistencies requiring attention and circumstances in which specialist advice should be obtained.

Employee or contractor assessment at a glance

This Australian employer tool examines which legal pathway may apply, the rights stated in the agreement, the relationship’s practical operation, potential sham-contracting warning signs and separate superannuation considerations. It identifies classification-risk indicators and matters requiring review; it does not make a legal determination.

The contractual label, ABN and invoices do not determine status by themselves.
Control, delegation and commercial risk are important core considerations.
Differences between the agreement and practice may indicate classification risk.
Superannuation, PAYG withholding, payroll tax and workers compensation require separate consideration.

Legal content reviewed 11 July 2026.

Which employee or contractor test applies?

For work performed on or after 26 August 2024, constitutionally covered businesses generally apply the whole-of-relationship test. That test considers the totality of the relationship, including both the terms of the agreement and how the arrangement operates in practice.

The earlier start-of-relationship approach continues in specified circumstances, including certain state-referred businesses, work performed before 26 August 2024, and effective opt-out arrangements where the contractor’s earnings exceed the current contractor-high-income threshold.

Factors employers should examine

Control over how, when and where work is performed.
Delegation rights and personal-service obligations.
Financial risk and rectification responsibility.
Tools, equipment and business investment.
Payment for time or for a defined result.
Continuity and expectation of future work.
Operation of an independent business.

No single factor is determinative. The assessment considers the combination of factors in the context of the applicable legal pathway.

What is a contract–practice gap?

A contract–practice gap is a material difference between the rights or obligations stated in the agreement and how the relationship actually operates. Common examples include:

Delegation allowed in the contract but prohibited in practice.
Result-based agreement but routine hourly payment.
Contractual autonomy but detailed supervision.
Contractor label but staff presentation and rostering.
Contractual risk allocation but the organisation paying all rectification costs.

Sham-contracting warning signs

Sham contracting generally concerns representing an employment relationship as independent contracting without the required reasonable basis, or engaging in prohibited conduct to move an employee into substantially the same work as a contractor. Warning signs an employer should review include:

A previous employee re-engaged for the same or similar work.
Dismissal or threatened dismissal followed by re-engagement as a contractor.
A worker being told they must obtain an ABN or become a contractor to keep the role.
Potentially false or misleading statements used to persuade a worker into a contractor arrangement.

Can an independent contractor still attract superannuation?

Yes. Some individuals engaged under contracts principally for their labour may attract superannuation-guarantee obligations even where they are otherwise treated as contractors. Superannuation is a separate statutory test from the employee-or-contractor character question. Payroll tax and workers compensation may also apply separate tests.

When employers should review a contractor arrangement

Moving an employee to a contractor arrangement.
Dismissing and re-engaging for substantially the same work.
Long-running contractor arrangements.
Contractors managed through employee systems.
Delegation rights that cannot realistically be exercised.
Material differences between agreement and practice.
Relationship drift over time.
Proposed termination or reclassification.
Interposed companies, trusts or partnerships.
Labour hire, digital-platform or road-transport arrangements.
Unresolved superannuation exposure.
Historical underpayment or entitlement risk.

Frequently asked questions

Does having an ABN make someone an independent contractor?: No. An ABN may be relevant to the commercial arrangements, but it does not determine the legal character of the relationship.
Do invoices make a worker a contractor?: No. Invoicing is one circumstance to consider. The applicable assessment examines the relationship more broadly.
Does a written contractor agreement settle the question?: No. The agreement is important, but the applicable legal test may also require examination of the relationship’s practical operation.
Can the relationship change over time?: Yes. Changes in control, hours, delegation, payment, risk or organisational integration may alter the relationship’s practical character or indicate that the original agreement has been varied.
Can a contractor still be entitled to superannuation?: Yes. Some individuals engaged under contracts principally for their labour may attract superannuation-guarantee obligations even where they are otherwise treated as contractors.
What is sham contracting?: Sham contracting generally concerns representing an employment relationship as independent contracting without the required reasonable basis, or engaging in prohibited conduct to move an employee into substantially the same work as a contractor. The particular facts require careful review.
Which test applies from 26 August 2024?: Constitutionally covered businesses generally use the whole-of-relationship test for work performed from 26 August 2024. The start-of-relationship approach continues in specified circumstances, including certain state-referred businesses, earlier work and effective opt-out arrangements.
What is a contract–practice gap?: It is a material difference between the rights or obligations stated in the agreement and the way the relationship actually operates.
Can this tool provide a definitive answer?: No. It provides indicative decision support and identifies issues requiring review. Courts and tribunals may ultimately determine legal status.

Legal basis and official guidance