Hiring Your First Cleaner: Employee vs Subcontractor in Australia

Why This Decision Matters More Than It Seems

Some businesses engage a "subcontractor" specifically to avoid superannuation, award entitlements, and workers compensation obligations. Fair Work and the ATO both look past the label used in a contract to the actual nature of the relationship, and a misclassified employee can result in significant back-pay, penalty and superannuation liabilities.

The Core Test

Broadly, the more control you exercise over how, when and where the work is done, the more likely the relationship is genuinely employment rather than contracting. Key factors that tend to point toward employment include:

The person works set hours you determine, not hours they choose.

They use your equipment and products, rather than supplying their own.

They work solely or primarily for your business, rather than running their own independent operation with other clients.

You direct exactly how the work should be done, rather than simply specifying the outcome required.

Factors that tend to point toward genuine contracting include the person operating under their own ABN, supplying their own equipment, setting their own hours, working for multiple clients, and carrying their own insurance.

What Changes If You Hire an Employee

Award coverage applies, generally the Cleaning Services Award, with minimum pay rates, casual loading if applicable, and penalty rates for weekend or public holiday work.

Superannuation contributions are required on top of wages.

Workers compensation insurance becomes a legal requirement in every state.

Basic employment records need to be kept, and Fair Work's National Employment Standards apply.

What Changes If You Genuinely Engage a Subcontractor

The subcontractor is responsible for their own tax, superannuation and insurance.

You're not required to provide award entitlements, since the relationship isn't employment.

You still carry some responsibility for ensuring genuine subcontractors have appropriate insurance and are operating legitimately, particularly if they're working on your customers' properties under your business's reputation.

Getting the Paperwork Right Either Way

For an employee: a written employment agreement, superannuation setup, and payroll processes that correctly apply the relevant award.

For a genuine subcontractor: a written agreement confirming the independent nature of the arrangement, confirmation of their ABN and insurance, and an invoice-based payment process rather than a payroll one.

Why Getting This Wrong Is a Real Risk, Not Just a Technicality

A business that engages someone as a "subcontractor" while directing their hours, supplying their equipment and treating them functionally as an employee is exposed to back-payment of wages, superannuation and potential penalties if the arrangement is later found to be genuine employment. This risk applies regardless of what both parties originally intended or agreed to on paper.

A Simple Way to Decide

If you need someone working your set hours, using your equipment, exclusively for your jobs, you're very likely looking at employment, and should structure it, and pay it, accordingly.

If you're bringing in another established cleaning operator, with their own ABN, insurance and equipment, to help with overflow work on their own terms, that's more likely genuine subcontracting.

When genuinely unsure, it's worth a direct conversation with an accountant or employment law adviser before the arrangement begins, not after a dispute arises.