Employee vs contractor

Generally, nannies, housekeepers and most domestic staff or carers are seen by the ATO & FWO as employees rather than contractors. This doesn’t mean they can’t be genuine independent contractors.

Each situation needs to be assessed individually.

The ATO use to have a contractor decision tool on its website but this has been removed while it reviews the February 2022 High Court decision regarding hiring contractors.

However, they still require employers to look at the whole relationship and warn that if you hire an employee as a contractor, you may face penalties if you make the wrong decision.

Areas to look at include:

  1. Control: you have the legal right to control how, where and when the worker does their work.
  2. Mode of remuneration: the worker is paid for the time worked rather than a fixed fee.
  3. Ability to subcontract or delegate: the worker must perform the work themselves and cannot pay someone else to do the work for them.
  4. Provision of tools and equipment: you provide all or most of the equipment, tools and other assets required to complete the work. If the worker provides all or most of the tools, they are paid an allowance or reimburses for all expenses incurred.

For further information read the ATO website and the Myths and Facts page also provides a good summary.

Decided to go down the employee path? Domestic Payroll can assist with our nanny pay services.