It has long been the view that independent contractors are not entitled to superannuation payments. However, under the Superannuation Guarantee (Administration) Act 1992 (SGA Act), independent contractors may be entitled to superannuation where they are classified as an employee for the purposes of the SGA Act.
For the purposes of the SGA Act, section 12(3) extends the definition of employee (beyond the ordinary meaning) to include a person who ‘works under a contract that is wholly or principally for the labour of the person’.
In light of the above, where a business engages a worker:
- in their personal capacity (irrespective of whether the individual has an ABN or not); and
- to perform personal services,
the worker will likely be considered an employee for the purposes of the SGA Act.
We recommend reviewing your independent contractor agreements, to determine whether the workers are entitled to superannuation payments. Where a business has failed to comply with the SGA Act, it and the company directors may be exposed to liability involving:
- underpayment claims;
- wage theft claims;
- contraventions of the Fair Work Act 2009 (Cth); and
- contraventions of the SGA Act.
Our business team can assist you with this categorisation, to contact us please call 07 3224 0265.
