Employment and independent contracting information for gig workers

What is a non-employee gig worker?

This website and the Voluntary Fair Conduct and Accountability Standards refer to non-employee gig workers. Non-employee gig worker means a gig worker who is engaged by a platform as an independent contractor.

What is the difference between an employee and an independent contractor?

It is common for digital platforms to engage gig workers as independent contractors rather than as employees.

But the difference between employment and independent contracting is often unclear in gig work.

The definition of employee or 'worker' is not set out in most work laws.

And the definition of employee varies in those laws that do define the term.

But put simply:

• employees generally perform work, in their personal capacity, for their employer’s business
• independent contractors (also known as sub-contractors or contractors) generally work for their own business and provide services to other people or businesses.

Independent contractors are usually able to arrange for somebody else to provide those services by ‘delegating’ or ‘sub-contracting’. Usually, independent contractors also:

• supply their own equipment, and
• cover the costs of providing the services.

Whether you’re an independent contractor or an employee depends on several indicators. These include:

• the amount of control over how work is performed
• financial responsibility and risk
• who supplies the tools and equipment
• ability to delegate or subcontract work
• hours of work
• expectation of work continuing.

You can find out more about the differences between employees and independent contractors from the Fair Work Ombudsman.

What are the differences in the pay and entitlements for employee gig workers and non-employee gig workers?

Employees are entitled to a range of entitlements under law.

These entitlements generally include:

• the National Employment Standards in the Fair Work Act 2009, which includes leave entitlements
• minimum pay rates for the type of work performed. There is a minimum wage safety net for employees, and minimum wages for industries and occupations contained in modern awards
• protection from unfairly or unlawfully losing your job, in certain circumstances
• rights to collectively bargain for improved pay and conditions
• employer contributions to your superannuation
• access to workers compensation for work-related illnesses and injuries.

Non-employee gig workers generally aren’t subject to workplace regulation. Pay and work hours are usually commercial arrangements between the non-employee gig worker and the platform.

Non-employee gig workers usually must also take financial responsibility for the services they provide, including tax obligations.

Some workplace laws though, have a broad definition of ‘worker’ or ‘employee’ that can cover non-employee gig workers in certain situations. For example:

• Victoria’s workplace injury law ‘deems’ certain independent contractors to be workers.
• Superannuation laws also ‘deem’ some independent contractors to be employees and entitled to superannuation from the business you’re providing services to.

Who decides whether I’m an employee or an independent contractor?

The digital platform will usually inform you when you start work whether it considers you to be an employee or independent contractor. This information is usually included in your contract with the platform. But this label isn’t always correct.

If there is a dispute that can’t be resolved about whether a gig worker is an employee or independent contractor under a specific law, courts have the power to decide the point.

You can get legal advice if you are unsure whether you are an employee or an independent contractor.

Importance of your contract when it comes to work status

Your rights and obligations as contained in your contract with your platform are the most useful tool to determine whether you're an employee or independent contractor. Your contract might be written, or it might be wholly or partly verbal (spoken). What your contract says about your rights, obligations and how you will perform your work is more important than what happens in practice after your contract is agreed.

However, it is illegal for an employer to disguise an employment relationship, either recklessly or intentionally, as an independent contracting arrangement. This is known as a ‘sham contracting’.

You can find out more about the differences between employees and independent contractors from the Fair Work Ombudsman.

What is sham contracting?

Under the Fair Work Act 2009 it is illegal for an employer to:

• knowingly or ‘recklessly’ represent to an employee they are an independent contractor
• knowingly say something false to persuade or influence a worker to do the same work as an independent contractor which the worker performed as an employee
• sack or threaten to sack an employee to engage the employee as an independent contractor to do the same work (or mostly the same work).

Sham contracting is usually an attempt to avoid responsibility for employee entitlements such as:

• minimum wages
• superannuation
• workers compensation
• leave.

Who is an owner driver?

For the purposes of Victoria’s owner driver laws, an owner driver is an independent contractor who runs a business transporting goods (not passengers) using up to three vehicles supplied by them. The term ‘vehicle’ includes bicycles.

The owner of the business must also operate at least one of the vehicles. If you’re a non-employee gig worker using your own vehicle to deliver goods (such as food), you’re an owner driver.

Read more information for owner drivers.