Whole of relationship test

Constitutionally covered businesses use the whole of relationship test to determine if a worker is a contractor or an employee from 26 August 2024.

Learn more about the test and how it works.

On this page:

Who uses this test

Changes from 26 August 2024

From 26 August 2024, the test that constitutionally covered businesses use to work out if someone is a contractor or an employee changed.

Find out more at Independent contractors.

Independent contractors (contractors) are different to employees and don’t have the same rights and obligations.

Businesses and persons (and the workers they engage) need to use a test to determine if a worker is a contractor or an employee.

From 26 August 2024, constitutional national system business (constitutionally covered businesses) use the whole of relationship test to work out if someone is a contractor or an employee.

Constitutional corporations

A business with ‘Pty Ltd’ or ‘Ltd’ in its business name is usually a constitutional corporation.

Before 26 August 2024

Constitutionally covered businesses use the start of relationship test to determine if a worker was a contractor or an employee for work performed before 26 August 2024.

For more information, visit Start of relationship test.

Start of relationship test

This test is now only used by:

  • state referred national system businesses (state referred businesses)
  • constitutionally covered businesses when working out if a worker is a contractor or an employee:
    • for work performed before 26 August 2024, or
    • if the worker opted out of the whole of relationship test.

For more information, visit Start of relationship test.

Opting out of the whole of relationship test

A worker who earns more than the contractor high income threshold can opt out of using the whole of relationship test. Instead, the start of relationship test will be the relevant test for determining if they are a contractor or an employee.

For more information, visit Opting out of the whole of relationship test.

How the test works

The whole of relationship test determines if a worker is a contractor or an employee by considering the real substance, practical reality and true nature of the relationship.

Constitutionally covered businesses and workers must determine if there is an employment relationship by considering:

  • the real substance, practical reality and true nature of the relationship
  • all parts of the relationship between the parties, including the terms of the contract and how the contract is performed in practice.

If there is an employment relationship, the worker is an employee of the business.

When considering the real substance, practical reality and true nature of the relationship, there are several factors to consider. 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.

Using the test can be complicated

Working out if someone is a contractor or an employee can be complicated. In some situations, a court may need to determine the nature of the relationship between the parties.

If it’s not clear whether someone is a contractor or an employee, you may want to seek legal advice. Visit Legal help.

Factors of employment or contracting relationships

When considering if a relationship is an employment or contracting relationship, various factors need to be considered.

Using the factors

When determining if a worker is a contractor or employee, remember:

  • whether someone is a contractor or an employee will depend on their specific circumstances
  • all of these factors should be considered
  • there usually won’t be one deciding factor. For example, a worker who has an ABN or issues invoices isn’t automatically a contractor.
  • a worker won’t automatically be a contractor or an employee because of the type of work they do. They may perform the same type of work as an employee of a business but may still be a contractor.
FactorsEmployeeContractor
Amount of control over how work is performed
(Note: the other factors below may form part of assessing the level of control over how work is performed)

Performs work under the direction and control of their employer. Work is controlled by the employer including hours, work location and how work is done.

For example:

  • a shop assistant who is required to follow their manager’s instructions about how to serve customers, display clothes and when to tidy the change rooms
  • a gardener whose boss directs them where and when to work and to mow the lawns in a particular way.

Has a high level of control over the work they perform, including their hours, work location and how they do the work.

For example:

  • a tailor who collects garments from clothing stores for alterations when it suits their schedule, makes alterations in the way they choose and works from their own premises
  • a gardener who chooses their preferred suppliers and decides how and when to provide the landscaping services.
Financial responsibility and risk

Has no financial risk (as this is the responsibility of their employer).

For example:

  • a baker who gets paid their regular daily wage even if the bakery doesn’t make a profit for that day (as the employer carries the loss of the unsold baked goods)
  • a painter who spends a day painting a house, and gets paid by the employer for the work performed, even if the home owner has not yet paid the employer.

Carries the risk for making a profit or loss on each task or job. Is usually personally responsible and liable for poor work or any injury sustained while performing the task. Contractors generally have their own insurance policy.

For example:

  • a baker who supplies various baked goods to cafes but burns their croissants one day and can’t charge the cafes for the burnt croissants
  • a painter who paints a house in the wrong colour and doesn’t get paid by the client for the time and money spent.
Tools and equipment

Uses tools and equipment that are generally provided by the employer, or is paid a tool allowance.

For example:

  • an office clerk who has their computer provided for them in the office
  • a cleaner who uses cleaning supplies provided by the employer.

Uses their own tools and equipment. (Note: alternative arrangements may be made within a contract for services).

For example, an auditor who brings their own computer to do their work.

Ability to delegate or subcontract workIs generally required to do the work themselves. For example, they can’t ask someone else to go to their workplace and do their work for them.Can delegate or subcontract the services to be performed to another person or business.
Hours of work

Works standard or set hours (unless they’re a casual employee, in which case their hours may vary from shift to shift).

For example, a person who works regular 5 hour shifts twice a week at a petrol station.

Decides what hours to work to complete the specific task, by agreement between both parties.

For example, a graphic designer who negotiates the cost of creating a logo based on how long it will take and decides when they will do the work.

Expectation of work continuing

Usually has an ongoing expectation of work (note: some employees may be engaged for a specific task or specific period or on a casual basis).

For example, a person in a pet shop who works on a permanent part-time basis 4 times a week.

Usually engaged for a specific task.

For example, a removalist who does a one-off house move for a customer.

Example: Using the whole of relationship test

Peter starts work for a cleaning business in September 2024. Peter is called a contractor by his boss, Alfred. After 6 months, Peter starts to think he might be an employee instead.

Peter learns about the definition of employment. He then checks that he can use the definition by confirming Alfred’s business is a constitutionally covered business.

Peter looks at our website and reads the Factors of employment or contracting relationships table to check if he’s a contractor or an employee. Peter also considers the terms of his written contract to work as a contractor and the nature of his work in full.

He is required to:

  • wear a shirt with the business logo while working
  • keep a record of his start and finish times and fill out a timesheet at the end of each shift
  • perform his cleaning duties the way Alfred tells him to
  • use the cleaning supplies Alfred provides.

Peter has a contract that:

  • requires him to work 3 shifts a week
  • provides a fixed hourly pay rate
  • shows Alfred pays his tax, insurance and superannuation contributions
  • makes him submit invoices to Alfred for payment each month
  • says that Alfred can’t subcontract his work to others

Based on his review of all parts of his relationship, including the terms of his contract and how it is performed in practice, Peter believes he is an employee. Peter considers calling our Infoline to discuss his situation.

Entitlements and support

Contractors aren’t entitled to the same pay and conditions as employees.

For information and support, visit Contractor entitlements and support.

Source reference: Fair Work Act ss15AA-15AD

Related information