By Greg Allan, tradesman and creator of Data First Coaching
How does the ATO decide if a bricklayer working for a business is a subcontractor or an employee?
A bricklaying business cannot settle this by whether the bricklayer has an ABN or gets paid a day rate instead of wages. According to the ATO's guidance on employee or independent contractor, no single factor decides it, and the indicia should never be run as a checklist; the real test is the whole working relationship, as set out in hiring a new worker.
Most bricklaying businesses taking on a bricklayer for blockwork or face brick work, paid on a rate per thousand bricks or a day rate, assume the pay method settles the question. The ATO's indicia instead look at who directs the job on site, who can delegate the brickwork to another bricklayer or subcontract it out, and who supplies the scaffold, mixer and tools used to mix mortar and lay the job. A crew member who has to turn up personally, follow the builder's instructions on site and use the business's own gear points toward employee, while a bricklayer who quotes the retaining wall, sends their own labourer and owns their own scaffold lift gear points the other way.
Does an ABN or an invoice settle whether a bricklayer is a subcontractor?
No. According to Small Business WA, it doesn't matter whether the independent contractor has an ABN, and business.gov.au names people with an ABN always being contractors as one of the common myths that isn't true. An ABN, an invoice or even a written agreement calling someone a subcontractor doesn't override the real relationship or remove the super obligation if the business should be treating that person as an employee.
Plenty of bricklaying businesses hand a new bricklayer an ABN-based agreement and treat the question as closed, especially when that bricklayer is also quoting other builders at the same time. Business.gov.au is clear that a written contract calling the arrangement subcontracting doesn't change what the relationship actually is, and Small Business WA notes that if a bricklaying business engages a contractor mainly for their labour on the brickwork, the business is still responsible for paying super, regardless of the ABN.
What about labourers who mix mortar and load out for your crew?
They are always employees. The ATO's hiring a new worker page states plainly that apprentices, trainees, labourers and trade assistants are always employees, never independent contractors, no matter what you call the arrangement or how you pay them. If someone on your site is mixing mortar, loading out bricks or cleaning down for the crew under your direction, that question is already answered before you look at anything else.
This matters because many bricklaying businesses pay a labourer a day rate and assume that, like a subbie bricklayer, the classification is open to negotiation. It isn't. Where the real confusion usually sits is further up the chain: with the bricklayer who runs their own crew, quotes a retaining wall or a feature face brick job, owns their own scaffold and sends a labourer of their own. Keeping a clear, current record of who on each job is a labourer under your direction and who is genuinely running their own operation is paperwork that AI agents, software that carries out a task the way you would, using your own rules and records, can keep up to date from your actual job and pay data rather than from memory of who you meant to classify which way.
Does the test change if your bricklaying business is a company rather than a sole trader?
Yes, for the Fair Work test, though not for the ATO's. According to the Fair Work Ombudsman, a constitutionally covered business, usually a company with Pty Ltd or Ltd in its name, applies the whole of relationship test for current engagements, while a state referred national system business, which covers most sole traders and partnerships, applies the start of relationship test based on what was agreed at the outset.
This means two bricklaying businesses running the same job the same way, one a Pty Ltd company and one a sole trader, can end up tested differently by Fair Work even though the ATO looks at the whole relationship either way. The Fair Work Ombudsman's page sets out which test applies to which business type, and that is worth checking directly rather than assuming the sole trader rule and the company rule are the same.
What happens with workers compensation if you get the classification wrong?
Getting the tax and Fair Work answer right doesn't settle workers compensation, because status for one purpose doesn't carry across to the other. According to icare NSW, a person can be a contractor for tax purposes and still count as a worker for workers compensation insurance, and NSW's regulator has its own tool to check who needs cover.
WorkSafe Queensland runs a similar check for who a Queensland bricklaying business needs to cover, looking at things such as whether the contractor can subcontract the work to someone else and whether they supply their own tools without getting an allowance for it. Workers compensation sits with each state or territory regulator rather than one national rule, so a bricklaying business taking on bricklayers and labourers across more than one state needs to check the position in each state, not assume the answer carries over. This is general information, not legal, tax or employment advice. Check your own situation with the body named here or a qualified adviser.
For a bricklaying business running several crews across different sites, weather days and builder payment schedules, the classification question is easiest to get right when it starts from the business's own job and pay data, not from memory of who was engaged how on a job months ago. A data first view of who is on site, under whose direction, with whose scaffold and tools, tells the truth that a quick glance at an old subcontract agreement cannot. AI agents built around that data can be set to flag when a working arrangement starts drifting toward employee territory, so the bricklaying business catches it before the next quarter's paperwork, not after.
Where can you check the current rules?
- Employee or independent contractor (ATO) - the ATO's indicia for working out whether a worker is an employee or independent contractor.
- Hiring a new worker (ATO) - covers classifying workers, and states that labourers, trainees and apprentices are always employees.
- PCG 2023/2 (ATO) - the Commissioner's compliance approach to classifying workers, following TR 2023/4.
- Independent contractors (Fair Work Ombudsman) - which test applies depending on whether the business is constitutionally covered or state referred.
- Classifying workers for workers compensation (icare NSW) - how NSW decides who is a worker for workers compensation.
- Who your policy needs to cover (WorkSafe Queensland) - Queensland's test for who needs WorkCover.
- Employee or contractor decision tool (business.gov.au) - common myths, including the ABN myth.
- The difference between a contractor and an employee (Small Business WA) - WA's guide, including the super obligation.
How does Data First Coaching approach this?
Greg Allan's Data First Coaching starts from a bricklaying business's own job and pay data through the Trade Business Intelligence, not from a guess about who counts as a subbie and who counts as crew. It looks at how each bricklayer, labourer and subcontractor is actually engaged on real jobs, because that is where classification problems and their flow-on costs genuinely start, not in a filing cabinet of old agreements. The how, working through each role on the Trade Business Intelligence and building the checks an AI agent can carry, is worked through inside the Academy, with members. The Academy is for bricklaying business owners who are open minded, innovative and willing to share, because the Trade Business Intelligence is powered by every member.
