By Greg Allan, tradesman and creator of Data First Coaching
How does a scaffolding business tell a subcontractor from an employee in Australia?
You cannot tell from the contract alone. According to the Difference between employees and independent contractors page, the details within the working agreement, whether written, oral or both, decide the answer for tax and super purposes, and the whole working arrangement is reviewed, not just the label on the page.
For a scaffolder that means looking past the invoice and asking who tells the crew what time to be on site, who supplies the modular gear, harnesses and edge protection, and who carries the truck and transport costs to get materials to the yard and back. A crew that turns up when told, uses the business's gear and works inside your roster looks like an employee relationship, whatever the paperwork says. A crew running its own ABN, supplying its own major equipment and pricing the erect and dismantle as a job looks like a contractor relationship. The same page also notes that if you have hired a company, trust or partnership rather than a person, that is always a contracting relationship.
Why do scaffolders get this wrong more often than other trades?
Most scaffolding businesses move crews between residential and commercial sites, swap people in and out for different stages of a job, and run weekly hire periods that stretch on past the original date. That pattern makes contracting look like the obvious fit even when the business is still setting the roster and supplying the gear.
Builders on a program often push for flexible labour and are happy for a scaffolder to call a crew member a subbie, because it suits the head contractor's own numbers. The Fair Work Ombudsman's guidance for building and construction warns that calling someone a contractor does not make them one, and that knowingly telling a worker they are a contractor when the relationship is really employment, known as sham contracting, is illegal. A scaffolder caught in the middle of a builder's preference and its own crew's real working pattern carries that risk, not the builder.
What does the ATO and Fair Work Ombudsman actually look at on a scaffold crew?
They look at control and integration, assessed on balance rather than as a tick list. Control is about who has the legal right to say how, where and when the work happens. Integration is about whether the worker operates as part of your business or is running their own.
The ATO's industry guidance for building and construction gives a useful pattern for scaffolders to test their own crews against: a worker who is required to personally do the work, paid an agreed amount for time rather than a result, and given most of the equipment by the business, carries employee indicators. A worker who services demand as it comes, supplies their own major equipment, and carries their own costs of running that equipment, carries contractor indicators. The ATO's ruling TR 2023/4 says this is an evaluative exercise, weighed as a whole, never a simple checklist. A handover certificate and tag on the finished job tells a builder the scaffold is safe; it tells the ATO nothing about who erected it as an employee or a contractor.
Why does super still apply even when the crew has an ABN?
Because super follows the substance of the work, not the invoice. The ATO's page on super for independent contractors says that “if you pay independent contractors mainly for their labour, they are employees for superannuation guarantee (SG) purposes”, and that this applies whether or not the crew member holds an ABN, so long as the contract is mainly for their personal labour and skills, payment is not tied to a result, and the work cannot be delegated to someone else.
For a scaffolder that matters most with crew taken on for a single erect and dismantle, paid by the hour or the day rather than for a completed scope, who cannot send a replacement. The ATO's page on super from your employer adds that for this rule to apply the contract has to be directly between the business and the person, not through a company, trust or partnership structure.
Why is the real test what a crew actually costs, not just what the contract says?
Because the subcontractor or employee decision is really a capacity decision, and a capacity decision needs an honest cost of the crew against the hire period, not a feeling about the bank balance. If labour cost sits inside overhead instead of against the job it belongs to, every erect and dismantle on the board looks cheaper or dearer than it really is, and that false picture is what pushes an owner into the wrong call on who should be PAYG and who should stay a subbie.
Picture a scaffolder who could not get a cost of operations figure that made sense. Non-billable hours, the time spent moving the truck, loading the yard, chasing tags and handover certificates, were being loaded as overhead across every job, which made every job on the board look barely worth doing. Stripping those hours back out dropped the figure so low it was obviously wrong in the other direction. The business had no honest middle number to work from, let alone a sound answer on who to take on as staff and who to keep as a subbie.
An AI agent, which is software that does a job the way the owner would, with their own prices, wording and rules, can pull the actual wages and overhead straight from the business's own job and finance data and work out the true cost of running the crew with billable hours properly factored in. Overhead and non-billable time sit in their own bucket instead of being spread across jobs, and the agent keeps that costing current as the next hire period starts. That is the data first way to answer the subcontractor or employee question: start from what a crew genuinely costs, then decide how to engage them, rather than guessing and hoping the paperwork covers it. A second AI agent can also hold the control and integration detail against each crew member's actual working pattern, so the business has a record to check back against, not a memory of how things used to run.
This is general information, not legal, tax or employment advice. Check your own situation with the body named here or a qualified adviser.
Where can you check the current rules?
- Difference between employees and independent contractors: the ATO's core test, covering control, integration and company versus individual engagements.
- Contractors in building and construction: the Fair Work Ombudsman on sham contracting and what it can and cannot decide.
- Building and construction industry examples: worked construction examples showing employee and contractor indicators side by side.
- Super for independent contractors: when super guarantee applies to a contractor paid mainly for labour.
- Super from your employer: the direct contract requirement for super to apply.
- TR 2023/4: the ATO's own ruling on weighing the whole relationship.
- Independent contractor changes: the current reasonableness test for sham contracting defences.
- Contractor Decision Tools: a reminder that a federal finding and a state payroll tax finding can differ, so check both.
If your scaffolding business works across New Zealand as well, these ATO and Fair Work Ombudsman pages do not apply there; check the equivalent Inland Revenue and Employment New Zealand guidance for your own situation.
How does Data First Coaching approach this?
Data First Coaching, built by Greg Allan, starts from the owner's own job and finance data through the Trade Business Intelligence rather than from the contract wording alone. For a scaffolding business that means looking first at what each crew, however they are engaged, actually costs against its hire periods, because a mis-booked labour cost is often the real reason an owner reaches for the wrong engagement. From there the subcontractor or employee question becomes a numbers question, not a guess. The how, the agents and the costing build, is worked through inside the Academy with other members, because the Trade Business Intelligence is powered by every member for every member, and that only works for owners who are open minded and willing to share.
