By Greg Allan, tradesman and creator of Data First Coaching
Can the Fair Work Ombudsman just decide if my operator is a contractor?
No. The Fair Work Ombudsman is clear that it cannot make that call for a business. On its independent contractors page it says it cannot decide if someone is a contractor or an employee, and can only give information and advice to help an earthmoving contractor work it out themselves.
That leaves the decision sitting with the owner. Most owners running a site cut, trenching or bulk earthworks job assume that an ABN and an invoice settle the question. It does not. What settles it is how the arrangement actually runs on site, week to week.
What actually decides it, control or paperwork?
According to the ATO's guide to employee or independent contractor, the real tests are whether the worker can delegate or subcontract the job to someone else, who controls how the work gets done, who supplies the equipment needed, and who carries the risk if the work has to be put right.
For an earthmoving contractor this sits inside everyday decisions. If an operator turns up with their own excavator or bobcat under a dry hire or wet hire arrangement, sets their own hours, and can send a different operator on a given day, that points one way. If the business tells them which machine to run, when to start, and the operator cannot send anyone else, that points the other way. The ATO's page on equipment, tools and other assets says that a worker supplying the plant needed for the job is a sign of a contractor, while the business supplying it is a sign of an employee.
Why is this harder to pin down for earthmoving contractors than most trades?
Because machines, not people, often decide the answer. An earthmoving contractor floating an excavator between sites, running dry hire one week and wet hire the next, and logging machine hours against several civil or drainage jobs at once has a more tangled picture than a trade that just sends a person with a toolbox.
Who pays for fuel and servicing on the machine, who bears the cost if trenching work has to be redone, and who actually directs the operator on site all feed into the same test. The Fair Work Ombudsman's building and construction page sets out that contractors usually control how they do their work, including whether they can delegate it, and have more freedom over hours and location. It also notes that apprentices learning their trade under a formal training contract cannot be engaged as contractors, they must be employees, which matters where an earthmoving contractor is training up a junior operator rather than hiring a subbie with their own plant.
What about super and payroll tax for a subcontractor operator?
Even a contractor with an ABN can trigger superannuation obligations. The ATO's page on super for independent contractors says that if an earthmoving business pays a contractor mainly for their labour, the ATO treats them as an employee for superannuation guarantee purposes, regardless of the ABN.
Payroll tax runs on separate state rules. NSW Revenue's contractors and payroll tax page treats the contractor as deemed to be the employee for payroll tax unless an exemption applies, and points to a practice note for how that is worked out. Queensland Revenue Office's exemptions page gives an example close to earthmoving: where a business hires a crane and the contract also requires it to hire the operator, the payment can be exempt because supplying the machine is the main purpose and the operator comes with it. These rules differ by state, so an earthmoving contractor working across borders needs to check the relevant state revenue office, not assume one state's answer applies everywhere.
This is general information, not legal, tax or employment advice. Check your own situation with the body named here or a qualified adviser.
How do you keep the proof instead of guessing at the end of the quarter?
You keep it in the records you already generate on every job, not in memory. Who booked the machine, whose excavator or bobcat it was, who paid for fuel and servicing, who directed the work on the site cut, and how the machine hours were logged against the job all sit in your dockets, your plant register and your job files already. That is data first thinking: the answer to whether someone is a subcontractor or an employee lives in the paper trail your business creates every week, not in what felt right when you first agreed the job.
This is where AI agents earn their keep. An agent is software that does a job the way you would, using your wording, your rates and your rules. One built for this can watch new contractor arrangements against your own job and pay data as they are set up, and flag a wet hire or dry hire deal that is drifting toward looking like employment, long before it becomes a problem at tax time or a payroll tax review. AI agents do not decide the classification for you, but they can make sure the proof exists the day the arrangement starts, not months later when someone asks for it.
Where can you check the current rules?
- Independent contractors - Fair Work Ombudsman: what the Fair Work Ombudsman can and cannot decide, and how to confirm someone's status.
- Employee or independent contractor - ATO: the control, delegation and commercial risk tests the ATO applies.
- Contractors in building and construction - Fair Work Ombudsman: the contractor versus employee comparison, and the apprentice and trainee rule.
- Equipment, tools and other assets - ATO: who supplying the plant says about the relationship.
- Super for independent contractors - ATO: when a contractor paid for labour is still owed super.
- Contractors and payroll tax - NSW Revenue: how NSW treats contractor payments for payroll tax.
- Exemptions for contractor payments - Queensland Revenue Office: how a machine-plus-operator arrangement can be exempt in Queensland.
How does Data First Coaching approach this?
Data First Coaching, built by Greg Allan, starts from the owner's own job and pay records rather than a description of the business. For a question like this, the Trade Business Intelligence looks at how contractor and operator arrangements actually sit in an earthmoving contractor's own data: who directed the work, who supplied the plant, how payments were structured, because that is where a classification problem really starts, long before an audit or a claim brings it to the surface. The how, including the records worth keeping and the agents worth building around them, is worked through inside the Academy, with members, because the Trade Business Intelligence is powered by every member who joins it.
