Casual Employee or Contractor? You Might Owe Super Without Realising

Written by Daniel Dubois & Shara Cox

One of the most common misconceptions in business is the difference between a casual employee and a contractor — and getting it wrong can mean unexpected superannuation and leave obligations.

Many businesses assume that if someone has an ABN, sends invoices, or works independently, they must be a contractor. However, under Australian tax, superannuation and employment law, this isn’t always the case.

If someone is classified as a contractor, they could still be entitled to Superannuation Guarantee (SG) contributions and leave entitlements. Misclassification can lead to costly back payments and penalties, so it’s crucial to get it right.

Casual Employee vs. Contractor: What’s the Difference?

The ATO determines worker classification based on how the work is performed, not just what the contract says. Here are some key differences:

Casual Employees

  • Work on a flexible basis but are still part of the business.

  • Are paid a higher hourly rate, including casual loading.

  • The employer controls their work hours and tasks.

  • Must receive super if they earn more than $450 per month (or any amount if under a registered enterprise agreement).

Contractors

  • Provide services as an independent business.

  • Have control over how and when they complete the work.

  • Can delegate work to others.

  • Use their own tools and equipment.

  • Have a responsibility to rectify work where needed

The Hidden Super Trap: When Contractors Are Owed Super and Leave Entitlements

Even if a worker has an ABN and invoices you, they might still be entitled to super and leave entitlements.

Where they meet the criteria above, then under ATO rules, they must be treated as an employee for superannuation and leave purposes. This means you must pay super at the SGC rate (currently 11.5%), and leave entitlements may also accrue.

 Avoid Costly ATO Penalties

Getting worker classification wrong can lead to hefty back payments, penalties, and interest charges. The ATO regularly audits businesses to ensure compliance, and ignorance isn’t an excuse.

If you're unsure whether your casual staff or independent contractors are truly contractors, it's best to review your obligations now before the ATO does.

Get in touch with Salt today to check if your workers are classified correctly and avoid unnecessary risks!

Jenni Anderson