What is Contractor vs employee?

A contractor runs their own business and invoices for services; an employee works in the employer’s business under its direction. The distinction is decided on the substance of the relationship, not the label in the agreement. Misclassifying an employee as a contractor exposes a provider to back-pay, superannuation and penalty liabilities.

Contractors are generally not covered by the SCHADS Award and are paid at agreed rates rather than through award interpretation. Superannuation may still be payable where the contract is wholly or principally for the person’s labour, under section 12(3) of the Superannuation Guarantee legislation.

The participant-facing rate does not change either way — the NDIS price limit applies to the support delivered, not to how the worker is engaged. What changes is the provider’s cost and risk.

Related terms

SCHADS AwardThe SCHADS Award is the modern award covering most Australian disability and community services employees. It sets minimum pay rates by classification level, and the rules for penalties, overtime, broken shifts, sleepovers, on-call, travel reimbursement and minimum engagement periods. Compliance is a legal obligation, not a payroll preference.Casual loadingCasual loading is the additional percentage paid to casual employees in place of paid leave and notice entitlements. Under the SCHADS Award it is 25 per cent of the minimum hourly rate. It applies to the base rate, and the interaction between casual loading and penalty rates is set by the award rather than chosen by the employer.

More in Payroll & award

Broken shift Sleepover Active and passive overnight Minimum engagement

Rostery handles this in practice

SCHADS interpretation, NDIS price-guide validation, claiming and the evidence an audit asks for — built for Australian providers.

Book a demo See the features