Your contractor might still be owed superannuation

Yes. A genuine contractor can still be owed superannuation. Australia runs two entirely separate tests, and being correctly classified as a contractor under employment law does not answer the superannuation question at all.

What the law says

Test one - employee or contractor?

Since 26 August 2024, s 15AA of the Fair Work Act 2009 (Cth) requires the relationship to be assessed on its "real substance, practical reality and true nature". The contract matters, and so does what actually happens. Who controls the work. Who carries the commercial risk. Whether the person can delegate. Whether they work for others.

That provision was a deliberate reversal. Two High Court decisions in 2022 had pushed the test towards the written contract, and s 15AA pulled it back to the working reality.

Test two - is superannuation payable?

This runs on the Superannuation Guarantee (Administration) Act 1992 (Cth). Under s 12(3), a person engaged wholly or principally for their labour is treated as an employee for superannuation purposes, even where they are a genuine contractor under employment law.

The two tests do not have to agree, and frequently do not.

The part people get wrong

"They invoice us, so no super."

An ABN and an invoice have no bearing on s 12(3). What matters is whether the contract is mainly for the person's own labour, rather than for a result, for plant and equipment, or for the labour of others.

"They passed the contractor test, so we're done."

Passing the s 15AA test resolves employment obligations. Leave, notice, unfair dismissal. It says nothing about superannuation, which is decided under a different Act with a different threshold.

"US and UK guidance covers it."

It does not, and this is where offshore contract tools quietly fail Australian businesses. A system trained on US 1099 rules or UK IR35 logic has no concept of s 12(3). It will clear an engagement that is still accruing an unpaid superannuation liability.

"The contract says no superannuation is payable."

Parties cannot contract out of the superannuation guarantee. A clause saying otherwise does not change the obligation. It just means the contract is wrong.

What it means for your contract

The engagement most exposed is the one where an individual, working largely alone, is paid for their time rather than for a defined deliverable. Consultants, tradespeople engaged without their own crew, freelancers on a day rate. All sit close to the s 12(3) line depending on how the contract is written.

The questions the law asks are these:

• Is the contract for the person's labour, or for an outcome.

• Can they subcontract the work, in practice as well as on paper.

• Are they supplying materials, plant or their own team.

• Is payment structured around time, or around delivery.

Sham contracting sits alongside this. The defence under s 357 of the Fair Work Act 2009 (Cth) requires an employer to prove a reasonable belief that the arrangement was a contract for services, not merely an honest one.

Both tests run on every contractor agreement you put through Contractam, and the report says which one the engagement falls down on.