Employee vs Subcontractor: ATO’s Decision Impact Statement

We have previously discussed the case of JMC Pty Ltd vs Commissioner of Taxation, in which an individual lecturer initially deemed an employee by the Federal Court for superannuation purposes was later classified as an independent contractor by the full federal court upon appeal by JMC Pty Ltd. 

The Tax Office has responded to the case through a Decision Impact Statement. 

The ATO's view is that if a contract allows a worker to delegate, subcontract, or assign their work to someone else, even with the employer's consent, the worker will not be considered an employee for super guarantee purposes.

However, this applies only if the right to delegate is genuine and not a sham. If the contract isn't clear about whether the worker can delegate, the ATO will decide based on the available evidence about the agreement. 

What are the Implications for You? 

RTOs and subcontractors should ensure well-drafted contracts that accurately define working relationships. For example, if a trainer can delegate his/her work, defined clearly in the contract, the RTO will not be liable for superannuation.

For more information, please refer to the ATO's Decision Impact Statement.

Previous posts related to this case:

• Court Case on Employee Vs Subcontractor - Aug 2022

• Update on Court Case on Employee vs Subcontractor - Jul 2023

• Employee vs Subcontractor Court Case Update - Nov 2023