What is a contractor under the OHS Act?

July 2007

The purpose of this information is to provide guidance about the meaning of the term ‘contractor’ in the context of the Occupational Health and Safety Act 1991 (the Act). Guidance is also provided to determine whether a relationship is one of employment or independent contractor. 

The definition of contractor under the Act

A contractor for the purposes of the Act includes a Commonwealth contractor, a Commonwealth authority contractor or a non‑Commonwealth licensee contractor (see s9A for definition). To be a contractor of any of these entities, each of the following criteria must be satisfied:

• A contractor must be a natural person who is not an employee.

A natural person is a human being and not a company.  In other words, it must be the person who performs the work.

Note that for the purposes of section 14 only (workplaces controlled by a contractor for construction and maintenance purposes), a contractor is not limited to natural persons but extends to include bodies corporate who are not Commonwealth authorities or non-Commonwealth licensees.

• The contractor must perform work on Commonwealth or non-Commonwealth licensee premises.
  

Commonwealth and non-Commonwealth licensee premises are those owned or occupied by the Commonwealth, a Commonwealth authority or a non-Commonwealth licensee.

• a building, aircraft, vehicle or vessel; and
• any structure, whether a fixed structure or moveable structure such as a tent, and whether on land, on the bed of any waters or floating on any waters; and
• part of premises (including a part of premises of a kind referred to above).

‘Own’ in relation to a workplace, includes own jointly, or own in part. ‘Occupied’ is not defined in the Act, however, the common law meaning is generally considered to relate to the degree of control that a person has over the premises, such as:

• physical occupation of the premises;
• management or control of the premises; and
• responsibility for and control of persons working on the premises (eg an employer)

• The work must be performed in connection with a contract between either that person or another person (whether a natural person or company) and the Commonwealth, a Commonwealth authority or a licensee.

Under the Act, a ‘contract’ is broadly defined as including any arrangement or understanding. This would include a subcontract. ‘In connection with’ has been interpreted in law as having a wide connotation and requiring just a relation between two things (in this case the work performed and the contract.

• The contract under which work is performed must be in connection with an undertaking being carried on by the Commonwealth, a Commonwealth authority or a licensee.

The work performed in connection with the contract must be in connection with an undertaking being carried on by the authority or licensee.  ‘Undertaking’ is not defined in the Act but it is generally accepted that it refers to an activity or what is done in the course of carrying on a business or enterprise.

The difference between an ‘employee’ and a ‘contractor’

Under the Act an employee is a person who is employed by the Commonwealth, a Commonwealth authority or a non-Commonwealth licensee. Depending on the circumstances, the distinction between an employee and a contractor may be quite complex and it may be necessary to seek independent legal advice.

Factors indicating the person may be an employee

Employees under the Act are employed by the Commonwealth, a Commonwealth authority or a Commonwealth licensee. Employees also include those employed under a contract of service or apprenticeship. A key factor in deciding whether a person is an ‘employee’ is the degree of control the employee has over the process of work.

Under a contract of service the employer usually has the right to direct the manner in which the work is performed.  Contracts of service are mainly characterised by the person:

• being subject, ultimately to the control of the employer of the work performed;
• working regular and defined hours of work;
• working exclusively for one employer;
• working continuously for one employer;
• receiving regular payments (weekly or fortnightly);
• being required to work personally;
• having similar pay and conditions as other employees;
• having superannuation and taxation deducted;
• being entitled to overtime, penalty rates and leave, (personal, recreational and long service); and
• being able to be dismissed by the employer.

Factors indicating that the person may be a contractor

The Act does not use the phrase ‘contract for services’. However a ‘contract (or arrangement or understanding) for services’ distinguishes a contractor from an employee, the latter being tied to an employer by a ‘contract of service’. 

A contract for services is generally regarded as results based. The contractor works to achieve the result on the terms of the contract for an agreed price. The contractor has control over the manner in which the work will be accomplished. Contracts for service are mainly characterised by:

• having control over the manner in which work is conducted and the hours worked;
• freedom to work outside the organisation;
• the person supplies their own tools;
• responsibility for own taxation and superannuation;
• responsibility for own insurance;
• no sick leave, long service or recreational leave supplied by the employer;
• there is an invoicing system of payment for services delivered;
• being paid by the job, not by time;
• there is no regular wages payment system; and
• the payment method may be determined before the job commences.

Relevant Commonwealth Legislation

Further Information

For further details about this information or others in the series, contact Comcare on the general enquiry line 1300 366 979, e-mail ohs.help@comcare.gov.au or visit our internet website on www.comcare.gov.au