The main difference between an employee and contractor, to put it simply, is that an employee works for a business, whereas a contractor works as their own business. There are many other things that distinguish one from the other but the key is to understand what form of working, fits your requirements.

In this blog we will explore things you need to know about being an employee and contractor to help you decide which one could suit you best. 



As an employee, you are guaranteed a certain hourly rate or yearly salary. This is income you can count on. On top of this, as an employee, you are also entitled to Superannuation. It is your employer’s responsibility to pay your super to your complying superannuation account. 

With this form of working, everything you need to complete the job is supplied. For example, if you’re working in an office job, your desk, chair, computer and stationary are all supplied. In addition you are exposed to NO risk. Essentially, this means that should you get injured in the workplace, your employer will cover any costs outlaid including wages while you unable to work. This also applies to commercial work, should you make a mistake which leads to financial damages, the company is liable – not you personally. 

Being an employee also means you’re told exactly how to work within the company, there is little independence within the role, however you are entitled to annual and other leave.



As a contractor, the majority of the above does NOT apply to you. You’re completely independent and are to manage yourself as if you were a business because, you’re your own business. Being a contractor is not as easy or glamourous as being your own boss sounds. It comes with many other things that you have to pay attention to, when previously as an employee you didn’t. Let’s go through exactly what being a contractor means. 

You are no longer managed! This means you determine your workload, when, where, at what time and how much work gets done. You need to be self-motivated, which be very difficult for some people – there is no room for laziness when you’re a contractor. 

Your work and jobs are not ‘secured’. What do we mean when we say this? Well, as a contractor you are contracted to do certain projects or tasks. Once this work is completed there is no guarantee for continued work. You’re left to your own devices to bring in new work and hold onto existing clients. 

As a contractor you are exposed to risk. Should anything go wrong you as your own business are completely liable. You are also liable to rectify any faults at your own cost. Appropriate insurances can be used to mitigate risk.

You, as a contractor, now have to look after your own taxes and superannuation. You are responsible for paying the relevant taxes on your income quarterly/annually and should you wish to make contributions to your super, you must do this manually (which can be a bit of a pain to remember and of course, is a cash burden). 

After reading this, do you have an idea as to which one is the best option for you? Clearly there are advantages and disadvantages to both. If you need further help in deciding, give our team a call.