We share tips on ensuring you get all the information you need from a contractor when engaging their services on your next project.

A worksite is made up of more than just you and your employees. Contractors carry out the majority of onsite work in the housing industry. So, it is essential you know what documentation to request from your contractors, how to manage risks involved in contracting and avoid treating your contractors as employees. Before engaging your contractors, consider the following:

Registrations

Before you engage a contractor to work on your next project, ensure they have all required registration before they begin. The registration checks include having a registered business structure (company, partnership etc.), an ABN, and, if necessary registered for GST. Victorian contractors must be registered to carry out residential building work over $10,000, and penalties apply for engaging contractors who haven’t qualified.

Contracts

It can be hard to know what kind of contract is best, but always use a result-based contract when engaging a contractor. HIA period and project trade contract are recommended and can be accessed via the HIA website – http://www.hia.com.au. The contract should show the provision of materials/equipment and provide that the contractor is entitled to invoice and paid for work completed. The contract terms should state that the contractor is responsible for any defective work they provided.

Insurances

Insurance is vital for all people working on your site. Ensure that the contractor provides their own workers’ compensation (where applicable), public liability and sickness and accident insurances, so you don’t get hit with the costs should an accident occur.

Superannuation

Contractors paid entirely or substantially for their labour are deemed employees for superannuation purposes. So, it’s important to show that the contractor is providing more than just labour, that they can delegate work and that they’re paid on the result basis-not periodically. The principal should pay the contractor for the work completed under the contract.

Payroll tax

Contractors may be deemed employees for payroll tax purposes if they predominantly provide a labour only service or work primarily for one principal. HIA Workplace Advisors can assist you in clarifying your worker’s status.

OHS documentation

Site safety is everyone’s responsibility, so your contractor should provide a risk assessment of the works and provide a safe work method statement (SWMS), including an up-to-date list of hazardous substances before commencing work.

Security of payment claims

Late payment of contractors can lead to dispute, so pay your contractor on time to avoid receiving security of payment claim for completed construction work and supply of materials.

Failure to comply with the strict processes and timeframes may result in you becoming liable for the full amount.

For more information on employee status, contractors and payments, contact HIA Workplace Advisor on 1300 650 620.

Reference:

Tharani Senadheera (HIA Workplace Advisor) 2022, “Building”, p. 14, Housing Industry Australia (HIA).