Are Independent Support Workers really Employees

We all know that Independent Support Workers (ISW's) offer flexibility and reliability we can't get from the larger providers, but there is an inherent financial risk to using them that many participants are not aware of. The very nature of the work the perform leaves them employees by definition and that means articipants just copped a whole lot of responsibility they thought they had missed by not employing their own staff directly. It also means that most ISW's are not the solution we wanted.

I am Isabel Tilyard. I am a CPA with 40 years experience in Public and Private business in Accounting and its software. I have worked at Senior Management level, as a Consultant and as a business owner. 

I AM NOT A TAX AGENT!

I am also a Participant in the NDIS with a complex needs physical disability. I was self-managed for 7 years, but have been Plan-managed since July 2025.

This is merely my opinion, and I would love to have any feedback from Fund Managers, Accountants, lawyers or other experts on this. Don't act on what I say here, speak to your own advisors

I set up my own company for various reasons  and am still waiting to find out if I can run it as a real business or need to sell it. There is debate about whether there is a conflict of interest. 

Until I know for sure I am working pro bono so at least you know I am not biased in any direction.

My employees are trained, held to the highest standrds of care and compliance and I don't employee staff who are more interested in money than they are in caring for our clients.

For now I am just a Participant who uses ISW's to fill gaps when Kingfisher Care QLD doesn't have the staff.

I won't use large providers and love the flexibility of ISW's. As an Accountant, I suspect most of them think that being an ISW is as simple as getting an ABN and that they don't know/care about legal responsibility, tax implications or even securing their own financial security through Superannuation and insurance. 

That also means if they cause damage or death to you or your loved ones, they will walk away virtually unscathed leaving you with the consequences.

But now, it gets even worse. If they are really employees there is definitely a Superannuation liability of 12%, but then there's workers compensation and the potential for them to claim the write to become permanent employees and on it goes.

THE MOST OBVIOUS IMPLICATION IS THAT CAN'T PAY THEM THE TOP NDIS RATE, YOU NEED TO KEEP THE SUPER AND PAY IT TO THEIR FUND DIRECTLY.

THE NEXT THING IS THAT IT CAN BE RETROSPECTIVE.

I will be requesting a formal response from the  three bodies involved

 - Australian Taxation Office (ATO)

 - Fairwork Ombudsman (FWO)

 - NDIS national Quality and Safety Commission (NQSC)

I won't be holding my breath on a response time.

At first glance - THEY DEFINITELY ARE and we should ensure we withhold Super for them and make a separate payment to their fund from the negotiated rate

Our only hope is the next step - tell them that aznd they are most likely to say goodbye, which could tip the balance on the initial control criteria - we are not really controlling when they work. See my c omments under the next section

I do think that we need to investigate the possibility of our own contract where ISW's expressly guarantee that they will pay the super fromm their invoice, but I don't believe the Courts or FWO will accept that.

It has  confirmed my choice to work through a small company (always a contractor) or use Independents sparingly until this is cleared up.

These are direect quotes from the ATO webdite that I think are relevant to this discussion

My personal comments are in italics

You are responsible for classifying your worker for tax and super purposes and you need to get it right. If you make an incorrect decision, you may face penalties.

To check if your worker is an employee or independent contractor, you need to review the whole working arrangement.

If you are engaging a worker who you believe is an independent contractor, you can choose to pay them super to ensure you’re not liable for the superannuation guarantee charge (SGC). You will need to pay any super contributions directly to their chosen superannuation fund and should include this in your contract with the worker.

In certain circumstances, you must pay superannuation for independent contractors who are deemed to be employees for superannuation purposes.

These circumstances include if the worker:

• works under a contract that is wholly or principally for their labour
• performs work that is wholly or principally of a domestic nature for more than 30 hours per week

That 30 hours per week does not mean just for you, it just means that's what THEY do for a living.

ATO outline the following areas that differenciate betweenn employee and Independent Contractor. They are:

- Control

 - Integration

 - Remuneration

 - ability to sub-contract or delegate

 - tools and equipment

 - risk

Remember from the ATO point of view "your business" is the Participant and the business is providing support to them

In my comments below I use 'we' to refer to participants in general.

Employee - your business has the legal right to control how, where and when the worker does their work. 

Contractor -  the worker can choose how, where and when their work is done, subject to reasonable direction by you. 

By Definition, any ISW needs to be  an employee. That is the whole basis of the relationship.

Then again, we don't dictate when they work - it is negotiated. Whether that's enough to tip the balance needs a ruling from the NQSC/ATO/FWO

Employee -  the worker serves in your business. They are contractually required to perform work as a representative of your business. 

Contractor -   the worker provides services to your business. The worker performs work to further their own business. 

It could be argued this doesn't really apply, but we expect them to work as part of our total care team, so they really do serve as part of our business.

Emploee - the worker is paid either:

• for the time worked
• a price per item or activity

Contractor  - the worker is generally contracted to achieve a specific result, and is paid when they have completed that result, often for a fixed fee. 

Obviously an employee here

Employee - there is no clause in the contract allowing the worker to delegate or subcontract their work to others. The worker must perform the work themselves and cannot pay someone else to do the work for them. 

Obviously an employee here again, otherwise we would be using a large SP

 Employee - your business provides all or most of the equipment, tools and other assets required to complete the work; or the worker provides all or most of the tools, but your business provides them with an allowance or reimburses them for expenses incurred. 

Unlesss it's a cleaner  who uses their own vacuum and mop and products, most ISW use our equipment. And given we have to cover trtavel and/oe mileage, that also makes them employees

 Employee -   the worker bears little or no risk. Your business bears the commercial risk for any costs arising out of injury or defect in their work. 

Contractor -   the worker bears the commercial risk for any costs arising out of injury or defect in their work. 

Let's be honest - they often don't take responsibility. Legally, Public liability Insurance would be a must to argue they bear any risk. 

I  have put a screen dump of the myths from the ATO website on the left here, but the main takeaways are

 - just having an ABN and/or business name are irrelevant to the discussion

 - the contract nor the intention of the parties have no bearing on a wsorkers status

 - it doesn't matter that everyone else thinks ISW's are Independent Contractors