Plumber not deemed to be an employee for SG

Deeming provisions for superannuation guarantee (SG) can create unbudgeted costs in relation to contractors. The recent Federal Court decision in FCT v Hatfield 2025 FCA 182 is another example of the vexed question of when the extended definition of employee in section 12(3) of the Superannuation Guarantee (Administration) Act 1992 applies.

In that case, a plumber who picked up work on a subcontract basis from another plumbing business for many years claimed he was owed super. He provided ad hoc services on an hourly basis, under his business ABN. He used his own tools and materials and had full discretion as to whether to accept or reject jobs. The rate at which he was remunerated was higher than the award rates applicable to employees.

The Federal Court upheld the Tribunal’s decision that he was not a deemed employee, concurring that it was open to the Tribunal to conclude that the contract was for results, and therefore could not be for labour, despite charges being made on an hourly basis. Justice Logan referred to the principles elaborated upon in the High Court decisions in Jamsek and Neale respectively, which confirm that a contract for a given result in not wholly or principally for the labour of the person (as required by section 12(3)).

Though not relevant in Hatfield, delegation is another factor which is inconsistent with a contract being wholly or principally for labour. This is the position whether or not the right of delegation is actually used or likely to be used.

With issues such as this continuing to be a key driver of superannuation shortfalls, it is unfortunate that the draft Payday Super legislation (released on 14 March 2025) does not address simplifying the rules around deemed employees. It remains important for employers to carefully consider contractual terms, the substance of the arrangement and particular factors that can be evidenced to support the characterisation as a genuine independent contract.