Is Your Contractor Actually
a Contractor?
Find Out Where You Stand Before They Do.
Authorities Are Cracking Down on Sham Contracting
You signed a contractor agreement. They invoice you monthly. You assumed everything was sorted.
But the ATO does not care what your contract says. They look at what actually happens.
In March 2026, the ATO and Fair Work Ombudsman issued a joint statement confirming they are ramping up enforcement on sham contracting across multiple industries. Investigations are already underway.
If your contractors work set hours, use your equipment, follow your processes and cannot subcontract the work, the ATO may classify them as employees. And the consequences are serious.
The Penalties Are Real
- Individuals: Up to $19,800 per contravention
- Small businesses (fewer than 15 employees): Up to $99,000 per contravention
- Larger businesses: The greater of $495,000 or three times the underpayment amount per contravention
Each pay period the sham arrangement continues can be a separate contravention. A 12-month arrangement with fortnightly pay could generate 26 separate contraventions.
Free Sham Contracting Risk Check
- Answer a few questions about each contractor
- Get an instant risk assessment
- See exactly where your red zones are
- Completely free. No sign-up required.
If Your Risk Check Flags Issues, We Can Sort It
At Law by Design, we have built a fixed-price contractor compliance service specifically for this.
Full Contractor Compliance Audit
We review every contractor arrangement in your business against the ATO multi-factor test, the Fair Work Act requirements and relevant case law. You get a clear report showing which arrangements are compliant, which are at risk and what needs to change.
Agreement Review & Restructuring
Ongoing Compliance Support
As you engage new contractors, we provide ongoing support to make sure every new arrangement is set up correctly from day one. No more guessing. No more risk.
Why Law by Design
- Fixed prices for everything. You know exactly what it costs before we start. No hourly billing. No bill shock.
- Plain English advice. We speak your language, not legalese. You will actually understand what we are telling you.
- Over 15 years of commercial experience. Heidi Warren has spent her career working in and with businesses. She understands the commercial reality, not just the law.
- Built for small businesses. We exist to make legal services accessible to the businesses that need them most.
- Fast turnaround. We know that in business, time is money. We get things done quickly.
Who Is This For
- You engage contractors but are not 100% sure the arrangements are compliant
- Your contractors work set hours, use your equipment or follow your processes
- You have contractors who work exclusively or primarily for your business
- You asked a worker to get an ABN so you could engage them as a contractor
- You operate in a high-risk industry (construction, transport, cleaning, IT, hospitality)
- You are scaling and hiring more contractors
- You want peace of mind before the ATO comes knocking
The ATO Is Watching
on sham contracting across Australia.
Better to Check Now Than Explain
to the ATO Later
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