When a Subbie Counts as an Employee for Super: The SG Contractor Test for Builders and Solar Installers
By Rami Rajkumar, CPA, Founder & Partner, TechEdge Accounting. 21 October 2026.
In short. A subbie with an ABN who sends you an invoice can still be your employee for super. If you pay someone under a contract that's mainly for their labour, they have to do the work themselves and you pay for their time rather than a result, you generally owe them super guarantee at 12%. Since 1 July 2026 that super is due within 7 business days of each payment, so a wrong call costs you every pay run, not once a quarter.
Two tests, not one
There are two ways a worker you engage as a contractor can end up as an employee for super.
The first is the ordinary test. Under it, the ATO looks at the legal rights and obligations in your contract with the worker. Since two High Court decisions in 2022 (CFMMEU v Personnel Contracting and ZG Operations v Jamsek), the contract is the starting point, and what you call the arrangement doesn't decide it. Calling someone an "independent contractor" in the paperwork doesn't make them one.
The second is an extra test that applies only to super. Even if a worker is a genuine contractor under the ordinary test, they can still be an employee for super guarantee purposes. This is the one that catches builders and installers.
The super test for contractors
The ATO says a contractor is an employee for super if they're paid under a contract that is:
mainly for their labour, meaning more than half the dollar value of the contract is for their labour
for their personal labour and skills, not for achieving a specified result
done by them personally, with no right to delegate the work to someone else
If all three apply, you pay super for them, whether or not they have an ABN.
A few points in the ATO guidance matter a lot on site:
Labour and materials together. If one contract covers labour and materials, state the two amounts separately. If you don't, the ATO says you can use a reasonable market value for the labour, based on normal industry practice. Keep a record of how you worked it out.
Companies, trusts and partnerships. If you contract with a company, trust or partnership, you don't pay super for the person it sends to do the work. That entity may have its own obligations to them.
Paying the worker extra doesn't count. Adding 12% to the worker's invoice isn't a super contribution. The money has to go to their fund.
Choice of fund. Contractors who are employees for super generally get to choose their fund. You need to offer the choice within 28 days of their start date, and if they don't choose, request their stapled fund from the ATO.
What it looks like on a job
The ATO has a building and construction example with two concreters, both on comprehensive written contracts.
Darren works set hours on the builder's sites, a supervisor checks his work, concreting is a core part of the builder's business, he can't subcontract, and the builder supplies the concrete. The ATO treats him as an employee.
Sam is engaged by a labour hire business to concrete for some of its customers. He has no set hours, can take or refuse extra work, serves several businesses, can delegate, quotes for a result, supplies his own tools and pays for his own concrete. If he doesn't deliver, he isn't paid. The ATO treats him as an independent contractor.
Same trade, same kind of contract. The answer turned on how the work was actually set up.
For solar, think about the installer you engage on an hourly or daily rate to work on your jobs, using your panels, inverters and racking, who can't send someone else in their place. On those facts the contract is likely to be mainly for their labour, and super is likely to be payable. Compare an electrical contracting business that quotes per system, brings its own crew and fixes its own defects.
The factors the ATO looks at
For the ordinary test, the ATO weighs these together, as set out in the contract:
Control. Who has the right to decide how, where and when the work is done.
Integration. Whether the worker works in your business as part of it, or provides services to it from their own business.
How they're paid. Hourly, daily or per item points towards employee. A quoted price for a result points towards contractor.
Delegation. Whether they have a real, enforceable right to send someone else. The ATO says a delegation clause must not be a sham.
Tools and equipment. Who supplies them, and whether you reimburse or pay an allowance.
Risk. Who wears the cost of fixing defective work.
Goodwill. Whether the work builds your business or theirs.
No single factor decides it, and the ATO says they shouldn't be used as a checklist.
Why payday super raises the stakes
Since 1 July 2026, super has to reach each employee's fund within 7 business days after you pay them. The ATO's payday super pages say the extended definition of employee, which includes contractors caught by the super test, applies to these rules too.
For a contractor who is an employee for super, super is worked out on their qualifying earnings. That includes all labour payments, including overtime, but not payments for materials, equipment or other non-labour items, and not GST.
So if a labour-only subbie is misclassified, the shortfall now builds every time you pay them. If super isn't paid on time and in full, the super guarantee charge applies for each payday. We covered how the charge works in our Payday Super 2026 guide.
A quick check of your subbie list
Run through every individual you pay by invoice:
Who did you contract with? A sole trader, or a company, trust or partnership? Only sole traders and individuals can be caught by the super test.
How are they paid? By the hour or day, or a quoted price for a defined result?
What's the labour share? Is more than half the contract value for their labour? If materials are in the price, are they shown separately?
Can they send someone else? Is there a real right to delegate that they could actually use?
Whose gear and whose risk? Who supplies the materials and tools, and who pays to fix defects?
If the answers point to labour only, paid for time, done personally, treat them as an employee for super and pay into their fund on each payday. If you're unsure, get advice before the next pay run, not after an ATO review.
Our guides on RCTIs and paying subcontractors and subcontractor compliance and payment times reporting cover the rest of the subbie paperwork.
Related reading
Talk to a CPA
TechEdge is a CPA-led outsourced finance team for Australian construction, EPC, solar and renewables businesses. We review subbie arrangements, set up payroll so super goes out with every pay run, and keep the records that show how each worker was assessed.
Book a free 30-minute call with a CPA, email info@techedgeaccounting.com.au or call +61 468 634 973.
This article is general information only and is not financial, tax or legal advice. It is based on the ATO pages on super for contractors, the difference between employees and independent contractors, the building and construction industry examples, payment deadlines for payday super and key superannuation rates, as at 21 October 2026. Whether a worker is an employee depends on the facts of each arrangement, so check the current rules or speak to your adviser before acting. Workplace laws such as the Fair Work Act use their own tests.
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