Why do some promotional staffing agencies pay their staff through a Tax File Number (TFN), while others pay through an Australian Business Number (ABN)?
The short answer is that some agencies paying staff through an ABN may not have correctly classified their workers under Australian workplace laws.
Whether someone should be engaged as an employee or an independent contractor depends on the actual working relationship—not simply what is written in a contract or what either party prefers. According to the Australian Taxation Office (ATO) and the Fair Work Ombudsman, a range of factors must be considered before determining the correct arrangement.
Let’s take a closer look.
Before we begin: This article provides general information about employee and contractor arrangements in Australia and is intended for informational purposes only. It does not constitute tax, legal or financial advice. While the examples in this article relate to the event and promotional staffing industry, the same principles may apply across many Australian workplaces. If you need advice about your individual circumstances, please contact the Australian Taxation Office (ATO), the Fair Work Ombudsman or a qualified legal, tax or financial adviser.
Paying a worker through a Tax File Number (TFN) generally means they are engaged as an employee. Paying a worker through an Australian Business Number (ABN) generally means they are engaged as an independent contractor.
At Black Diamond Agency, we specialise in recruiting, employing and managing event staff, brand ambassadors and promotional staff across Australia in accordance with Australian workplace laws.
Employees and contractors are treated very differently under Australian law, and understanding the difference is important for both workers and businesses.
What is an employee?
An employee works as part of a business and performs work under an employment relationship.
This is the employment model we use for our brand ambassadors, promotional staff and event crew.
Employees are generally entitled to workplace protections and benefits, including superannuation (where eligible), workers compensation coverage, and other employment entitlements under Australian law.
What is a contractor?
1. Ability to subcontract or delegate
Can the worker subcontract or delegate the work to someone else?
If you’re booked for a shift with an agency but can no longer attend, can you simply send someone else in your place?
If the answer is yes, this generally points towards a contracting relationship.
If the answer is no, it generally points towards an employment relationship.
To help explain the difference, I’ll use two examples that are common within our industry.
On one hand we have Amy, a children’s face painter who operates her own business and is legitimately engaged as a contractor through her ABN.
On the other hand we have Sam, a brand ambassador engaged as an employee through his TFN.
Amy already has a booking but decides she wants to take the long weekend off. Because she runs her own business, she contacts another face painter she trusts and arranges for them to complete the booking instead. She lets the agency know who will be attending, and the agency is comfortable with this because they engaged Amy’s business to deliver the service—not necessarily Amy herself.
Now let’s look at Sam.
Sam has also been booked for a promotional shift but decides he’d rather go away for the weekend. He tells the agency he’s found someone to cover his shift.
The agency isn’t happy.
Why?
Because they employed Sam to work that particular event and their client is expecting Sam to attend. The agency needs to approve any replacement rather than Sam making that decision himself.
That level of control generally indicates an employment relationship rather than a contractor arrangement.
Learn more about our Brand Activation and Event Staffing services.
2. Basis of payment
Is the worker being paid for their time, or for delivering a particular result?
If you’re paid an hourly rate for the time you work, this generally indicates an employment relationship.
If you’re paid a fixed amount to achieve an agreed outcome, it generally points towards a contracting relationship.
Let’s go back to Amy.
Amy is booked for a three-hour children’s event for a fixed fee of $150.
If setting up or packing down takes longer than expected, she doesn’t invoice extra hours. She’s being paid to deliver the service, not simply for the amount of time it takes.
That points towards a contractor arrangement.
Now let’s look at Sam.
Sam is booked as a brand ambassador for a promotional activation at $28 per hour.
The event runs over schedule and packing up takes an extra 30 minutes.
Because Sam is paid for the hours he works rather than for delivering a specific outcome, the agency pays him for the additional time.
This generally indicates an employment relationship.
3. Equipment, tools and other assets
Is the worker required to provide their own equipment or tools to complete the work?
This can be a little tricky in the promotional staffing industry because many event roles don’t require specialised equipment. However, where tools or equipment are needed, who provides them can help indicate whether someone is an employee or an independent contractor.
If the business provides or reimburses the worker for the equipment they need, this generally points towards an employment relationship.
If the worker is expected to supply and maintain their own equipment at their own expense, this generally points towards a contracting relationship.
Let’s look at Amy again.
As a professional face painter, Amy provides all of her own paints, brushes, sponges, glitter and other equipment needed to perform her work. She purchases these items herself and isn’t reimbursed by the agency.
This is consistent with operating her own business as a contractor.
Now let’s look at Sam.
Sam is booked as a brand ambassador to assist with an event bump-in. He needs a high-visibility vest to safely perform the role.
The agency either provides the vest or reimburses him for purchasing one. He’s also issued with a branded uniform to wear while representing the client at the event.
These are both indicators of an employment relationship.
4. Commercial risk
Who is legally responsible for the work being performed?
One of the factors considered by the ATO is whether the worker bears the commercial risk associated with the work.
For example:
- Is the worker responsible for correcting defective work at their own cost?
- Would they need to compensate the client if something went wrong?
- Or does the business take responsibility and simply direct the employee to fix the issue?
Let’s use Sam as an example.
Sam has been employed to help pack 1,000 show bags before an event.
When the shift finishes, it’s discovered that only 800 bags have been packed because several boxes were accidentally overlooked.
The agency asks Sam to return the following day to complete the remaining work and pays him for the additional hours worked.
The agency remains responsible for delivering the outcome to its client, while Sam is paid for his time.
This generally indicates an employment relationship.
By comparison, if Amy accepted a face painting booking as a contractor and failed to deliver the agreed service, she would generally be responsible for resolving the issue as the owner of her own business.
5. Control over the work
Who decides how, when and where the work is completed?
The amount of control exercised over the worker is another important factor.
If the business directs what work is to be completed, when it is performed, where it takes place and how it should be carried out, this generally indicates an employment relationship.
If the worker has greater independence in deciding how to achieve the agreed outcome, it is more consistent with a contractor arrangement.
Let’s go back to Amy.
She’s booked to provide face painting at a children’s event.
The agency tells her the event theme is animals and asks her to paint designs that fit the theme.
Exactly how she paints them, which techniques she uses and her artistic style are entirely up to her.
This level of independence points towards a contractor arrangement.
Now imagine the agency instead provided Amy with a specific set of approved designs, required her to use particular techniques, trained her in exactly how to paint each design and expected every face to look identical.
That level of direction and control would be much more consistent with an employment relationship.
6. Independence
Is the worker operating their own independent business, or are they working as part of another business?
A genuine contractor is usually running their own business.
They typically market their own services, build their own client base and decide which work they wish to accept.
Employees, on the other hand, generally perform work as part of their employer’s business.
Let’s look at Amy again.
Amy advertises her own face painting business, accepts bookings from multiple agencies and private clients, sets her own pricing and decides which jobs she wants to take.
She is clearly operating an independent business.
Now compare that to Sam.
Sam accepts shifts through the staffing agency and performs work as one of the agency’s brand ambassadors.
While he may choose whether to accept a particular shift, once he accepts it he performs that work as part of the agency’s workforce and represents both the agency and its client.
This is generally more consistent with an employment relationship.
Looking at the whole picture
One of the most important things to understand is that no single factor determines whether someone is an employee or an independent contractor.
The ATO considers all of these factors together when assessing the true nature of the working relationship.[i]
Sometimes one factor may suggest a contractor arrangement, while another points towards employment.
It’s the overall relationship—not just one individual characteristic—that matters.
If you’re unsure whether you’re correctly engaged as an employee or contractor, the ATO provides an online tool that can help businesses assess working arrangements by answering a series of questions based on the facts of each situation.
You can also contact the ATO directly on 13 28 61 if you need assistance understanding your particular circumstances.
So what's the issue with agencies paying workers as contractors when they should be employees?
According to the Australian Taxation Office:
“It’s against the law for a business to incorrectly treat employees as contractors.”[ii]
Incorrectly classifying employees as contractors can result in businesses failing to meet their obligations relating to tax, superannuation and employee entitlements.
It can also create an unfair competitive advantage by reducing labour costs compared with businesses that correctly employ and protect their staff.
At Black Diamond Agency, we’re committed to employing our event staff, promotional staff and brand ambassadors in accordance with Australian workplace laws because we believe workers should receive the protections and entitlements they’re legally entitled to.
What does this mean for your tax obligations?
One of the biggest practical differences you’ll notice between being paid as an employee and working as a genuine contractor is how tax is handled.
If you’re engaged as a genuine contractor through an ABN, you’re generally responsible for managing your own tax affairs, depending on your individual circumstances. This means the business engaging you will usually not withhold tax from your payments.
As a contractor, you’ll typically need to keep accurate records of your income and expenses and meet your own tax reporting obligations. Depending on your circumstances, you may also have other obligations such as GST registration if your business meets the relevant thresholds.
If you’re engaged as an employee through a Tax File Number (TFN), your employer will generally withhold tax from your wages and report your income to the Australian Taxation Office (ATO) through Single Touch Payroll (STP). This makes it easier to access your Income Statement when preparing your tax return.
Regardless of how you’re engaged, it’s always a good idea to keep your own employment and income records.
Because everyone’s circumstances are different, if you’re unsure about your tax obligations you should seek advice directly from the ATO or a qualified tax professional.
At Black Diamond Agency, our event staff are employed under the appropriate employment arrangements so they receive the workplace protections and entitlements that come with being an employee.
What does this mean for superannuation?
Superannuation is money that employers are generally required to contribute on behalf of eligible employees.
The rules around superannuation have changed over time, and eligibility depends on current Australian legislation rather than a fixed earnings threshold.
If you’re engaged as an employee, your employer is generally responsible for paying the legislated Superannuation Guarantee contributions where required.
If you’re genuinely operating as an independent contractor, your superannuation obligations may differ depending on the nature of your working arrangement and current legislation.
The Australian Taxation Office provides detailed guidance on superannuation obligations for both businesses and workers, and it’s important to refer to the current rules as these can change over time.[iii]
Be cautious when comparing hourly rates
You’ll sometimes see job advertisements that advertise an hourly rate as being “inclusive of super.”
While this isn’t necessarily incorrect, it’s important to understand exactly what is included in the advertised rate before comparing it with another role.
Two jobs may appear to offer different hourly rates, but once you understand whether superannuation is included or paid on top, the comparison may look quite different.
When comparing opportunities, it’s always worth asking:
- Is super paid in addition to the hourly rate?
- Or is it already included within the advertised amount?
Understanding the total employment package will help you make a more informed comparison.
What does this mean for workplace insurance?
Insurance is another important difference between employees and genuine independent contractors.
If you’re operating your own business as an independent contractor, you may be responsible for arranging appropriate insurance depending on the work you perform and your individual circumstances.
Depending on the type of work you undertake, businesses engaging contractors may also ask for evidence of your insurance before work begins.
If you’re engaged as an employee, your employer is generally responsible for maintaining the appropriate workers compensation insurance required under the relevant state or territory legislation.
This means that if you suffer a work-related injury while working as an employee, you may be covered under your employer’s workers compensation policy, subject to the applicable laws in your state or territory.
This is another reason why it’s important that workers are correctly classified under Australian workplace laws.
At Black Diamond Agency, our employees are covered under the appropriate workplace insurance arrangements as required by law.
Let's compare the numbers
The following example is intended to illustrate the general concept only. Actual tax obligations, insurance costs and take-home pay vary depending on individual circumstances and current legislation.
One question we’re often asked is:
“If two jobs both pay $30 per hour, does it matter whether I’m paid through a TFN or an ABN?”
The answer is:
It can.
While two hourly rates may look identical, the overall value of the arrangement can differ because employees and genuine contractors have different responsibilities and obligations.
For example, a genuine contractor may need to consider things such as:
- managing their own tax obligations
- arranging appropriate business insurance where required
- covering the costs of operating their own business
- managing their own bookkeeping and administration
- superannuation obligations that may apply depending on their circumstances.
By comparison, employees generally have many of these responsibilities managed by their employer.
For this reason, genuine contractors often charge a higher rate than employees performing similar work.
However, every situation is different.
The hourly rate alone doesn’t determine whether someone should be an employee or contractor, nor does it necessarily tell you which arrangement is better.
The correct classification depends on the actual working relationship, not the rate being offered.
Can an agency ask whether you'd prefer to be paid through a TFN or an ABN?
This is a question we hear quite often.
According to guidance from the ATO and Fair Work Ombudsman, whether someone is an employee or an independent contractor isn’t a matter of personal preference.
Instead, it depends on the true nature of the working relationship.
Simply choosing to work through an ABN, or signing a contract that says you’re a contractor, doesn’t automatically make you one if the working relationship is actually that of an employee.
That’s why it’s important for businesses to correctly assess each arrangement based on the relevant factors rather than allowing workers to simply choose between a TFN or ABN.
What if I signed a contract saying I'm a contractor, but it looks like I'm actually an employee?
This is another common question.
Simply signing a contract that says you’re an independent contractor doesn’t automatically make you one.
According to the Fair Work Ombudsman, if a business deliberately represents an employment relationship as an independent contracting arrangement, this may be considered sham contracting.
The actual working relationship—not just the wording of a contract—is what determines whether someone is an employee or a genuine contractor.
If you believe your working arrangement may not be correct, it’s worth seeking information from the Fair Work Ombudsman or the Australian Taxation Office before making any decisions.
What if I think an agency isn't paying workers correctly?
If you believe a business may be incorrectly treating employees as contractors, the Australian Taxation Office provides several ways to report concerns.
You can:
- complete the ATO’s confidential tip-off form
- phone the ATO on 1800 060 062
Information can generally be provided confidentially, and you don’t have to identify yourself if you don’t wish to.[iv]
If you believe your situation involves sham contracting or other workplace issues, you can also contact the Fair Work Ombudsman for information about your rights and the options available.
Where can I get more information?
If you’d like to better understand your rights and obligations as an employee or independent contractor, these government resources are a great place to start.
Australian Taxation Office (ATO)
https://www.ato.gov.au/
The ATO provides information about:
- employee versus contractor arrangements
- tax obligations
- superannuation
- business responsibilities
- contractor obligations
Fair Work Ombudsman
The Fair Work Ombudsman provides guidance on:
- employee rights
- sham contracting
- workplace entitlements
- pay and conditions
- employment laws
These resources are regularly updated and should always be your first point of reference if you’re unsure about your own circumstances.
Why Black Diamond Agency chooses to employ our event staff
At Black Diamond Agency, we’re passionate about doing things properly.
Our brand ambassadors, promotional staff and event crew are employed under the appropriate employment arrangements because we believe people deserve to receive the workplace protections and entitlements they’re legally entitled to.
We’re proud to work with clients across Australia by supplying reliable, professional event staff while maintaining compliant employment practices.
Whether you’re looking for casual event work or you’re a business searching for experienced event staff, we’re committed to supporting both our team and our clients with transparency and professionalism.
Explore our Event Staffing Services to learn more about how we support brands and events nationwide.
Who wrote this article?
Hi, I’m Tamara Haddow, Founder and Managing Director of Black Diamond Agency.
I’ve worked in the promotional staffing industry for more than 16 years and have spent over 12 years building Black Diamond Agency.
One of the reasons I started the agency was simple—I wanted to create a business that treated brand ambassadors and event staff the way I wished I’d been treated when I worked in the industry myself.
Throughout my career, I’ve spoken with countless promotional staff who were unsure about the difference between being an employee and being an independent contractor.
That’s why I wrote this article.
While my qualifications have given me a strong understanding of business law and workplace arrangements, they don’t make me a lawyer or accountant. This article is intended as general information only and shouldn’t replace professional advice about your own circumstances.
I hold a Bachelor of Social Science (Criminal Justice) and a Master of Commerce specialising in Business Law and Financial Planning. While these studies have given me a strong understanding of workplace legislation, every person’s circumstances are different.
If you’re unsure about your own situation, I encourage you to seek advice directly from the Australian Taxation Office, the Fair Work Ombudsman or a suitably qualified legal or tax professional.
If you’re part of the promotional staffing industry and have general questions about working in the industry, I’m always happy to have a conversation.
Don’t be a stranger.
tamara.haddow@blackdiamondagency.com
Looking for compliant event staffing?
Black Diamond Agency supplies experienced event staff, brand ambassadors, promotional staff, conference staff and corporate hospitality professionals across Australia.
Whether you’re planning a product launch, exhibition, conference, sporting event, retail activation or national campaign, we can help you build the right team.
References
[i] Australian Taxation Office. Employee or contractor – Difference between employees and contractors.
https://www.ato.gov.au/business/employee-or-contractor/difference-between-employees-and-contractors/
[ii] Australian Taxation Office. Employees treated as contractors.
https://www.ato.gov.au/business/employee-or-contractor/employees-treated-as-contractors/
[iii] Australian Taxation Office. Superannuation Guarantee obligations.
A better replacement would be the ATO’s current Super page, which is less likely to become outdated.
[iv] Australian Taxation Office. Employees treated as contractors.
https://www.ato.gov.au/business/employee-or-contractor/employees-treated-as-contractors/
