Gig Economy and Platform Worker Compliance: What Australian Businesses Must Know

The gig economy transformed how millions of Australians work — and the Closing Loopholes Act 2023 and Closing Loopholes No. 2 Act 2024 transformed how that work is regulated. If your business uses gig workers, platform workers, or what were previously called "independent contractors," the rules have fundamentally changed.

The New Employee Definition

The single most significant change from the Closing Loopholes reforms is the new test for determining whether a worker is an employee or a contractor.

Prior to 26 August 2024, the legal test for employment focused heavily on the terms of the written contract between the parties — a "multi-factor" test that gave significant weight to what the contract said.

From 26 August 2024, the Fair Work Act requires courts, the Fair Work Commission, and employers to assess whether a worker is an employee by looking at the real substance, practical reality, and true nature of the relationship — not just the contract terms.

This is a major shift. Under the old test, a carefully drafted contractor agreement could often establish contractor status even where the economic reality resembled employment. Under the new test, the economic reality matters more than the contract label.

Factors That Point to Employment

Factors the courts and the Commission consider when assessing the real nature of the relationship include:

• Whether the worker can subcontract or delegate the work to others
• Whether the worker sets their own hours and rates
• Whether the worker bears financial risk (provides their own equipment, takes on clients independently)
• Whether the worker has a separate trade or business they genuinely conduct
• The degree of integration into the engaging business's operations
• Whether the worker receives paid leave and other employee entitlements
• Whether the working arrangement looks like employment in practice

If a food delivery rider, for example, works exclusively (or almost exclusively) for one platform, has no genuine ability to build their own client base, and earns a wage-like income with no real capital investment or business risk — they may now be assessed as an employee under the new test.

Regulated Platform Workers: A New Category

The Closing Loopholes reforms also created a new minimum standards framework for workers who are not employees but work through digital labour platforms.

The Fair Work Commission has the power to make Minimum Standards Orders for employees of digital labour platforms — covering things like:

• Pay rates
• Insurance requirements
• Working conditions
• Dispute resolution processes

The digital labour platforms covered include app-based delivery platforms and rideshare platforms. These orders can apply to genuine independent contractors who use those platforms.

For businesses that use gig workers through such platforms, this means:

• The workers may have minimum standards that apply to them regardless of contractor status
• The platform is responsible for compliance with those standards, but engaging businesses may have related obligations

Who Is a Casual Employee vs a Gig Worker?

The distinction between a casual employee and a gig worker/contractor matters for compliance purposes:

• A casual employee has an employment relationship with your business — they are entitled to the NES, a casual loading, and (after 12 months) consideration for conversion to permanent
• A contractor has a commercial contract with your business — they are responsible for their own tax and super, and are not entitled to employment entitlements

Under the new employee definition test, many workers who were previously treated as contractors are now likely to be employees. The consequences of misclassification include:

• Back-payment of employment entitlements (annual leave, sick leave, super, penalties)
• Penalties for sham contracting
• Tax liability for PAYG withholding not deducted

Sham Contracting: The High-Risk Zone

Sham contracting is when an employer tries to represent an employment relationship as an independent contracting arrangement to avoid employment obligations. It is illegal under the Fair Work Act.

The sham contracting provisions make it unlawful to:

• Misrepresent employment as independent contracting
• Dismiss an employee to re-engage them as a contractor
• Make false statements to induce an employee to become a contractor

Penalties for sham contracting have been significantly increased under the Closing Loopholes reforms. Civil penalties can reach $16,500 per contravention for an individual and $82,500 per contravention for a corporation.

From January 2025, reckless sham contracting — doing it without caring whether it is a sham arrangement — attracts higher penalties.

What If Your Business Uses Food Delivery, Rideshare, or Task Platform Workers?

If you use workers from platforms like Uber, Airtasker, ServiceSeeking, or similar:

• The platform relationship is primarily between the worker and the platform
• However, if you are the engaging business (e.g., you use Airtasker to engage a tradesperson to do ongoing work for your business), you need to assess whether the working arrangement might actually be employment
• Sole reliance on a platform's labelling of workers as "contractors" does not protect you under the new employee definition test

Engaging Genuine Contractors: How to Reduce Risk

If you genuinely engage independent contractors (not employees), reduce your risk by:

1. Ensuring the commercial reality matches the contract — contractors should genuinely have their own business, clients, and capital
2. Not exercising control over how the work is done — provide outcomes, not detailed instructions
3. Allowing delegation and subcontracting — genuine contractors can send someone else to do the work
4. Reviewing ongoing arrangements — a short-term project contractor who becomes a long-term regular engagement may have drifted into employment territory
5. Documenting the commercial relationship — scope of work, invoicing, ABN, separate business identity

Superannuation for Contractors

Even genuine contractors may be entitled to superannuation from you under the Superannuation Guarantee (Administration) Act if they:

• Work under a contract that is wholly or principally for labour
• Are not associated entities

This catches many arrangements where the "contractor" provides personal services rather than a commercial outcome. Check whether your contractor arrangements trigger a super obligation — it is separate from the employment question.

How Reguladar Helps

The Closing Loopholes reforms have significantly changed the landscape for businesses that use contractors and gig workers. Reguladar tracks your employment and contractor compliance obligations under the Fair Work Act — including the new employee definition rules — and surfaces what has changed and what it means for your specific business.

If you use contractors or platform workers, Reguladar helps you understand whether your arrangements remain compliant under the new test.

Understand your contractor and employment obligations. Start your free compliance check at Reguladar and get your complete workforce compliance picture today.