NDIS Contractor Compliance: Managing Independent Contractors and Sham Contracting Risk
NDIS contractor compliance explained: the 2024 employee test, sham contracting penalties, super you still owe, and how to structure contractors safely.
What counts as a genuine independent contractor
The new employee-vs-contractor test (from 26 August 2024)
Employee or contractor: the indicators
What sham contracting is — and the penalties
Superannuation you owe even to genuine contractors
What it costs when a 'contractor' is really an employee
NDIS obligations do not transfer to the contractor
Reform pressure: prove-and-pay, registration and records
How to structure a compliant contractor arrangement
Mistakes providers make
Decide: contractor, casual or employee
Frequently asked questions
Can I engage NDIS support workers as independent contractors?
You can, but only if the relationship is genuinely a contractor one — they control their work, can delegate, carry commercial risk and insurance, and work for other clients. Most sole-trader support workers doing your rostered shifts under your policies are legally employees regardless of holding an ABN. Since 26 August 2024, Fair Work looks at the real substance of the relationship, not the written agreement.
Do I have to pay super to a contractor support worker?
Often yes. Under the Superannuation Guarantee (Administration) Act, a contractor engaged wholly or principally for their labour is treated as an employee for super purposes, even if they are a contractor for everything else. A hands-on support worker almost always falls inside this rule, so you must pay super guarantee (12% from 1 July 2026) or risk the non-deductible Superannuation Guarantee Charge. Confirm current details on ato.gov.au.
What are the penalties for sham contracting?
Sham contracting breaches sections 357 to 359 of the Fair Work Act, and civil penalties run into tens of thousands of dollars per contravention, with far higher maximums for serious contraventions since the Closing Loopholes reforms. On top of penalties you still owe back-pay, leave, super and any SCHADS award shortfall. Confirm current penalty-unit figures with the Fair Work Ombudsman before relying on a number.
Is a signed independent contractor agreement enough to protect me?
No. Under the test that commenced on 26 August 2024, a written agreement is only one factor among many. If the day-to-day reality — control, rostering, exclusivity, no delegation — looks like employment, the worker is an employee whatever the contract says. Structure the actual working relationship correctly rather than relying on paperwork.
Am I still responsible for NDIS compliance if the worker is a contractor?
Yes. The NDIS Code of Conduct binds both workers and providers, and as the provider you remain accountable for worker screening, quality, duty of care and reportable incidents. Engaging someone as a contractor does not transfer those obligations to them, so verify clearances and qualifications for contractors exactly as you would for employees.