What’s the difference between employees and contractors in design?

creative industries

Employees work for an employer on an ongoing basis.  However, contractors are self-employed individuals who work on a project-by-project basis for clients.

The differences between contractors vs employees for creative industries in Australia are listed below.

Creative contractors vs employees have different legal status


Compared to contractors, employees in the creative industries are entitled to more benefits and protections, including minimum wage, superannuation, and leave entitlements. In contrast, independent contractors don’t receive these same benefits.  Design contractors are generally responsible for their own taxes, insurance, and other financial obligations.

Design contractors enjoy more autonomy 

Contractors are generally free to set their own hours and work methods.  However, employers generally have the right to direct their design employees’ work to a greater degree. Flexibility and autonomy may be especially important for designers when considering employment status as an independent contractor or employee.  

Contractors & employees are paid differently as creatives

Contractors and employees are also paid and engaged differently. Regular wages and salaries are typically paid to employees, along with bonuses and commissions. Unlike employees, contractors are usually paid on a project-by-project basis.  Contractor hourly rates and payment terms can be negotiated.

Contractors and employees

Different tax & reporting obligations for employees vs contractors

Contractual workers are classified differently under Australian law than employees. Employers have different legal and tax obligations for contractors versus employees.  Different obligations may apply regarding tax, superannuation, workplace health and safety, and other regulatory requirements.

It is important to note that the distinction between contractors and employees can be difficult to make, and there are no strict rules about how workers are classified. Employees or contractors are determined based on factors such as control, independence, risk, responsibility, and payment method, according to the Australian Taxation Office.

Need to manage payroll for contractors and employees?

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