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PAYG Contractor or Company Contractor?

28th Jul, 2016

PAYG Contractor or Company Contractor?

Many of our contractors ask us to explain the difference between a PAYG Contractor and a Company Contractor, so we thought we’d clear up some of the confusion…

In short, PAYG contractors are individuals employed by us, the agency. As their employer, we are responsible for their payroll, payroll tax and other statutory requirements such as superannuation. PAYG contractors are covered by our WorkCover policy.

PAYG contractors are paid at an hourly rate, which is usually higher than that of a permanent employee to cover holiday entitlements.

A Company Contractor will operate under their own Pty Ltd company and have a registered ABN; they are not considered employees. A Company Contractor will invoice the agency for their time when they submit their timesheet and the agency will pay the Company Contractor on a weekly basis. Depending on initial negotiations with our consultants, a Company Contractor can charge by the hour or by day. Unlike a PAYG contractor, the agency does not deduct PAYG or superannuation. The Company Contractor will have their own insurances, Professional Indemnity, Public Liability (not less than $20 million) and WorkCover. The agency will require evidence of these policies. The Company Contractor will be registered for GST.

So in summary: the differences between a PAYG and a Company Contractor are -

  • The PAYG Contractor is paid a salary whereas a Company Contractor is paid by submitting an invoice for payment of hours worked.
  • Benefits such as annual leave and sick leave are provided to a PAYG Contractor. 
  • The PAYG Contractor is covered by our public liability, professional indemnity and WorkCover insurances. We take care of PAYG and payroll tax.
  • A Company Contractor is responsible for obtaining public liability, professional indemnity and WorkCover insurances. They will have an ABN and be registered for GST.

Want to know more? If you would like further information, please speak to one of our consultants who will be happy to help you.