The  Superannuation Guarantee (Administration) Act 1992 (Cth) (SG Act) deems certain workers to be employees for the purposes of Superannuation Guarantee Contributions (SGC) even if the worker is engaged in an independent contractor relationship. This deeming provision will apply if the person works under a contract that is wholly or principally for their labour.

In On Call Interpreters and Translators Agency Pty Ltd v Federal Commissioner of Taxation (2011)1 (On Call) the Federal Court (Court) ruled this deeming provision will apply when an independent contractor provides personal services in an "employment-like setting which was not of a domestic or private nature".2 According to the Court, an employment-like setting arises when, in all the circumstances, the labour component of the contract in question could have been provided by the recipient of the labour employing an employee.

However, the Full Federal Court did not follow the On Call approach in the Dental Corporation Pty Ltd v Moffet (2020)3 decision.   


The Court determined that, for the purpose of the extended definition of an employee in section 12(3) of the SG Act, the question is rather whether the contract is wholly or principally 'for' the labour of a person. The meaning of 'for' required examination of the purpose of the contract from the perspective of the person who is receiving the benefit of the labour.

The Court applied this approach to a dentist working under a services agreement (an independent contractor agreement) with a company carrying on a dental practice. The proper inquiry was what the company received under that agreement. The dentist was to provide dentistry, practice management and, when requested by the company, assistance to the company to guide it on how it should provide administrative services to him. He was also required to determine appropriate fees and maintain patient records. He was required to do all of these things personally but had the option of procuring other people, engaged by the company, to do them as well.

The Court then considered whether, in addition to the labour of the dentist, the company received other benefits under the services agreement. The remuneration structure under the agreement gave rise to a revenue stream to the company. Those revenues were collected either as a result of the dentist's own labour (as a dentist) or by his management of the other dentists and health care professionals within the practice. Therefore, in addition to the labour of the dentist, the agreement provided the company with the benefit of the dentist's undertaking to ensure the practice would achieve a minimum cash flow, which was backed up by the company's right to reduce his monthly drawings by 50 per cent until any shortfall was rectified.

While the flexibility and independence afforded to him under his services agreement affirmed the conclusion at trial that the dentist was an independent contractor and not an employee at common law, such that he was not entitled to be paid annual leave or long service leave, it did not preclude the finding he was an 'employee' for the purposes of section 12(3) of the SG Act because the agreement substantially required the dentist to provide dentistry services to patients of the practice and practice management to the company.

The Court observed that "like the dancer and the dance"4, these two benefits cannot be disentangled although they remain conceptually distinct. The revenues derived for the company under the agreement were merely the consequence of the application by the dentist of his labour under that agreement. The minimum cash flow requirement was inextricably related to his promise to provide his labour, making the services agreement wholly or substantially 'for' the labour of the dentist.

For this reason, the Court concluded the payments made to the dentist attracted SGC obligations.

Lessons for employers

The Court's finding is a reminder that the terms of a services agreement are not determinative of the true relationship and the reality of the engagement. The approach to the debate on employment remains multi-factorial and will absorb evidence of the practical performance of the agreement.

The result of this decision may be that many contractors previously marked as outside the scope of compulsory superannuation payments will in fact have been owed this entitlement.

Employers should review the substantial purpose of their existing independent contractor agreements for the purposes of section 12(3) of the SG Act, as they may be required to make superannuation contributions, even if an independent contractor is held not to be an employee at common law.


1 On Call Interpreters and Translators Agency Pty Ltd v Federal Commissioner of Taxation (No 3)  2011 FCA 366; 214 FCR 82.

2 Ibid 306.

3 Dental Corporation Pty Ltd v Moffet  2020 FCAFC 118; 297 IR 183.

4 Ibid 103.

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