Labour Hire Contractor vs Casual Employee in Victoria

Whether a worker supplied through labour hire is an employee or a contractor is decided by how the work is actually done, not by what the paperwork says. Since 26 August 2024 the Fair Work Act looks at the real substance and practical reality of the whole working relationship. A person who works the hours they are given, under your supervision, with your equipment, doing tasks that are part of your operation, is very likely an employee. That describes almost every labourer, picker, packer, storeperson and process worker a labour hire provider supplies, which is why Bluestone engages them as casual employees on our payroll.

This article is for site managers and operations managers at civil contractors, manufacturers and warehouses. It explains how the law tells employees and contractors apart, what a casual employee on a provider's payroll means for your site, and the one situation where a contractor arrangement genuinely fits. It is general information, not legal advice.

The test

How the law tells employees and contractors apart

The label in the contract is a starting point, not the answer.

Whole of the relationship

The Fair Work Act directs attention to how the arrangement works in practice, including control over how and when work is done, whether the worker can delegate the work, who supplies tools and equipment, how the worker is paid, and whether they run a business of their own.

Control is the strongest signal

If your supervisor tells the worker where to be, what to do next and when to knock off, that points strongly to employment. Genuine contractors agree a result and decide how to deliver it.

Equipment and business

A person who turns up with their own boots and works your machines, on your roster, is working in your business. A person who brings and runs their own excavator or truck, quotes the job and carries their own insurance is running a business of their own.

Casual has its own definition

A casual employee is one who has no firm advance commitment to continuing and indefinite work. Casuals receive a loading instead of paid leave, and after six months (twelve for a small business) can choose to move to permanent employment if their work has become regular.

Two site workers in hard hats checking a clipboard and speaking on a two way radio

Who carries what

What a casual employee on the provider's payroll means for you

How the main obligations fall when Bluestone supplies a casual employee to your site.

Wages and award

The provider pays the worker at the award or agreement rate, with the casual loading and any penalties

Superannuation

The provider pays it with wages, under the Payday Super rules that apply from 1 July 2026

WorkCover

Covered by the provider's WorkCover policy from the first shift

Tax

PAYG withheld and reported by the provider through Single Touch Payroll

Long service leave

For construction work, the provider is registered for portable long service leave with LeavePlus

Health and safety

Shared: the host is treated as the employer for safety on its site, and the provider keeps its own duties

When each fits

Casual employees, and the one exception

Casual employee: general labourers, pipe layers and concreters on civil crews, working set hours under your foreman
Casual employee: pickers, packers, storepersons, forklift operators and process workers in warehouses and on production lines
Casual employee: civil labourers and plant operators who run the host's machines
Casual employee: short notice cover and peak season ramps, where people slot into an existing roster
The exception: a plant operator who brings and runs their own machine, quotes the work and carries their own insurance

On manufacturing lines and in distribution centres the work is always directed, rostered and done with the host's equipment, so casual employment is the fit. Civil sites are the same for labourers and trades. The owner operator who brings their own plant is the only arrangement we engage on an ABN.

The cost

Why the cheaper looking option can cost more

An ABN rate for a labourer often looks lower than a casual charge rate because it does not visibly carry superannuation, WorkCover, payroll tax or casual loading. If the arrangement is really employment, those costs have not gone away. They become a liability that can surface later as an underpayment claim, an unpaid superannuation assessment or a WorkCover dispute after an injury. Under superannuation guarantee law, a person paid wholly or principally for their labour is treated as an employee for super purposes in any case.

The host is not shielded by the fact that the worker came through a provider. Hosts share health and safety duties for every worker on their site, as our guide on host employer health and safety duties explains. In Victoria the host must also only use a provider licensed by the Labour Hire Authority, covered in our guide to the Victorian labour hire licence.

The practical approach is simple. Describe the work honestly to your provider: who will supervise it, whose tools and equipment will be used, the hours and how long the job will run. Then check that what happens on site matches what was agreed, because the substance of the relationship is what counts. Our guide to what you pay for in a labour hire rate shows what a casual charge rate carries.

Bluestone Labour Group engages its workers as casual employees on our payroll under the relevant award, with WorkCover and superannuation from the first shift. The only exception is a plant operator who brings their own machine. We hold Victorian Labour Hire Licence VICLHL11535. See civil labourer hire, plant operator hire and warehouse staff hire for the crews we supply, and our guide to same job same pay for how charge rates are affected where an order applies.

Questions

Frequently asked questions

It depends on how the work is done, not on the contract. A worker who works set hours under the host's supervision, with the host's equipment, as part of the host's operation is very likely an employee. Bluestone engages its labour hire workers as casual employees on its payroll under the relevant award.

For a casual employee supplied by a labour hire provider, the provider pays the wages, superannuation and WorkCover, and withholds tax. The host pays the provider's charge rate and shares health and safety duties on its site.

At Bluestone, only for a plant operator who brings and runs their own machine, quotes the work and carries their own insurance. Labourers, trades, controllers, warehouse and production workers are engaged as casual employees.

Casual employees can choose to move to permanent employment with their employer after six months (twelve months for a small business employer) if their work has become regular and they no longer meet the casual definition. For labour hire workers, that employer is the provider, not the host.

See all labour hire services

Contractor or Casual Employee: How Labour Hire Workers Should Be Engaged