Employee or Contractor?

Hatfield Case Puts SG Back in the Spotlight

The Federal Court has weighed in once again on the meaning of "employee" for superannuation guarantee (SG) purposes — and it’s clear the line between employee and contractor isn’t just legal, it’s functional.

In Commissioner of Taxation v Hatfield Plumbing Pty Ltd (Trustee) [2025] FCA 182, the ATO challenged a decision that a plumber was not entitled to SG. The plumber worked under a contracting arrangement, was paid hourly, and did the work personally. Sounds like an SG liability, right?

Not quite.

What the AAT decided — and why the ATO disagreed

Initially, the AAT had found no SG liability. Even though the contractor was paid hourly and performed the work personally, the Tribunal determined that the contract was “for a result”, not for labour — meaning it didn’t fall under section 12(3) of the SGAA.

The ATO didn’t accept this and appealed, arguing that the hourly payment and personal performance were key indicators of a labour-based engagement.

What the Federal Court said

The Court ultimately agreed with the AAT and dismissed the Commissioner’s appeal. Key takeaways from the judgment:

The engagement was found to be for a specific result, not just for the provision of labour — even though payment was calculated hourly.
The method of payment (e.g. hourly rate) was considered a neutral factor, not determinative of the relationship.
The Court confirmed that the overall character of the contract is what matters — not any single indicator.

This decision affirms the principle that context, contract, and control all matter, and reinforces the idea that not all personal services trigger SG.

What this means in practice

This ruling highlights how complex and fact-specific contractor arrangements can be. For practitioners advising on SG obligations:

Hourly rates and personal performance don’t automatically mean SG applies.
The critical question is: what is the contract really for — the labour itself, or the delivery of a result?
Businesses must consider the overall structure and purpose of the engagement, including autonomy, control, and the nature of the work delivered.

But hold on — the ATO’s not done

The Commissioner has lodged an appeal against this decision, meaning the High Court may get involved. So once again, we’re in a holding pattern — with a court decision favouring contractors, and an ATO determined to hold the line.

For now, firms should:

Review contractor arrangements that sit in the grey zone — especially where personal services are involved but the agreement is project- or outcome-based.

Ensure that contracts clearly define deliverables and expected results, not just hours worked.

Warn clients that SG compliance reviews are likely to continue, regardless of the current court outcome.

Final Thoughts

Hatfield reopens the SG definition debate and reminds practitioners that employment status isn’t just about labels — it’s about substance. With another appeal pending, the uncertainty continues — but for now, businesses have another case in their corner when defending well-structured contractor engagements.