Your Pty Ltd Isn’t Just a Shell. The Fair Work Commission Just Proved It.

The gig economy has made one thing very clear: plenty of people are working through their own companies without really thinking about what that means legally.

And regulators have noticed. The Fair Work Commission and the ATO are both paying close attention to contractor arrangements right now, and a recent FWC decision is a sharp reminder of why getting this right matters.

What Happened in This Case

In Anderson v Vektoro Pty Ltd [2026] FWC 1775, a contractor named Brendon Anderson provided services through his own company, TestAI Solutions Pty Ltd, to a business called Vektoro. When the arrangement ended, Anderson lodged a general protections claim arguing he had been unfairly dismissed.

There was one problem. TestAI had its own LinkedIn profile. It advertised services. It listed a multidisciplinary team. It ran as a real, independent business. The contract sat between TestAI and Vektoro, not between Anderson personally and Vektoro.

Deputy President Dean was not persuaded by Anderson’s argument that TestAI was merely an invoicing entity. The Commission found he was not an employee of Vektoro, or of anyone else named in the claim. No employment relationship. No dismissal. Application dismissed.

This Is Not a New Problem

The courts and the Commission have been drawing this line for years. In Hollis v Vabu Pty Ltd (2001) 207 CLR 21, the High Court made clear that calling someone a contractor does not make them one. The actual nature of the relationship matters more than the label on the contract.

In Personnel Contracting Pty Ltd v CFMMEU [2022] HCA 1, the High Court refined the test further, placing greater emphasis on the terms of the written contract where one exists. But the Court was clear that where the arrangement is a sham, or where the written terms do not reflect reality, those terms carry less weight.

More recently, in CFMMEU v Personnel Contracting [2022] HCA 1 and ZG Operations v Jamsek [2022] HCA 2, the High Court confirmed that courts will look at the totality of the relationship. Structure matters. Documentation matters. But so does the day-to-day reality of how the work actually gets done.

The Anderson decision fits squarely within this line of authority. Where the contractor has genuinely set up and operates a real business entity, the Commission will hold them to that structure. You cannot build a business, market it as a business, and then claim employee protections when things go south.

Why Contractors Are Under the Microscope Right Now

It is not just the Fair Work Commission watching this space. The ATO has had contractors in its sights for a long time, and the pressure is only increasing.

Here is the commercial reality. When someone is engaged as an employee, the employer withholds PAYG tax and pays superannuation on top of wages. When someone is engaged as a contractor, neither of those things happens automatically. The individual is responsible for their own tax and super.

The ATO loses guaranteed upfront revenue. And based on its own data, a significant number of contractors are not meeting their tax and super obligations in full. The agency has made no secret of the fact that it views some contractor arrangements as a mechanism to avoid employer obligations, not a genuine commercial choice.

Payday super makes this more urgent. From 1 July 2026, employers will be required to pay superannuation at the same time as wages, rather than quarterly. The government has been explicit that this reform is partly designed to close the gap on unpaid super, which currently runs into billions of dollars annually. Contractors who are genuinely employees will be caught in this net.

If the ATO determines your contractor is actually an employee, you face back-payment of super, penalties, and interest. Payday super means those obligations will accumulate faster and the liability window gets shorter.

The Primary Person Test: A Practical Rule of Thumb

One principle worth understanding, even if it is not codified in quite these terms, is what practitioners sometimes call the primary person test.

If the individual named in the contract is the one actually performing the work, and not genuinely deploying a team or substituting another resource, the arrangement looks a lot more like employment than a commercial services contract. The contractor entity is, in substance, just a vehicle for one person’s labour.

At minimum, if that individual is performing the labour personally and regularly, you should be paying their superannuation guarantee contributions. The ATO’s own guidance makes clear that super can be owed to contractors who are engaged predominantly for their labour, regardless of how the arrangement is structured on paper.

This catches a lot of businesses off guard. They assume the Pty Ltd structure provides a clean separation. It often does not.

If It Quacks Like a Duck: A Sham Contracting Checklist

Before you engage someone as a contractor, or before you assume your current arrangements are solid, run through this list. The more boxes you tick, the more your arrangement looks like employment.

• The same person performs the work every time and cannot send a substitute
• You set the hours, location and method of work
• The person works exclusively or predominantly for your business
• You supply the tools, equipment or systems they use
• The person is paid by the hour or day, not by deliverable or project outcome
• The contract was drafted by you and the person had little ability to negotiate terms
• The person has no real business presence, no other clients, no team
• The Pty Ltd was set up at your suggestion or as a condition of engagement
• The person receives leave, allowances or other employment-style benefits
• The arrangement has continued for years with the same conditions

If several of these apply, you are not looking at a contractor arrangement. You are looking at employment with extra paperwork. That distinction matters enormously when the ATO or the Fair Work Commission comes knocking.

What to Do About It

If you engage contractors, now is a good time to review those arrangements. Look at the substance, not just the structure. Consider whether superannuation is owed regardless of how the contract is worded. Make sure your agreements reflect genuine commercial terms.

If you are a contractor operating through your own entity, understand what that means. The Anderson decision is a useful reminder that the structure you choose can work in your favour, but it also means you have taken on the obligations that come with running a business.

Getting this wrong is expensive. We help businesses review their workforce arrangements, identify the risk, and fix it before it becomes a problem. If you want a second set of eyes on your contractor model, get in touch.