Why This Keeps Happening
Nobody sets out to break employment law. What happens is much more ordinary than that.
A groomer wants a second pair of hands. The person who turns up already has an ABN, because everyone in this industry seems to. They both prefer it: the business avoids super, leave, payroll and the paperwork, and the worker gets a higher hourly figure and the feeling of running their own thing. An invoice arrives every fortnight. Everybody is happy for about two years.
The reason it happens is arithmetic, and it is worth naming plainly before the law, because the law makes more sense once you have seen the number that people are trying to avoid.
An hour of help is never the hourly rate. Superannuation, leave, workers compensation, and the hours somebody is present but not producing all sit on top, and for a small salon that is the difference between a hire that works and a hire that quietly costs the owner their own wage.
So the temptation is real and it is not villainous. Applied honestly to most of the arrangements we hear described, though, the test below lands on employment.
A note on what this is. We are a pet business software company, not your lawyer or your accountant. Everything below is sourced to Fair Work, the ATO or the legislation, and the sources are listed at the end with the date we checked them. Get advice before you restructure anything.
The Test Changed in August 2024
For a few years the courts gave primacy to the contract. If the written agreement said independent contractor, and the parties genuinely performed something resembling it, the label mostly held.
That is no longer how it works. Section 15AA of the Fair Work Act commenced on 26 August 2024 and directs that whether someone is an employee is determined by the real substance, practical reality and true nature of the working relationship, assessed across the totality of the relationship, including both the terms of the contract and how the contract is actually performed in practice (Fair Work Act 2009; Fair Work Ombudsman).
The practical effect for a pet business is that your contract stopped being your defence. What matters is your Tuesday.
Run through your own Tuesday against the things the test looks at:
| What the test looks at | The question to answer honestly | How it usually falls in a pet business |
|---|---|---|
| Control | Who decides what time they start, which dogs they take, and in what order? | The schedule is yours, which points hard at employment |
| Who the work is done for | Do customers book with your business, pay your business, and complain to your business? | Almost always yours |
| Equipment | Whose table, dryer, clippers, van and shampoo? | Usually yours |
| Delegation | Can they send someone else on Thursday without asking you? | Rarely, and a genuine contractor can |
| Risk and profit | Do they carry commercial risk, or get paid the same whether the day went well or not? | Usually no risk |
| Integration | Do they wear your shirt, appear on your website and answer your phone? | Usually yes |
You do not need all of these to point one way. You need to look at the whole picture and be honest about which way it leans. In grooming, daycare and walking it usually leans one way, because the entire operating model of those businesses is that the business owns the client relationship and the schedule.
If your software is producing a run sheet each morning that assigns named people to named dogs at named times, that document is a fairly clear answer to the control question. It is a useful thing to look at honestly, because it is also the kind of thing an inspector would look at.
Rent a Table, Rent a Chair
Grooming inherited this from hairdressing, and it is the one place where a genuine contracting arrangement is actually possible.
| The version that stands up | The version that does not | |
|---|---|---|
| Payment to you | Fixed rent, earned or not | A percentage of what they bill |
| Who the customer pays | The groomer | The salon |
| Bookings and prices | Theirs | Yours |
| Kit | Their clippers, blades, shampoo, dryer | Yours |
| Client list | Theirs, and it leaves with them | Yours |
| Insurance | Their own public liability | Covered by you |
| Taking Thursday off | Their call | Needs your agreement |
The tell is usually the money flow. If the customer pays the salon, the salon is trading with that customer and the groomer is working for the salon. Calling the payment rent does not change it.
A middle case exists and it is genuinely uncomfortable: the groomer has their own clients and their own kit, but you take the bookings and the payments for them as a convenience. That is worth advice rather than a guess, because it is exactly the arrangement that looks fine until somebody leaves badly.
The Rostered Walker With an ABN
Walking and pet sitting have the same shape in a different costume.
Somebody with an ABN who walks the same six dogs on a route you built, at times you set, with your key safe and your branded lead, invoicing you weekly at a rate you set, is very unlikely to be a contractor no matter what the agreement says. The ABN is doing no work here at all. Plenty of employees have ABNs for unrelated reasons.
The genuine contractor version is a walker who has their own clients and takes overflow from you as a business-to-business referral, sets their own price for it, and can decline. That is a real relationship, and it is also a much less convenient one, which is why so few arrangements actually take that shape.
Superannuation Reaches Further Than Employment
This one catches out people who have correctly worked out that someone is a contractor.
Under the superannuation guarantee, a person engaged under a contract that is wholly or principally for their labour is an employee for super purposes, even if they are genuinely a contractor for every other purpose. Principally for labour means more than half the value of the contract is their labour, the contract is for their personal skills, and they have to do the work themselves rather than delegate it. Having an ABN does not change this (Australian Taxation Office).
Almost every grooming or walking contractor arrangement fits that description exactly, because the whole point of the engagement is the person's hands.
Two dates matter here. The superannuation guarantee rate reached 12 per cent on 1 July 2025. And from 1 July 2026, payday super requires contributions to be made at the same time as the pay rather than quarterly, which removes the float that a lot of small businesses had quietly been relying on (Australian Taxation Office).
If you have been paying invoices to a labour-only contractor and not paying super, that liability has been accruing, and the ATO's employee/contractor decision tool is a free way to find out how exposed you are before someone else does.
Sham Contracting, and Why "I Thought It Was Fine" Got Weaker
The Fair Work Act prohibits three things (Fair Work Ombudsman):
| What is prohibited | What it looks like in a salon |
|---|---|
| Misrepresenting employment as contracting | Telling a new groomer the role is contracting when the arrangement is employment |
| Dismissing or threatening to dismiss to re-engage as a contractor | Letting a bather go on Friday and offering the same shifts back on an ABN on Monday |
| Knowingly making a false statement to persuade an employee to become a contractor | Telling someone they will be better off on an ABN when you know they will not be |
The defence used to be that the employer did not know and was not reckless. The Closing Loopholes amendments replaced it with a requirement that the employer reasonably believed the contract was a contract for services, which turns a question about what was in your head into a question about what a reasonable business owner would have concluded (Fair Work Ombudsman).
That is the practical change. Not looking into it is no longer the safe option it used to be. Civil penalties apply, and they are higher where a contravention is treated as serious.
The consequences of getting it wrong are not only the penalty. Unpaid super, unpaid leave entitlements, unpaid award rates and payroll tax can all be recovered going back years, and it is usually a departing worker rather than a regulator who starts it.
What to Do This Quarter
If you already suspect the answer. Do not restructure on your own reading of a blog post. Run the ATO decision tool, then talk to an accountant or an employment lawyer, and expect the fix to involve back-paying super rather than only changing paperwork going forward. Fair Work also runs a free small business helpline.
If you are about to bring someone on. Employ them. The cost is real, and we have laid it out state by state in what employing actually costs in an Australian pet business. It is cheaper than the alternative when the alternative goes wrong, and it also gets you the thing you wanted in the first place, which is somebody who turns up on the days you need them. How to structure what you pay them, including where commission can and cannot sit, is hourly pay or commission.
If you want the genuine contractor version. Build it properly. Their kit, their clients, their prices, their insurance, their invoice to the customer. Charge rent, not a percentage. Accept that you cannot then tell them when to work.
Where the Software Sits
Worth being straight about this. Petboost does not run payroll. No timesheets, no pay runs, no super calculations, no Single Touch Payroll to the ATO. Australian payroll is a specialist regulated job and we would build a mediocre version of it, so we do not; Xero Payroll, Employment Hero and Deputy do it properly and sit alongside us (Petboost help centre).
What Petboost does hold is the operational record that all of this reasoning is built on: who was rostered, what capacity each person had, which appointments were assigned to them, and what those appointments were worth. When your accountant asks how many hours a person actually worked over the last year, or when you are trying to decide whether an arrangement looks like employment, that history is where the answer lives.
Sources
- Fair Work Act 2009 (Cth), current compilation, section 15AA. Accessed 30 August 2026.
- Fair Work Ombudsman, Whole of relationship test. Accessed 30 August 2026.
- Fair Work Ombudsman, Difference between employees and contractors. Accessed 30 August 2026.
- Fair Work Ombudsman, Sham contracting. Accessed 30 August 2026.
- Australian Taxation Office, Super for independent contractors. Accessed 30 August 2026.
- Australian Taxation Office, Super for employers, superannuation guarantee rate and payday super. Accessed 30 August 2026.
This is general information, not legal, tax or financial advice. Figures inside the diagrams are illustrative worked examples, not survey results.
