Contents
If you’re working as a sub‑contractor, it is important to protect yourself and know your rights. Just like any other business, there are many obstacles that can get in the way of you doing what you truly love – whether it’s managing contracts, resolving a dispute with the head contractor, or not being paid on time (or at all!).
Taking the time to set up proper processes now can help safeguard you from these issues down the track. In 2025, legislative updates and evolving industry practices mean that being well-prepared is more critical than ever.
In this article, we take you through some key steps to ensure you’re ready for the challenges you may face as a sub‑contractor. We also point you to additional resources, such as our guides on unfair contract terms and dispute resolution, to help keep you informed in today’s legal landscape.
Do Your Research
Before signing any agreement or entering into a working relationship, one of the best things you can do is conduct thorough background research. By learning about the head contractor for the job you’re considering, you protect your interests and minimise the risk of being caught up with unreliable businesses. For further insights into assessing contracting parties, check out our guide to contractor versus sub‑contractor arrangements.
What Questions Should You Ask?
Some key details you could ask the head contractor for include:
- Their Australian Company Number (ACN) – note that only registered companies will have an ACN;
- Their registered business name and Australian Business Number (ABN); and
- Any licences they hold – and if relevant, the licence number.
If the head contractor operates a legitimate business, they should have no qualms about sharing this information or answering other related questions. You might also consider cross‑referencing details using ASIC’s registers for additional confidence.
How Do You Verify the Information Provided?
Once the head contractor has shared their business details with you, it’s wise to verify this information. You can do so by checking ASIC’s registers here. ASIC’s registers can help you to:
- Confirm if the company and/or business name is registered by searching the Organisations & Business Names Index;
- Find out who holds the business name and identify other officeholders;
- Determine whether the head contractor or their company has entered into an enforceable undertaking; and
- Ensure that the head contractor or their company is not banned or disqualified from managing companies.
Remember, simply verifying the information does not guarantee that the contractor is safe to work with – you must also learn how to use this data to assess potential risks.
How Can This Information Help You?
Having reliable information about a head contractor is one thing; knowing how to use it to evaluate the potential risks is another. Here’s a non‑exhaustive list to guide you in drawing conclusions about the business:
Business Name
Looking at how long a company has operated under its current business name can give you an idea of its stability and reputation.
Company Status
It is generally safest to work with a registered company. If a company is under external administration (“EXAD”), it may be facing financial difficulties, warranting extra caution. Additionally, if a company has been deregistered, it cannot legally continue to operate.
Company Directors and Officers
Similar to assessing a business name, looking at how long a director or office holder has been with the company can offer clues about its internal stability. Frequent changes in management may indicate operational issues or inconsistent policies. Moreover, if someone appears to hold significant managerial power but is not listed as a director on ASIC, further inquiries are prudent to confirm their authority and ensure they haven’t been disqualified or declared bankrupt.
You may wish to search ASIC’s “banned and disqualified” register. A nil result typically indicates that the director has not been disqualified. Also, ASIC’s “enforceable undertakings” register can be useful since these undertakings are legally binding under the Corporations Act 2001 (Cth).
You may also conduct a personal name search for the director(s) and office holders to see if they are involved with other businesses. For instance, if a director’s past involvement ended in insolvency, it might be a signal to proceed with caution. You can read more on this topic in our article on company structures.
Members
An ASIC search of a private company will reveal information about the company’s members, offering further insight into the people behind the business. Additionally, examining the share capital can signal how much confidence the owners have in the enterprise.
Did you know that you can sign up for free Company Alerts to keep informed about lodging documents, changes in administration, or deregistration applications? Staying updated in real time is essential in today’s fast‑paced business environment.
Have A Written Contract In Place
As a sub‑contractor, contracts are your best friend when a working relationship sours. In this context, the contract – often known as a Sub‑Contractor Agreement – is essential. Ensure you have a written and signed contract in place with the head contractor before commencing work, so that you always have a clear reference point if disputes or issues arise.
- Read Thoroughly: It is crucial to take your time and read the entire Sub‑Contractor Agreement before signing it. Once signed, you are bound by its terms and conditions.
- Negotiations: Use the negotiating process as an opportunity to bolster your protection. For instance, you might request personal guarantees from the head contractor or ask them to register a security interest on the Personal Properties Securities Register (PPSR).
- Dispute Resolution Procedure: We highly recommend that your agreement includes a dispute resolution clause outlining specific steps for addressing late payment, disagreements, or termination. Clear provisions on timelines and payment plans can save you headache later.
- Make Your Own Calculations: Before agreeing to any price offered by the head contractor, perform your own estimate of the time, costs, and materials required. If your services are billed on a time basis, maintain a detailed timesheet with descriptions of your work. Depending on the project, request a deposit as a sign of goodwill to cover initial costs.
- Payment Terms: Your Sub‑Contractor Agreement should clearly detail the terms of payment, including what goods or services are to be provided and how the price is calculated. Avoid including new or additional terms on your invoices.
- Variations To Contract: Changes to a project can happen. Ensure any variations are documented in writing with clear details of modifications to work, price, or delivery dates. This written variation supports the enforcement of your dispute resolution clauses if needed. For further guidance, see our contract review and redrafting resources.
Dealing With Disputes
The best way to avoid disputes is to have a written agreement from the start, so that every party is clear about rights and obligations. This clarity can minimise misunderstandings relating to liability or responsibilities, and the Sub‑Contractor Agreement serves as a reliable fallback if the head contractor fails to meet their commitments.
Even with strong precautions, some disputes may still arise. In such cases, attempt to communicate directly with the head contractor and resolve the matter amicably through alternative dispute resolution (ADR) processes. ADR methods, such as facilitation, mediation, conciliation, or arbitration, are typically quicker, less expensive, and less disruptive than initiating court proceedings.
Some common alternatives to court include:
- Facilitation – an independent third party works with both sides to clarify issues and explore potential resolutions.
- Mediation – a mediator helps facilitate an agreement while leaving the final decision to the parties.
- Conciliation – similar to mediation, but the conciliator may offer non‑binding settlement proposals.
- Arbitration – a more formal process where a tribunal can make binding decisions.
Taking matters to court should always be your last resort given the time and expense involved. For assistance in navigating these complex options, you might find our guide on ensuring clients pay and our free legal consultation service very useful.
How To Make Sure You Get Paid
One of the most important steps to ensure timely payment is to issue a correct invoice from the outset – even small errors can delay payment. If your Sub‑Contractor Agreement sets out a timeframe for invoicing, adhere to it rigorously. When no date is specified, it is common practice to issue invoices on the last day of the month.
What Does Your Invoice Need to Include?
Knowing the details required on your invoice is integral to meeting your tax and business obligations.
If your business is not registered for Goods and Services Tax (GST), you will issue a standard invoice without a tax component.
However, if registered for GST, you must provide a tax invoice that includes the GST amount for each item. To be valid, these tax invoices should include:
- A clear statement that the document is a tax invoice;
- Your identity;
- Your ABN or ACN;
- The date the invoice is issued;
- A description of the goods and/or services provided, including quantity and price;
- The GST amount payable (if applicable);
- For each item, the proportion of GST – either by displaying the GST amount per item or by stating that the total price includes GST.
When the taxable sale amount exceeds $1,000.00, you must also include the buyer’s identity or ABN on the tax invoice. For more details on issuing tax invoices in 2025, refer to the ATO guidance here.
What Can You Do If You Haven’t Been Paid?
While it can be frustrating, there are several steps you can take if payment is delayed:
- Review your Sub‑Contractor Agreement for specified payment terms, dispute resolution provisions, and debt recovery avenues;
- Follow up with the head contractor promptly after the payment due date via a friendly phone call or email;
- Consider initiating dispute resolution options such as negotiation or conciliation as per the agreement;
- If necessary, send a formal letter of demand;
- If there is still no response, you might consider engaging a debt collection agency;
- As a last resort, taking legal action through the courts may be required.
The escalation of debt recovery options often involves increased time and costs, so it is important to carefully weigh the benefits and drawbacks. For a comprehensive overview, please read our advice here.
The Contractors Debt Act 1997 (NSW) continues to provide vital protections for sub‑contractors by allowing the recovery of debts for work performed or materials supplied, particularly in serious cases. We recommend seeking professional legal advice if you decide to pursue this route.
Minimising Your Risk If The Head Contractor Goes Insolvent
The collapse of a head contractor’s business can have a devastating impact on your cash flow. In 2025, enhanced legal safeguards and proactive measures are available for sub‑contractors.
Register A Security Interest
Before signing your Sub‑Contractor Agreement, negotiate with the head contractor to register a security interest on the PPSR in your favour. This adds an extra layer of protection, granting you priority rights over the secured property if the head contractor becomes insolvent.
Keep in mind that enforcing your security interest is not automatic. You must notify the appointed insolvency practitioner of your claim, provide all necessary supporting documents, and request that they secure your assets from any sale. Given the legal complexities involved, seeking professional advice is highly recommended. For further insights, you can review the guidance provided here.
Look Out For Warning Signs
Staying alert to how your head contractor is operating will help you identify potential financial difficulties early. This proactive approach could enable you to secure your payments before it is too late.
Be on the lookout for warning signs such as:
- Consistent patterns of delayed payments (to you or other sub‑contractors);
- High turnover of employees;
- Reduced progress on projects;
- Late delivery or performance of goods and services compared to agreed timeframes; and
- Decreased frequency or complete silence in correspondence.
Other Legislative Protections
Sub‑contractors are further protected by legislation such as the Fair Work Act 2009 (Cth) (FW Act) and the Independent Contractors Act 2006 (Cth) (IC Act). In 2025, these acts continue to offer significant safeguards, including protection from:
- Adverse action: A head contractor cannot terminate your contract simply because you have enquired about or complained regarding your workplace rights;
- Coercion: It is unlawful for a head contractor to threaten you in an attempt to prevent you from enforcing your workplace rights;
- Abuses of freedom of association: For example, it is illegal to threaten adverse action against you for your union membership or non‑membership;
- Sham contracting: This occurs when an employer disguises an employment relationship as one with a contractor to evade employee entitlements. If you’re unsure of your status, our detailed guide on employee versus contractor can help clarify.
Additionally, the IC Act protects you from unfair contracts. Should the terms be excessively harsh or one-sided, you may apply to a court in 2025 to have the contract – or certain terms within it – amended or set aside. When assessing fairness, courts typically consider:
- The actual terms of the contract;
- The relative bargaining power between the parties at the time of negotiation;
- Any undue pressure, influence, or unfair tactics used; and
- Whether the remuneration is significantly lower than what an employee performing similar work would earn, among other relevant factors.
Need More Help?
Ensuring you are protected as a sub‑contractor may seem daunting, but investing time in establishing these processes now is invaluable in the long run. A well‑drafted Sub‑Contractor Agreement not only helps resolve disputes with head contractors but also ensures you get paid. For more detailed advice, explore our comprehensive Contractor vs Sub‑Contractor guide and learn about unfair contract terms.
Keeping up-to-date with the latest legislative amendments is critical. In 2025, recent changes to the Independent Contractors Act strengthen the position of sub‑contractors, providing clearer processes for dispute resolution and enforcing fair contract practices. To stay informed about these and other legal updates, we recommend regularly reviewing our legal tips and resources.
If you’d like assistance setting up robust protection for you and your business – whether it’s drafting an agreement, resolving a dispute, registering a security interest, or another matter – our team of friendly and experienced lawyers are here to help. Reach out for a free, no‑obligations chat at team@sprintlaw.com.au or call 1800 730 617.
Meet some of our Employment Law Lawyers
Get in touch now!
We'll get back to you within 1 business day.
Top 3 Legal Mistakes
Book in a free consultation with us to discuss your legal needs.