Note that the opt out process does not affect the rights of the the contractor under the Superannuation Guarantee (Administration) Act.

Opt Out Notices

National system businesses and individuals are subject to the whole of relationship test to determine a worker's status as either a contractor or an employee. This assessment method is based on the employment definition effective from 26 August 2024, and outlined in section 15AA of the Fair Work Act. For more information on this test, see Lawpath's article.

Workers earning above the contractor high income threshold can elect to bypass the whole of relationship test for classification purposes. This is achieved by submitting a written opt out notice to their engaging business. Consequently, the start of relationship test becomes the determining factor for the worker's classification. For more information on the start of relationship test, see the Fair Work Ombudsman website.

Contractor High Income Threshold

As of 1 July 2024, the contractor high income threshold is set at $175,000.

Implications of Opting Out

Choosing to opt out may lead to a worker being classified as a contractor under the start of relationship test, even if they would be considered an employee under the whole of relationship test.

Should a worker's status change, they should evaluate how this affects their entitlements from the point of status change.

Process for Opting Out

When a worker submits a written opt out notice to the business, the start of relationship test will be applied to their working relationship from that date, replacing the whole of relationship test.

The notice must indicate the worker's belief that their earnings for work performed under the relationship exceed the contractor high income threshold at the time of submission.

Cancelling Opt Out Notice

A worker can cancel their opt out notice at any time by providing written notice to the business. Upon cancellation, the whole of relationship test is reinstated from the day of notice withdrawal.

Workers are limited to one opt out notice per working relationship.

Informing Workers of Opt Out Notices

The engaging business may notify a worker of their ability to opt out if:

• The business believes the worker might be classified as an employee under the whole of relationship test
• The worker's earnings surpass the contractor high income threshold

The business must provide this notification in writing.

Workers wishing to opt out have a 21-day window to submit an opt out notice to their engaging business.