Expert Insight: How to Manage your Contractor Payroll

What’s your contractor payroll approach? With today’s workforce made up of so many different categories of workers, the process of paying them has become increasingly complex.

There are differences in how you pay (or should pay) your permanent employees, versus your contingent workers, for example. And there are differences in bonus structures, statutory benefits and other entitlements.

Paying your blended workforce requires the right structures and processes to be established. It’s a multifaceted operation. Today, we’re looking into the various considerations you need to make, to establish a well-oiled contractor payroll machine.


Contractor Payroll Management


outsource payroll

Employees are paid via your payroll operation. Contractor payroll is typically undertaken via Accounts Payable.

contractor payroll solutions

Establish visibility of your entire contingent workforce population. In doing this, you’ll get an accurate take on the true cost of your contractor payroll. This is best achieved via a centralised contingent workforce management solution, with an integrated vendor management system.

contractor payroll

You’re not responsible for withholding superannuation, payroll tax, and other statutory obligations for your contingent workforce. Make sure you seek advice on all legislative compliance issues, so your contractor payroll is accurate and lawful.

outsourcing the payroll process

Make sure you classify your contingent workers accurately – this is essential, so you don’t run afoul of ATO and Fair Work Ombudsman rules, and so you’re not over or inaccurately paying contingent workers in your business.

contractor payroll services

Centralise your contingent worker hiring. This is best achieved via a strategic contingent workforce management strategy. In this way, you won’t experience rogue hiring of contingent workers that may not technically appear on your centralised contractor payroll books.

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Establish the right payment structure for all categories of contingent workers. Some workers will be Statement of Work, where milestone payments are made as well as project completion payments. Others will be only on completion of the contract. The classification of the worker will determine the nature of payment to them.

outsourced payroll

Look to engage the experts who can offer a water-tight contractor payroll solution. Your expert partner will ensure you’re not exposed to compliance risks and taxation obligations. And, they’ll help you streamline the management of your entire contingent worker population.


Make sure Your Contractor Payroll Processes Stay on Track


Here are some useful links to help your contractor payroll processes stay on track:

Australian Taxation Office: This is the central source of information about your tax and other statutory obligations, for managing and paying contractors.

Fair Work Ombudsman: Here, you’ll find all the information and advice you’ll need about workplace rights, and the regulations around engaging and paying contract workers.

Superannuation for Contractors: This link provides insights into superannuation obligations for certain types of contractors.

Employee or Contractor: This link will help you determine the correct categorisation of your contingent workers, and ensure all workers in your business are correctly classified.

In addition to these links, we also suggest you seek legal advice and the advice of trusted contingent workforce management specialists (like CXC).


If you’d like to discuss contingent worker payment solutions with me, you can reach me here. I look forward to hearing from you.