Hiring Contractors vs Employees What’s Better for Trades?
If you're scaling your team or delivering new contracts, one big question always comes up:
Should I hire tradespeople as independent contractors, or bring them on as employees?
It’s not just about cost it's about compliance, loyalty, flexibility, and long-term business outcomes. The wrong model can open you up to legal risks, delays, or unnecessary costs.
In this article, we break down the pros and cons of hiring contractors vs employees for trades and help you decide which model suits your business best.
What’s the Difference Between a Contractor and an Employee?
Employees are legally part of your business. You pay them a wage or salary, cover their superannuation, withhold tax, and offer leave entitlements. You also provide direction on how, when, and where they work.
Contractors (sometimes called subbies or sole traders) run their own business and invoice you for services. They generally supply their own tools, cover their own tax/super, and work on a job-by-job basis.
Pros of Hiring Contractors
- More flexibility hire on a job-by-job or short-term basis
- No super or leave obligations they manage their own
- Often quicker to engage less paperwork or onboarding
- Cost control you only pay for work completed
- Good for overflow or urgent projects especially when timelines are tight
Cons of Hiring Contractors
- Higher hourly/daily rate than an employee
- No control over availability they may take other jobs
- Limited loyalty no obligation to stick with you
- Risk of misclassification if treated like an employee, you may still be liable for entitlements
- Not ideal for team building harder to create consistency and culture
Pros of Hiring Employees
- Greater loyalty and stability ideal for long-term roles
- Lower cost per hour when you account for commitment and productivity
- You control the schedule set start times, job sites, and standards
- Build a real team stronger culture, smoother processes, better communication
- Better compliance especially on government, union, or high-risk projects
Cons of Hiring Employees
- More admin and compliance you handle payroll, super, insurance, and entitlements
- Higher upfront onboarding time
- Ongoing wage commitment even if work slows
- Takes time to find the right person unless you use an agency like HJ Recruitment
Key Compliance Risk: Contractor Misclassification
One of the biggest risks in hiring contractors is treating them like employees. If they:
- Work regular hours
- Use your equipment
- Follow your instructions
- Don’t advertise to other clients
Then the ATO or Fair Work may deem them an employee and you may owe backpay, super, leave, and penalties.
This is especially risky in trades where many businesses use the contractor model informally.
If in doubt, get legal advice or switch to permanent recruitment through a trade-specialist agency like HJ Recruitment.
When to Use Contractors
Hiring contractors works best when:
- You need help urgently for a short-term project
- You don’t have internal systems or capacity for onboarding
- You’re testing a new service or region
- You want to keep headcount low
- You only need specific skills for a defined task
When to Hire Employees
Hiring employees makes more sense when:
- You want long-term loyalty and team culture
- You value stability and reduced turnover
- You need workers on a set schedule, reliably
- You’re scaling and want to build predictable capacity
- You want to avoid compliance risk from contractor misclassification
What We Recommend at HJ Recruitment
At HJ Recruitment, we support both contractor and employee placements but for most trade-based roles, we recommend hiring permanent employees.
Why?
- They’re more invested in your company’s success
- They stay longer, saving you from constant rehiring
- You reduce the legal risks of misclassifying contractors
- You build a stronger brand and internal team culture
We provide permanent recruitment for:
- HVAC technicians
- Electricians
- Plumbers
- Mechanical fitters
- Boilermakers
- And more — across Australia
See how we work
Contact our team
Final Thoughts
Contractors give you short-term speed and flexibility. Employees give you long-term strength, stability, and compliance.
There’s a time and place for both but if you're looking to build a business that scales, reduce risk, and deliver consistent quality, permanent employees are usually the smarter move.
Let us help you find the right people fast, qualified, and ready to work.
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