Hiring a virtual assistant (VA) can be a game-changer for your business, providing the support you need to focus on growth and strategy.
Many Australian businesses fall into the trap of assuming that hiring a virtual assistant will wipe out any obligation to pay for employee expenses such as superannuation or workers’ insurance.
We’ve asked our go-to Australian legal expert, Riz (Founder and Director of Foundd Legal), to help set the story straight before you sign an Australian virtual assistant contract.
Understanding How Your Australian Virtual Assistant Operates
Before determining whether you need to pay superannuation, it’s essential to understand the different ways virtual assistants operate. Let’s explore the most common business structures for VAs in Australia.
1. Remote Employees
An Australian virtual assistant hired as a remote employee works directly for your company under an employment contract.
They are considered part of your team and are typically paid a regular wage or salary.
They are entitled to the same benefits and protections as other employees, including superannuation, paid leave, and workers compensation.
2. Sole Trader Contractors
A sole trader is a business structure set up under the owner’s name, where the business and the individual are legally the same entity.
The business declares its income through the owner’s personal tax return, making it a straightforward option for small business owners, freelancers, and contractors. Sole traders must have an Australian Business Number (ABN) to operate, and if the business turnover exceeds $75,000 annually, they must also register for Goods and Services Tax (GST).
One important aspect of engaging a sole trader, such as an Australian VA, is that they bear unlimited liability, meaning they are personally responsible for all business debts and obligations. As sole traders, they manage their own business operations, including tax and insurance. However, it’s crucial to determine whether they are classified as independent or employee contractors under ATO guidelines, as this affects tax and legal obligations for both parties.
If they are classified as an employee contractor, you may have similar obligations to those for remote employees. It is crucial to review the ATO guidelines to determine whether your Australian virtual assistant sole trader is an independent contractor or an employee contractor.
3. Company Contractors
Some virtual assistants operate through a company structure.
In this case, the VA is an employee of their own company, which provides services to your business.
Your business contracts with the VA’s company, not the individual VA directly. A company is responsible for these for its own employees.
4. Partnership Contractors
Sometimes, a virtual assistant might operate as part of a partnership.
A partnership involves multiple owners and requires a TFN. Like sole traders, partnerships also have unlimited liability for business debts.
Like company contractors, your business contracts with the partnership entity, not the individual VA.
Superannuation Obligations Based on Engagement Type
Now that you understand the different operational structures of VAs, let’s dive into your superannuation obligations based on each type of engagement.
1. Remote Employees
If your Australian VA is a remote employee, you are legally required to pay superannuation contributions for them. You should remain up to date on your current and upcoming superannuation guarantee (SG) obligations.
This is a mandatory contribution, irrespective of whether they work in your office or remotely.
2. Sole Trader Contractors
When engaging a sole trader, you need to determine if they are classified as an employee contractor or an independent contractor for superannuation purposes according to the ATO’s criteria. This classification will affect your obligations significantly.
To verify their status, use the ATO’s decision tool to assess your situation.
Employee Contractor
If the sole trader is considered an employee contractor for superannuation purposes, you must pay superannuation and workers’ compensation insurance.
Furthermore, you must pay the superannuation directly to the sole trader’s nominated superannuation fund and NOT to the sole trader.
Factors that may indicate this classification include if you control how they work, if they provide services exclusively to your business, or if they do not have an independent business structure.
You must pay the superannuation directly to the sole trader’s nominated superannuation fund and NOT to the sole trader.
Independent Contractor
If the sole trader is classified as an independent contractor for superannuation purposes, they are responsible for their own superannuation and insurance. You are not required to make superannuation contributions.
You should still ensure that your contract specifies that the VA is responsible for taking out appropriate insurance policies and making payments to its superannuation fund.
3. Company Contractors
You generally have no superannuation obligations when dealing with a VA operating through a company.
The company itself is responsible for paying superannuation to the VA as an employee of that company.
However, you should ensure that your contract specifies that the VA’s company will be responsible for meeting all employee entitlements.
4. Partnership Contractors
For VAs working within a partnership, your business is contracting with the partnership entity.
Like a company, the partnership is responsible for paying superannuation and other entitlements to its partners or employees.
There is no obligation to pay superannuation directly, but it’s wise to include clauses in your contract confirming this arrangement.
Additional Obligations: Workers’ Compensation Insurance
Beyond superannuation, Australian businesses may also have obligations related to workers’ compensation insurance when engaging an Australian virtual assistant:
- Remote Employees: You must provide workers’ compensation insurance as your state or territory legislation requires.
- Sole Trader Contractors classified as Employee Contractors (see above): If the sole trader is deemed an employee contractor, you may need to provide workers’ compensation insurance as you would for a regular employee.
- Independent Sole Trader Contractors, Company Contractors, and Partnership Contractors: Generally, you are not required to provide workers’ compensation insurance for these contractors. However, you should verify that they hold their own insurance to cover work-related injuries.
💡 DID YOU KNOW?
When you list a project or role with the Virtual Assistant Lead Network, you can specify what type of structure you want your VA to be operating their business under when completing your list of “Requirements” or “Bonus Points” (nice-to-haves).
Either Way, You Should Pay
While you may determine that you are not obligated to pay superannuation or workers’ compensation insurance, you should understand that a fair pay rate will still cover these costs.
Before you compare the rates you would expect to pay an employee with those quoted by an independent virtual assistant contractor, consider the “hidden” costs and minimum standards that come with employees, including:
- The current minimum wage in Australia;
- Casual loading, which increases the minimum wage for Australians employed on a casual basis;
- The Super Guarantee that employers are required to pay Australian employees on top of wages and casual loading;
- Employee leave entitlements (holiday, sick, carer’s etc.);
- Insurance (workers’ compensation, professional indemnity etc.);
- Computer equipment and furniture;
- Standard software licenses;
- Phone and internet accounts.
Keeping your Business Legally-Legit
Hiring an Australian virtual assistant can be a great way to support your business, but it’s vital to understand your legal obligations.
Depending on how your VA operates, you may be required to pay superannuation and provide workers’ compensation insurance.
Be sure to classify your VA correctly, review your contracts, and consult a legal or financial professional to ensure compliance with all relevant laws and regulations.
Cost-Effective Legal Support
Navigating the complexities of business structures and superannuation can be daunting.
We have personal experience purchasing and using Foundd Legal’s templates, and they are our preferred supplier for all our legal business needs, so you can trust that this recommendation comes with a genuine tried-and-tested seal of approval from Virtual Assistant Lead Network.
Gain Peace of Mind with Foundd Legal Templates
Using Foundd Legal templates ensures your business is protected with clear, legally-sound agreements developed by Australian lawyers and tailored to your needs.
Riz has been a lawyer for over 20 years and is a creative entrepreneur… so she brings first-hand experience, insight and legal know-how to all the tricky processes and challenges businesses face during start-ups and growth.
📌 OUR FAVOURITES
Here are the VA Lead Network’s favourite legally legit templates from Foundd Legal:
PSSST… use the discount code ‘THOUGHTPENNY’ to snag a huge 15% discount, or join the Legally Legit Lounge (see below) to access a 30-50% discount!
Join the Legally Legit Lounge
Looking to get your business legally legit? Our partners at Foundd Legal have launched the ultimate membership for Australian business owners—The Legally Legit Lounge!
This membership gives you access to a library of expert legal resources designed to protect and empower service-based businesses like yours.
Whether you are just starting your business or looking to scale up, The Legally Legit Lounge has everything you need to stay legally compliant:
- Expertly crafted contract templates
- Industry-specific resources
- Monthly mentoring sessions that guide you through the legal ins and outs of running a business in Australia.
Check out The Legally Legit Lounge here to save 30% on templates and courses when you sign up for the Gold or Platinum membership!
Platinum Membership Highlights
Why upgrade to a Platinum membership? You’ll receive:
- Over $5,000 worth of legal templates (including contracts for hiring VAs, employment agreements, NDAs, and more).
- Lifetime access to template updates, even if you don’t renew your membership.
- 50% off templates/courses for 30 days after signing up.
- Monthly mentoring sessions with Riz McDonald, a lawyer with over 20 years of experience supporting Australian online businesses and service providers.
Ready to protect your business with confidence? Don’t miss this opportunity to join The Legally Legit Lounge and secure peace of mind for your business operations!
Disclaimer: If you join the Legally Legit Lounge or purchase their templates using our affiliate link or discount code, we’ll receive a small commission for sending you their way. We have personal experience purchasing and using Foundd Legal’s templates, and they are our preferred supplier for all our legal business needs, so you can trust that this recommendation comes with a genuine tried-and-tested seal of approval from Virtual Assistant Lead Network. It is your personal responsibility to evaluate whether any affiliate offer, including the Legally Legit Lounge by Foundd Legal, is right for you or your business. We encourage you to do your own research and due diligence before making any purchase decision.
