I am currently a web developer for an Australian company, in a full time salaried position. Due to COVID we have much less work, and redundancies are expected. My manager has been put under pressure to find savings.

My boss does not wish to lose me, so has proposed that I voluntarily move from being an employee to a sole trader/contractor that invoices my company for my time. Very little about my role would change, other than how I get paid. It solves their issue as they can budget for me as a capital expenditure instead of payroll.

I do not mind this as I already have a company set up to do work for other companies. I am confident in my ability to find work so losing the security of full time does not bother me.

My question is, am I entitled to a redundancy in this situation? If I was just made redundant normally I would entitled to six weeks full time pay. Does this still apply if I am technically still doing work for the same company, just under a different contract?

  • 3
    I can’t answer your question, however, as a contractor you will be responsible for paying any taxes yourself. So hopefully, this move comes with a pay increase, so it’s not effectively a pay cut
    – Donald
    Sep 8, 2020 at 2:28
  • 1
    Also, don't forget the additional expenses for your medical/health care benefits. Sep 8, 2020 at 10:18
  • how much more will you make as a sole trader?
    – Kilisi
    Sep 8, 2020 at 13:15
  • @LifelongScholar Employers are not responsible for medical/health care in Australia.
    – throx
    Sep 11, 2020 at 13:25
  • If you are offered ridiculously more, then sure, take it. Otherwise politely refuse and go look for other options. You don't have to wait until you are let go, even if you will get unemployment payments for 6 weeks. Because you are a software developer, you will make a lot more by working, rather by getting government payments. Sep 11, 2020 at 23:32

3 Answers 3


Answer - Ask your boss.

As a sole trader you have very little protection and there is no knowing when this may bite you in the back so you need to factor that in when discussing remuneration. You should be making much more than an employee. So if the redundancy money isn't on the books, add it to the negotiation.


The sole trader piece is a red herring. The only question that is relevant is whether you are quitting or if you are being made redundant. The way it is phrased ("voluntarily move"), your boss is asking you to quit so there will be no redundancy payout.

You should also be a little wary of whether this could be construed as a constructive dismissal and whether there are any impacts. Not sure if anyone would have standing to contest it under the Fair Work Act, but it's usually a good sign something fishy is going on if a company executes a redundancy and immediately effectively fills the position.


First, as a contractor you should get paid a daily rate, and as a rule of thumb 120 to 150 daily rates should be the same as your annual salary. Or 10 to 12 daily rates = monthly salary. The reason why your daily rate must be significantly higher is that you don't get paid holidays, you don't get paid when you are sick, you have to pay your own taxes and health insurance, and your job is totally unprotected. So check the suggested daily rate first.

And then have someone check your contract to make sure that you don't get ripped off. If you are laid off, you get paid during the notice period, and you often will get an additional redundancy payment. If you quit yourself to start as a contractor, you won't get that money. And since you have no protection as a contractor, the company can cancel your contract after the first day, with no penalty. So you really need a contract that prevents this from happening.

  • Yep, any contract should have a term specified. And cancellation terms (but usually no cancellation option unless for cause). I witnessed contractors doing absolutely nothing for a month, just because they did everything they were hired for, so just browsing internet. If you are hired without a term, those rates should be at least double, if not triple your usual rate. Because they might let you go in a week or two, you never know, better build up that cash pillow. Sep 11, 2020 at 23:30

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