Dealing With Subbies — How to Hire, Manage, and Pay Subcontractors Without Losing Your Shirt

Every trade business hits the wall eventually. More work than you can physically handle, jobs stacking up, and you're turning down good money because there's only one of you. That first hire feels like a big decision — and it is. But for a lot of tradies, the smarter move isn't hiring an employee. It's bringing on a subbie.

Subbies are the backbone of every growing trade business in Australia. Electricians sub to builders. Plumbers bring in extra crews for commercial fit-outs. Concreters call in teams for slab weeks. It's how you scale without taking on the full weight of an employee — the super, the leave, the tools, the risk. But here's the thing nobody tells you: subbies can also be the fastest way to lose money and burn relationships if you don't get the structure right.

I've been on both sides of this fence. The mistakes I made cost me real money. Let me save you the same headache.

This catches more tradies than anything else. Just because someone has an ABN doesn't mean the ATO sees them as a subcontractor. If you tell them when to start, what tools to use, how to do the job, and they only work for you — that's an employee in the ATO's eyes. Full stop.

The tax office runs a multi-factor test now: does the subbie control how the work is done? Do they take commercial risk? Can they delegate to someone else? Do they have a chance at profit or loss? If most answers are "no," you're in sham contracting territory — back-pay claims, super penalties, legal fees that'll make your eyes water.

The fix is simple: treat subbies like genuine business owners. Let them organise their schedule. Pay by the job, not the hour — hourly pay is the biggest red flag. And get a proper subcontractor agreement written up. Not a handshake. Not a text message. Something that spells out scope, price, payment terms, and confirms they're responsible for their own tax, super, and insurance.

I learned this one the hard way. A mate of a mate who "does great work" who leaves half-finished jobs for you to clean up. Here's what I check now:

Licensing. If they need a licence in your state, ask to see it. Check it's current and covers the work you're subbing. Every licence database is online — takes two minutes.

Insurance. Public liability — minimum $10 million, $20 million for commercial sites. If they don't have it, every claim lands on your policy. And your insurer will drop you fast if they find out you're using uninsured subbies.

References. Call recent builders or tradies they've worked for. Ask: did they show up on time? Clean up? Finish on budget? Would you hire them again?

White Card. For construction sites, everyone needs one. Check it. Take a photo. Put it in the job file.

I keep a simple spreadsheet — name, licence number and expiry, insurance policy and expiry, white card, date of last reference check. When a job needs a subbie, I can see who's good to go in thirty seconds.

Most subbies want progress payments for anything over a week. That's fair — they've got bills too. I break it into milestones with 10% held until the client signs off. That protects both of us.

Payment terms: I pay within seven days of receiving their invoice. Not thirty. Not sixty. Seven days. Here's why — if I pay them fast, they'll take my call when I need someone in a hurry. In this industry, loyalty from good subbies is worth more than the marginal cash flow benefit of holding their money.

One thing to flag: if you're paying a subbie more than $75K a year for their personal labour, talk to your accountant about the new Payday Super rules. Even contractors can trigger super obligations, and getting this wrong means hefty penalties.

The best subbies are never short of work. They don't need you. So if you want them on your jobs, earn it.

Pay them on time. Give them clear scopes — not "do the bathroom" but a proper spec with drawings and timelines. Have materials and access sorted before they arrive. Don't change the scope halfway without renegotiating. And treat them like part of the team, not hired help you can bark at. A subbie who feels respected will go the extra mile when something goes wrong. A subbie who feels like a number will walk at the first sign of trouble — and take your next three jobs with them.

That's why I built TradeTrack — not to become a SaaS company, but because I needed it to stop our own business from drowning in admin. When you're juggling your own jobs and managing subbies, the admin multiplies fast. Quotes, job sheets, progress payments, insurance checks — it piles up. Having one place to track it all is the difference between keeping your head above water and watching everything slide.

Trade Track is the job management software that helps Australian tradies manage quotes, jobs, invoices, and subcontractors from one place — so you can grow without the chaos. [No credit card required · 7-day free trial]