Most tradies don’t start a business expecting to deal with HR.
You start to win work, hire a few people, maybe bring on subcontractors, and before you know it, you’re responsible for pay rates, entitlements, awards, and Fair Work compliance.
The problem is that HR mistakes don’t usually hurt straight away.
They sit quietly in the background until a complaint is made, an employee leaves, or Fair Work comes knocking.
In Episode 478 of The Site Shed Podcast, Matt is joined by Karen Hillen from My HR Partner to break down what Fair Work really cares about when it comes to trade businesses and where most tradies unknowingly put themselves at risk.
🏷️ Employee vs Contractor: Why This Trips Up So Many Tradies
One of the most common HR issues in trade businesses is getting the employee vs contractor distinction wrong.
Many business owners assume that if someone has an ABN and signs a contractor agreement, that’s the end of the story.
According to Karen, Fair Work doesn’t see it that way. What matters isn’t just the paperwork. It’s how the relationship operates day to day.
If you control where someone works, when they work, how they do the job, and they’re mainly providing labour rather than a service, Fair Work may still class them as an employee.
This is where many tradies get caught out.
Even with a contract in place, businesses can be forced to backpay superannuation and entitlements years later if the arrangement doesn’t stack up.
🔧 Why Contracts Alone Don’t Protect You
Many tradies assume that having a contractor agreement protects them.
It doesn’t. At least not on its own.
Contracts are important, but they don’t override Fair Work legislation or awards.
Karen shares real examples where businesses did “everything right” on paper, only to discover that their behaviour told a different story.
If someone looks and behaves like an employee, Fair Work is likely to treat them as one.
That’s why understanding the practical reality of your workforce matters just as much as having documents in place.
The takeaway?
Contracts matter, but behaviour matters more.
🔒 Trade Award Entitlements Most Tradies Don’t Know About
One of the most eye-opening parts of the episode is the discussion around trade-specific awards.
Some construction and building awards include redundancy entitlements that apply even when an employee resigns, something many tradies have never heard of.
This can apply even in small businesses with fewer than 15 employees, which catches a lot of business owners by surprise.
If you don’t know which award covers your workers, you may be carrying financial liabilities you’ve never planned for.
✍️ Leave, Shutdowns & Hidden HR Liabilities
Karen also breaks down how leave really works in trade businesses:
- Annual leave continues to accrue
- Sick leave builds up over time (and can be used years later)
- Leave balances are a real financial liability (not just a payroll number)
For tradies who shut down over Christmas, there are rules around notice periods and directing employees to take leave.
These details might seem minor, but getting them wrong can quickly turn into a compliance issue.
Karen explains why leave balances shouldn’t just be seen as payroll numbers.
They’re liabilities that need to be understood and managed.
💡 What Fair Work Actually Cares About
Despite the fear many business owners have, Fair Work isn’t out to “get” tradies.
According to Karen, Fair Work focuses on:
- Whether you’re trying to do the right thing
- Whether you fix issues once you become aware of them
- Whether underpayments or breaches are intentional or repeated
Most issues start with a lack of knowledge rather than bad intent. However, once you’re aware of a problem, ignoring it can escalate the situation quickly.
“Good tradies avoid conflict. Smart tradies manage it early."
🔐Performance Management: Act Early, Not Late
Tradies are generally good people. They want to be fair, loyal, and avoid confrontation.
But avoiding people issues usually makes them worse.
Karen’s advice is simple:
- Address problems early
- Have informal conversations first
- Document patterns before they escalate
Good HR isn’t about being harsh. It’s about being clear and consistent.
The Bottom Line for Tradie Business Owners
You don’t need to be an HR expert to run a successful trade business.
But you do need to know:
- Where your risks are
- What award applies to your workers
- Who to ask before reacting to a problem
That knowledge alone, or knowing who to ask, can save you thousands of dollars and a lot of stress.
📚 Resources from this Episode
Get in touch with Karen Hillen:
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