Working in Australia with an ABN or TFN?

Disadvantages of Working with an ABN

July | 2025 | Australia

ABN vs TFN in Australia: What You Need to Know

Let’s start by understanding the employee–employer relationship.

This relationship means that the employer has certain obligations and responsibilities toward the employee, such as providing fair wages and complying with labor and tax laws.

In addition, they must ensure safe working conditions and provide employment benefits and protections.

When you work as an employee, you are backed by these regulations and have the right to receive those benefits and protections.

An employee–employer relationship exists when there is subordination — meaning the employee works under the authority and control of the employer, who oversees tasks and performance.

In contrast, being an independent contractor means providing specialised services without being under the direct control of an employer. There is no set schedule or supervision from an employer.

By obtaining an ABN and working as an independent contractor, you become your own employer and take on legal and tax responsibilities — while also losing many important rights and protections.

Here are the 5 main reasons why you should not use an ABN if you’re actually working as an employee:

1. Job protections and rights:

As an employee under an employment contract, you are entitled to protections such as minimum wage, sick leave, paid holidays, and workers' compensation.

Having an ABN excludes you from these rights and exposes you to potential exploitation.

2. Legal responsibilities:

As an employee, your employer is responsible for complying with labor and tax laws, including paying taxes and contributing to superannuation.

If you work under an ABN, you take on these responsibilities yourself.

3. Benefits and financial security:

Employees receive additional benefits such as retirement plans, health insurance, and unemployment support.

Using an ABN means giving up these benefits and facing greater financial insecurity.

4. Job stability:

Employees often have greater job stability through long-term contracts and protection from unfair dismissal.

With an ABN, you’re more likely to work on short-term projects or temporary contracts, which can lead to job and income instability.

5. Compliance with labor and tax laws:

Both employees and employers are legally required to follow labor and tax regulations.

If you work with an ABN when you should be classified as an employee, both you and your employer may be in breach of the law, which can result in legal penalties and fines.

If you are experiencing workplace exploitation and want free professional advice, you can contact your state’s union or reach out to Union Australia through the following link: "Union Australia".

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