As Australian organisations lean harder into gig and contract work, HR leaders are being forced to rethink some of their most fundamental assumptions about what a “workforce” even is.
According to data from the Australian Bureau of Statistics (ABS), the number of people engaged in the gig economy increased by around 34% between 2014 and 2022.
Further ABS data found that there were 1.1 million independent contractors in Australia as of 2024, making up 7.5% of all employed people.
This growing and often grey area of employment places strain on HR teams as they navigate uncertainty in their workforce.
Speaking with HRD, Nicole Karagiannis, country manager at MyHR, noted that the shift is already well under way – and many businesses are underprepared for the cultural and compliance challenges that come with it.
From fixed headcount to fluid workforces
Karagiannis said today’s economic uncertainty is pushing leaders away from traditional permanent hiring models and towards more flexible arrangements.
“There's this hesitation in terms of committing to a full-time permanent or a part-time permanent worker profile,” she explained.
That is compounded by “the rise of fear around engaging casual workforce” given conversion rights under the Fair Work framework, andgrowing anxiety about unfair dismissal claims.
The result: “There’s definitely a trend that is increasingly moving towards engaging independent contractors.”
At the same time, workers themselves are no longer chasing the traditional nine to five roles that they once did.
“In the 70s and 80s, my definition of a job was nine to five, and you worked it for that company for 30 years. That was like the peak success,” Karagiannis said.
“Now you’ve got more people saying, I don’t want to work for anyone. I want to set my own hours… I want to be measured by outcome rather than by effort along the way.”
She also pointed to the growing visibility of workers who simply don’t fit standard working patterns, such as neurodivergent employees, caregivers, or parents.
Taken together, these forces are fuelling the rise of gig, freelance and outcome-based work – and creating an HR challenge that “is becoming a whole beast onto itself”.
The compliance tightrope
The first risk area is legal. Many organisations are attracted to the flexibility of contractors butmisunderstand where the line sitsbetween a genuine independent contractor and a de facto employee.
“There’s set criteria in the legislation around what is a true independent contractor versus what isn’t,” Karagiannis noted, pointing to the sham contracting provisions in Fair Work.
Ideally, she said, a bona fide contractor has real autonomy over when and how they do their work and what tools they use – and they’re not simply embedded in the business indefinitely, treated like any other staff member but without the protections.
While a deep legal analysis sits outside her remit in these conversations, she sees a clear “compliance lens” HR leaders must apply. The message: know exactly what you’re engaging – contractor, casual, part-time, permanent – and make sure your practices match that choice.
The hidden risk: culture, brand and the “extended workforce”
Beyond compliance, Karagiannis argued the bigger blind spot is cultural and reputational.
As more organisations rely on contractors, offshore teams and gig workers, those individualsare increasingly part of the real, lived workforce– interacting with customers, shaping culture and influencing how the brand shows up in the market.
“You’re sending a subcontractor… who is representing your company, your reputation, your brand,” she said.
“They don’t know what that looks like, and they go and say something that is inappropriate to the customer and they ruin your brand. And you’re getting the phone call and finding out about it. The amount of these incidents that I see is phenomenal.”
The problem? Many businesses don’t onboard contractors at all, for fear of treating them like employees. Karagiannis warned against this.
Feedback without “performance reviews”
Another grey area is performance management. Many leaders assume they can only give structured feedback to employees, not contractors.
Karagiannis pushed back firmly on that idea: “You can’t do a performance review because then you’re treating them as a permanent employee. But rather than saying, you did the job, here’s the money, it’s also about, thanks for the job, here’s the feedback – what we liked working with you on, what we think we could do better together.”
She encouraged HR teams to “do a retro” after a project or task – borrowing the software engineering habit of a short retrospective on what worked, what didn’t and what should change next time.
These conversations can be “short, sharp, constructive”, and don’t require HR-heavy processes. But they do require intent – and basic capability – from business owners and people leaders.
What happens when it goes wrong?
When contractor behaviour crosses a line, many HR teams assume they have little power beyond not re-engaging the individual.
From a pure compliance standpoint, Karagiannis conceded the options are narrow: “Check their contract, give them their notice period and part ways with them. That’s at its purest operational compliance level.”
Where HR should be far more active, she says, is in what happens before and after something goes wrong.
Strategically, HR should be asking:
1.Was engaging a contractor or gig worker the right choice at all, or should this have been a casual, permanent hire or even an AI-enabled process?
2.Have we designed the right environment for contractors to be introduced into our world – including expectations, policies, guardrails and feedback loops?
3.Do our leaders have the skills to give and receive feedback with anyone delivering work for us, not just employees?
“What you do for your culture, your leadership capability, your employee capability – that has downstream effect on the effectiveness of the contractor,” she said
Just as importantly, HR should be building a genuine “speak up” culture that doesn’t stop at the employee boundary.
HR must empower people to raise concerns “regardless of whose behaviour that was. Even if it’s a customer shouting at you, for example… that speak up culture is really, really crucial, and HR plays a huge role in creating that.”
HR’s role: from policy enforcer to strategic architect
For Karagiannis, the rise of contractors and gig work isn’t a reason for HR to retreat. It’s the opposite.
“If you just go, sorry, this contractor piece is outside of my scope, and a lot of internal HR teams do leave that to procurement teams or to the business unit itself, I strongly believe they have a role to play,” she said.
Contract and gig work is just another part of HR’s evolution from being just a policy enforcing position and towards the more strategic, cross-functional role many earned during the pandemic and are now expected to play in the age of AI.
For HR and people leaders facing a growing mix of gig workers, contractors, offshore teams and AI-enabled roles, Karagiannis’ message is both a warning and an invitation:
-Don’t ignore the contractor question or assume it sits with procurement.
-Get clear on legal definitions and ensure your practices match.
-Invest at least a minimal amount of time in contractor onboarding and brand education.
-Build simple, repeatable feedback and “retro” practices for non-employees.
-Make sure every contractor has a clearly accountable leader – and that HR is holding that leader to account.
-Treat culture, brand and reputation as shared responsibilities across employees and non-employees alike.
“HR plays a big role in the company brand, not just employer brand,” she said. In a world where your “workforce” increasingly includes people who never sign an employment contract, that role is only becoming more critical.
