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News headings from LabourStart


Massive penalties for sham contractors

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One sleeze-bag firm was fined $286,704 for underpaying seven drivers

It has come to our attention that some fleet operators are trying to get around the protections given to employees by the Fair Work Act 2009, and other employment laws by engaging drivers as “contractors”.

These so-called “contract” drivers drive a truck that is provided by their employer, and the employer pays for the fuel and the truck registration, maintenance and repairs, and the drivers undertake deliveries and/or pick-ups as directed by the employer.

Such drivers are not contractors, but employees. Just because someone is called a contractor this does not make them a contractor.

It is illegal under the Fair Work Act for an employer to try to get around the protections that are offered to employees by law by disguising what is an employment relationship as an independent contracting arrangement.

This practice is referred to as “sham contracting”. The sham contracting provisions under the Fair Work Act make it illegal for employers to:

Misrepresent an employment relationship as an independent contracting arrangement.

Dismiss or threaten to dismiss an employee for the purposes of engaging them as an independent contractor to perform the same or substantially the same work.

Knowingly make a false statement to persuade or influence an employee to become an independent contractor.

Sham contracting is viewed as a serious matter, and the penalties for this can be substantial.

This is because under the sham contracting arrangement employees are being denied their rightful workplace rights and entitlements.

These include minimum pay rates, superannuation, leave and other issues as well as responsibility for workers’ compensation insurance.

Penalties include a maximum penalty of $33,000 for each contravention and compensation payments to each employee for any loss they have suffered.

The seriousness with which the courts view sham contracting can be seen from the following case example.

In Fair Work Ombudsman v Happy Cabby Pty Ltd & Anor [2013] FCCA 397, Happy Cabby Pty Ltd, an airport shuttle service, was fined $286,704 by the Federal Circuit Court for engaging in sham contracting and underpaying seven shuttle drivers.

Happy Cabby classified the bus drivers as independent contractors, however, the court found that they were actually employees as:

The company was able to, and did, exercise control over the manner in which the drivers performed their duties. The company provided the drivers with a detailed run sheet for each run which the drivers were required to do.

The company owned and maintained the buses that the drivers drove in their jobs, and the company paid all costs associated with running the buses including fuel, maintenance, servicing and repairs.

The company determined the amount that the drivers were paid.

The Drivers did not conduct a business in their own right.

If an employer is trying to get you to become a contractor, or if you are offered a driving job on the basis that you provide an ABN then you should not go along with that because it is illegal for an employer to do that.

You should also contact the TWU on 9328 7477 if this happens to you, or someone that you know.

An employer cannot avoid paying you the correct wages, paying superannuation and covering you for workers’ compensation by getting you to sign a bit of paper which says that you are a “contractor”!

Massive penalties for sham contractors