The Fair Work Ombudsman (FWO) has marked the New Year with a sham contracting warning for small businesses, unveiling fresh court proceedings against a Queensland-based transport company.
Boske Road Transport will face the Federal Circuit Court over allegations it misclassified four delivery drivers as independent contractors, leading to underpayments totalling $63,803 between 2016 and 2018.
The case is just the latest move by the regulator to crack down on sham contracting — where firms disguise employment arrangements as independent contracts to avoid payment of various entitlements.
Ombudsman Sandra Parker said the regulator will be on the lookout for businesses mischaracterising their workers in 2020.
“If employers misclassify employees as independent contractors and pay flat rates that undercut entitlements, they face serious consequences such as court action, hefty back-payment bills and penalties,” Parker said in a statement circulated Monday.
The FWO was directed to establish a dedicated sham contracting taskforce last year, receiving more than $9.2 million in taxpayer funds to crack down on dodgy arrangements.
Last September, inspectors were seen combing through the stands of sports stadiums in Melbourne and Sydney on the lookout for contracted cleaners.
In its most recent case, the FWO will allege the workers in question drove vans owned by the company, wore its uniforms and were required to work at days and times set by the company.
All of these factors suggest an employment relationship, McDonald Murholme principal lawyer Trent Hancock tells SmartCompany.
“There’s a couple of questions you can ask that tell you whether someone is an employee or contractor.
“Is the worker running their own business, or are they furthering the business of the company?
“Is the goodwill they generate for their own brand, or the company they’re working for?
“And the level of control exercised over the workers … [are] they dictating days of work, or the ways in which the work is performed?”
The FWO has its own checklist for businesses wondering whether they’re own employment relationships are compliant.
Get SmartCompany FREE to your inbox every weekday.
Hancock says the FWO is indicating sham contracting will be one of its focus points for 2020, warning businesses to keep in mind that under the Fair Work Act companies don’t get to decide the nature of an employment relationship.
“[Sham contracting] is incredibly prevalent, sometimes through ignorance, but sometimes deliberately.
“The courts have consistently said parties can’t agree to characterise an employment relationship as something it’s not,” he says.
In a statement, Boske’s lawyers DWF Australia said its client denies the allegations.
“Boske Road Transport denies the allegations in their entirety, and is vigorously defending these proceedings,” an email statement sent by the lawyers reads.
“Given the matter is currently before the Court, the business does not otherwise propose to comment on the matter at this time.”