Over the past year, sham contracting has shifted from being an industry concern to a major national enforcement issue. While most businesses continue to do the right thing, governments and regulators are becoming increasingly concerned about those who are not.
NatRoad, alongside other industry groups and operators, has consistently pushed for greater recognition of sham contracting and the damage it is causing to compliant businesses, drivers and safety outcomes across the sector. The fact the issue is now firmly on the agenda of regulators, ministers and enforcement agencies a significant shift for the industry.
The focus intensified again in May, following a major National Heavy Vehicle Regulator (NHVR) crackdown targeting high-risk operators across the country. The NHVR identified more than 20 operators presenting what it described as an “unacceptably high risk to public safety”, using intelligence gathered through compliance data, crash records, fatigue monitoring and confidential industry reporting. Nine operators are no longer accredited, another 10 are having their accreditation eligibility reviewed, and two have received formal warnings.
Importantly, the crackdown also reinforced the growing focus on sham contracting across the transport industry. In the latest episode of the NHVR’s What’s Your 20? podcast, NHVR CEO Nicole Rosie acknowledged the widespread concern being raised by operators, associations and drivers.
“A very common theme from the industry, operators, associations and also drivers, is this concern about sham contracting,” Ms Rosie said.
She also acknowledged the challenge regulators face in changing behaviour. Education remains important, but the NHVR has openly recognised there is a percentage of the industry that simply will not respond to education alone.
This recognition reflects the frustration many compliant operators have felt for years. Most transport businesses invest heavily in safety, maintain their vehicles properly, manage fatigue responsibly and comply with their legal obligations. But those engaging in sham contracting gain an unfair commercial advantage by cutting corners and shifting risks onto drivers.
For owner-drivers and small operators, the impacts are real. Sham contracting drives down rates across the industry and creates pressure for legitimate businesses trying to compete fairly. It can also create broader safety concerns when drivers are pushed into financially unsustainable arrangements simply to stay afloat.
It’s pleasing to see the issue is now receiving serious attention at the federal level. In May, I attended a national roundtable convened by Senator Glenn Sterle involving industry associations, unions, ministers and senior representatives from the NHVR, Treasury, the Australian Border Force and the Fair Work Ombudsman.
The Fair Work Ombudsman has also acted, recently writing to 45 road transport companies regarding sham contracting and worker misclassification arrangements, while conducting site visits and investigations.
Regulators are becoming more sophisticated in how they identify high-risk behaviour. The NHVR has significantly improved its risk data over the past six months and is now better able to build risk profiles around sham contracting and other unsafe practices.
NatRoad supports the increased regulatory focus and enforcement activity targeting sham contracting. Compliant operators should not be forced to compete against businesses gaining an unfair commercial advantage by avoiding their legal obligations or shifting unreasonable risks onto drivers.
There will always be a small group willing to ignore the rules if they believe there is commercial benefit in doing so. But stronger cooperation between regulators, improved data sharing and visible enforcement action are important steps toward restoring fairness for compliant operators.
At the same time, it is important not to confuse sham contracting with legitimate contracting arrangements. Genuine owner-drivers and properly structured independent contracting models remain an important part of the transport industry.
The challenge is identifying arrangements designed primarily to avoid obligations while transferring unreasonable commercial and safety risks onto drivers.
What is clear, however, is the issue is no longer being ignored.
Governments, regulators and industry bodies are now treating sham contracting as a serious issue affecting safety, fairness and the long-term sustainability of the transport sector.
For compliant operators, the shift is long overdue.
*Warren Clark is CEO of the National Road Transport Association.
NatRoad communications are intended to provide commentary and general information.
