Sham Contracting Crackdown

The Australian Government 2019-2020 Budget contained an announcement that the Government will provide $9.2 million over four years from 2019-20 (and $2.3 million per year ongoing) to establish a dedicated sham contracting unit within the Office of the Fair Work Ombudsman.  This unit will address sham contracting behaviour engaged in by some employers, particularly those who knowingly or recklessly misrepresent employment relationships as independent contracts to avoid statutory obligations and employment entitlements. The unit will tackle sham contracting by increasing education, compliance and enforcement activities, and dedicating additional resources to investigate and litigate cases.

NatRoad opposes sham contracting. This is because legitimate employer members are disadvantaged by having to compete with firms that reduce their costs through unlawful means. We support the Government’s crackdown.

NatRoad supports genuine contracting relationships. We help members put in place contracts that properly set out the terms of those relationships.

But there are circumstances where supposed contract relationships are misused. That is where there is a deliberate disguising of an employment relationship as an independent contracting relationship. That practice is illegal under the Fair Work Act. Sometimes members ask whether workers with ABNs are always contractors. That's not the case. If the working arrangement is primarily for the provision of a worker’s labour, whether the worker has, or quotes, an ABN is not the deciding factor of whether or not a worker is a contractor. Unless a driver provides a vehicle or other significant equipment, it is unlikely that they will be a contractor, even when holding an ABN. 

NatRoad is able to assist in giving advice on these issues. Contact a NatRoad adviser today on 02 6295 3000 to know more.