BlandsLaw - Blog posts from sham contractor
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FWO cashed up to investigate and prosecute sham contract arrangements

The Federal government has announced the Fair Work Ombudsman will receive $2.3 million each year for the next 4 years to establish a dedicated unit to address sham contracting.

While part of the objective is to increase education and encourage compliance, the unit will also dedicate funds to investigation of and litigation against employers who are participating in sham contractor arrangements.

Sham contractor arrangements refers to a situation where a worker is being engaged as a contractor but is in fact an employee. The effect of this is that the employer avoids its usual employment obligations such as paid leave, notice and redundancy.

It is well established that courts will look further than the written agreement between the parties to determine the true nature of the working relationship. Considerations including who has effective control of how and when the work is done, whether the worker performs work for others and whether the worker can refuse or delegate the work all form part of the assessment of the true nature of

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The Federal Circuit Court has imposed a record $238,920 penalty on a company providing an airport shuttle service from Newcastle to Sydney airport, for underpaying its drivers. 

Interestingly, the Fair Work investigation arose not from an employee complaint, but as part of a national compliance campaign focussed on sham contracting. The penalty imposed was made up partly of breaches relating to misrepresentation of employees as contractors, and partly for failing to meet award requirements.

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