Sham Contracting Provisions under the Fair Work Act
Sham contracting has become a prevalent issue in today’s business world. Sham contracting occurs when an employer misrepresents an employment relationship as an independent contracting arrangement. The employer does this to avoid paying employee entitlements such as superannuation, leave, and minimum wage.
The Fair Work Act of 2009 introduced provisions to address sham contracting. The provisions apply to all employers, whether they are individuals, partnerships, incorporated entities, or unincorporated entities.
The provisions set out that an employer must not misrepresent an employment relationship as an independent contracting arrangement. The employer must not engage in any conduct that would lead the employee to reasonably conclude that they are an independent contractor rather than an employee. If an employer is found guilty of sham contracting, they may be fined up to $66,600 for individuals, and $333,000 for corporations.
The provisions of the Fair Work Act also state that employers must provide written notice to their employees of the type of employment that they are in. The notice must be provided within seven days of the employee’s employment commencement, and it must outline the employment arrangement, including whether the employee is a casual, full-time, or part-time employee.
Additionally, the Fair Work Act has provided for the establishment of the Fair Work Ombudsman. The Fair Work Ombudsman is responsible for ensuring that the provisions of the Fair Work Act are being followed by employers. They also provide information and support to employers and employees regarding their rights and obligations.
In conclusion, the provisions of the Fair Work Act regarding sham contracting aim to protect employees’ rights and ensure that they are not exploited. Employers who engage in sham contracting risk severe penalties for non-compliance. As an employer, it is essential to understand your obligations under the Fair Work Act and to ensure that you are fulfilling them.