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Sham contractor arrangements (Australia)

Discussion in 'General Issues and Discussion Forum' started by Robbo, Mar 19, 2019.

  1. Robbo

    Robbo Welcome New Poster

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    I have had no employment other than sham contracting arrangements since I started working as a podiatrist 5 years ago. I don't fit any of the criteria for being a contractor. The practice seems to be very widespread. I can completely understand why an employer would want someone working as a contractor as it enables them to not pay any of the entitlements to their employees, fire them for no reason and have an unfair level of control over how they treat the 'contractor' who has almost no workplace rights. I have yet to see a situation where the sham contracting is anything but exploitative.

    What I would like to know is why is this practice of sham contracting allowed to occur? Why aren't the podiatrists being exploited fighting back against the practice?
  2. Craig Payne

    Craig Payne Moderator

    My assumption is that because it is advantageous to the employer and people are willing to take the job.

    It is a bit of a legal minefield.
  3. AMPK

    AMPK Welcome New Poster

    I had to look up podiatrists and found it is nothing like my line of work.

    I work in aviation and Sham Contracting is rife by the Labour Hire Firms. The big names need a bit of distance so they use 3rd party providers (generally) that then engage Labour Hire Firms to do the real dirty work of classing workers as Independent Contractors.

    The rates of pay then paid to the contractors on face value seems not bad and motel accommodation is supplied - but they are required to work 60 hours a week to get the accommodation (if you wont work 60 hours minimum they will not give you any work). Most of these people often 30 at a time are not locals so when you work out the entitlements at the award rate to what these guys get, they are actually paid around $700 per week less than the very poor award rate. The workers have never done the full maths so think they are on a good deal money wise.

    All Independent Contractors working for Labour Hire Firms must have PAYG tax withheld by the Labour Hire Firm, yet none in my industry do.
    The Labour Hire Firm not withholding the PAYG tax then leads to Payroll tax not being paid.
    Again not withholding the PAYG tax leads to Accident Insurance (Workers Comp) not being paid.

    I can go on!

    I have reported this to the Australian Tax Office, Fair Work Commission, Fair Work Ombudsman and the new Labour Hire Licencing Department in QLD. I also reported it to DoHA Immigration Department as some are on Visitor Visas that do not allow work.

    To date nothing is happening about this illegal practice - given the large penalties involved you would think one of the departments would take an interest. My calculation around a year ago for just one of the Labour Hire firms in penalties and taxes (not WC payments) was well over $5,000,000 ($5M)
  4. Mark_M

    Mark_M Active Member

    Hi Robbo,
    I'm surprised to hear contracting is still around. As you mentioned podiatry employment does not fit criteria for a contractor.
    Back in the day I was employed as a 'contractor' . I would take a % of each consultation. Insurance, Super and Tax was my responsibility.
    How do you feel exploited? How does your contract work?

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