Another example of the many cases relating to “Sham Contracting”

In another case example from the many that go through Fair Work relating to sham contracting, this week a building company will now face civil penalties and a possible compensation order for dismissing a construction worker so that they could re-employ her as an independent contractor.

The judge rejected company evidence that the excavator operator was dismissed because there wasn’t enough work for her.  The company had excavator work to be done and the employer had been satisfied with the employee’s work performance to date.

When the employee was being dismissed, the excavator was given a letter saying that the company was happy with her work and her “eagerness to do a good job, and learn”.  The company continued by saying it would “like to continue to utilise your labour, however it would have to be on a sub-contractor basis”.  The letter also outlined the hourly rate for becoming an independent contractor.  Judge Simpson said the letter made it clear that the excavator would be dismissed if she did not agree to become an independent contractor.

The director told the employee the day after the dismissal that it was “an ABN or nothing”.  The worker did not ultimately enter into the new contract. 

The construction company was doing exactly what s358 of the Fair Work Act was designed to prevent.

A penalty hearing is to be held at a later date.


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