If it looks like a duck and quacks like a duck… Is it a duck?

In December last year, the High Court of Australia handed down judgment in the matter of Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd.

Quest Serviced Apartments (“Quest”) employed two housekeepers over several years. It then entered into a contract with Contracting Solutions whereby the two women would become independent contractors engaged by Contracting Solutions, though they continued to work for Quest and performed the same roles.

This arrangement was effectively sham contracting, which is prohibited under Commonwealth legislation.

Section 357 of the Fair Work Act 2009 (Cth) restrains an employer from representing to an individual that they are working as an independent contractor when they are working as an employee.

As a result of its sham contracting, Quest now faces pecuniary penalties, which can be as high as $54,000 per breach for a corporation. 

So how do you know if your employees are genuinely employees or independent contractors? There is no hard and fast rule and it can often depend on the individual circumstances of the situation.

There are several indicators to consider when determining the nature of your employment relationship, such as how the worker is paid, who makes the taxation payments and whether the worker is a representative of the business.

The entire arrangement will need to be considered to determine the nature of the working relationship.

If you are unsure whether your workers are employees or independent contractors, speak to one of the Workplace Relations team at Nevett Ford on (03) 9614 7111.

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Employer penalised for deducting monies from wages

Late last month, a Victorian cleaning business learned that deducting or withholding monies from employees is not permitted except in very specific circumstances.


Oz Staff Career Services Pty Ltd employed 102 casual cleaners pursuant to the Cleaning Services Award 2010. The employer deducted monies from its employees’ pay for meals without authorisation on three occasions over two months.


After conducting an audit of the business, the Fair Work Ombudsman took legal proceedings in the Federal Circuit Court against the company and its chief executive officer. It was found that the employer contravened the Fair Work Act 2009 (Cth).


Under the Act, employer deductions are prohibited, unless the employee has provided written consent.  The employee must expressly agree to reimburse the employer for any costs to be deducted from any final termination payment and must specify the amount of the deduction. This authorisation can be withdrawn in writing at any time.


A failure to comply with these requirements may breach your obligations as an employer under the Act, leaving you liable to civil penalties of up to $61,000 per breach.


If you believe you are entitled to recover monies from employees for overpayments or permitted deductions, contact the Workplace Relations team to Nevett Ford on (03) 9614 7111 to ensure that you comply with your requirements as an employer and avoid the risk of litigation and penalties.

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