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.
