Incorrectly classifying an employee as a contractor can be costly. Businesses can be fined up to $54,000 for sham contracting. It is easy to ensure you avoid such fines with advice from our human resources (HR) specialists.
Employee or Contractor – Sham contracting describes the act of an employer knowingly attempting to disguise an employment relationship as an independent contracting arrangement. An employer may do this to avoid providing their workers with the entitlements and benefits they would normally gain access to when engaged under an employment relationship.
The Fair Work Ombudsman (FWO) recently filed legal action against Foodora in relation to two Melbourne bicycle delivery riders and a Sydney delivery driver, with the FWO alleging that Foodora was in breach of sham contracting laws by convincing employees they were independent contractors instead of employees of Foodora. The FWO claims despite each of the workers signing an Independent Contractor Agreement, their work conditions and responsibilities including the requirement to wear branded uniforms, the level of supervision and control Foodora has over their location and hours of work identify would result in them being deemed as employees instead of independent contractors. As a result of this FWO filed legal action against Foodora in relation to two Melbourne bicycle delivery riders and a Sydney delivery driver, with the FWO alleging that Foodora was in breach of sham contracting laws by convincing employees they were independent contractors instead of employees of Foodora.
Determining if a worker is an employee or an independent contractor can be a difficult task as there is not a single factor that can be used to determine if an employment or contracting relationship exists. Instead the totality of the relationship needs to be taken into account when determining this with The cost of incorrectly classing an employee as an independent contractor being costly with businesses being fined up $54,000 per ‘sham’ contract. .
If you need assistance correctly determining if your workers are employees or contractors in orderto avoid being lumped with a hefty fine, contact ABILITY GROUP on 02 9098 5500.
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Source: Foodora rider flights dismissal from food delivery service
Title: ABC News
Read time: 2 mins