Attempted inter-positioning of company fails

The Federal Court has found an employer who moved employees from one internal company to another to avoid employee entitlements guilty of sham contracting.

In Fair Work Ombudsman v Ramsey Food Processing Pty Ltd [2011] FCA 1176, the court acknowledged that there may often be overlapping management and operating in intragroup arrangements, and that this is not illegal. However, in structuring companies, employers with intra-group arrangements must tread carefully in respect to the entity that will do the employing, ensuring there is a connection between the "employing" company and the company the employees do the majority of their work for, to avoid the arrangement being classified as a sham.