What is sham contracting?
Sham contracting is when an employer misrepresents what is
really an employment relationship as an independent contracting
arrangement. This means the contractor who should be paid as an
employee potentially misses out on entitlements such as award pay
rates, superannuation, workers' compensation and leave.
Employers should be wary of using contracting arrangements which
could be construed as sham contracting.
Case in spotlight: What can happen?
In the case of Fair Work Ombudsman v Quest South Perth
Holdings Pty Ltd (Federal Court, 2017), Quest operated a
business that provided serviced apartment accommodation and
employed two housekeepers.
The Manager of Quest, arranged for Contracting Solutions Pty
Ltd, a labour hire business, to take over the employment of the
housekeepers and hire them back to Quest, doing the same work as
before. The employees were not given any real option – they
were told that in future they would be working
