Workplace Ombudsman launches first prosecution on sham contracting

The Workplace Ombudsman (WO) has launched its first prosecution for alleged sham contracting under provisions of the current WR Act. The WO will allege in the Fed Magistrates Court that Sydney-based Centennial Finance Services “converted” eight employees to contractors but continued to have them perform the same duties under the company’s direction. The court will hear workers were told to get an ABN, sign a sales consultant agreement and invoice the company when they made sales, and that they would no longer have annual leave, sick leave or super. WO chief counsel Leigh Johns in a statement said it would be argued the workers were paid on a commission-only basis during the “sham” period which, as a result, led to underpayments of more than $52,000 in wages and annual leave entitlements. Johns said the WO was “very concerned” about sham arrangements. “Where we suspect sham contracting is occurring, we will look behind the often carefully drafted legal documents prepared by clever lawyers to determine the true state of affairs for affected workers,” he said. The current action is being taken against the company, its sole director Rolf Mertes and its HR manager Christopher Chorazy. A directions hearing was listed for today (Jan 30).

Source: Workforce news service, published January 30, 2009. Issue 1665.