If you have answered YES to any of the above questions then you may be accused of sham contracting. The Fair Work Ombudsman has been actively focusing on sham contracting and fines up to $630,000 for company’s and $126,000 for directors can be issued, with the current record fine totalling $532,910.
A recent decision by the Supreme Court of Victoria provides good insight with determining whether a person is a contractor or an employee. Refer to BSA Ltd v Victorian Workcover Authority & Ors – the first appeal to reach verdict under s85 of the Workplace Injury Rehabilitation and Compensation Act 2013
Avoidance is the best way to manage this exposure and to reduce the potential risk of a large fine and costly legal action, regular reviews should be undertaken, including visiting the Fair Work Ombudsman website at www.fairwork.gov.au.
This is also an good reminder of the importance of having the right insurance protection in place.