Bob, the manager of a construction company, contacted him. Louis was hired for a job and told he would be paid $25 per hour. He worked for ten days, until the job was completed. However when he attempted to retrieve his payment, Bob advised Louis that he would have to get an ABN. When Louis refused, Bob told him that he would be taxed at 46.5%.
When Louis received no payment for several months despite sending many emails and phoning Bob and the owner of the company, he lodged a complaint with the Fair Work Ombudsman (FWO). He received a letter of reply stating that there was insufficient evidence to support his complaint, so the FWO would not be taking any further action.
Louis attended an appointment at Redfern Legal Centre. With the help of an interpreter, he was able to explain his situation. RLC helped him to compose a letter of demand to send to Bob and recommended that he ask the FWO to reconsider his matter as he appeared to be an employee and not a contractor.
His status as an employee was characterised by the fact that he worked for a single organisation, used their tools, was told when to come to work and what tasks to perform and bore no commercial risk. Conversely, genuine independent contractors operate their own business, enter into contracts for service with more than one business or contract, are hired on a temporary basis to perform a specific task, provide invoices and usually set up their own hours of work, using their own tools and equipment.
Later, Louis discovered that the company he worked for had been deregistered and he decided not to pursue the debt any further.
Louis’ situation is an example of sham contracting. Such an arrangement occurs when an employer deliberately masks an employment relationship as an independent contracting arrangement to avoid paying the worker as an employee. Workers such as Louis miss out on rights and entitlements like sick leave, protection against unfair dismissal, workers’ compensation, insurance and minimum awards and conditions.
