Sham Arrangements and the use of Labour Hire in
the Building and Construction Industry
Discussion Paper
December 2010
© Commonwealth of Australia
5692639/8
Table of Contents
1
Introduction ........................................................................................................................... 1
1.1
Terms of reference........................................................................................................ 1
1.2
Scope and purpose of this discussion paper ................................................................ 2
1.3
Participation .................................................................................................................. 4
2
Background – inquiries, investigations and regulation ......................................................... 5
3
Abbreviations and frequently used terms ............................................................................. 7
4
Profile of the building and construction industry in Australia and the incidence of
contracting and labour hire arrangements ................................................................................... 9
5
6
4.1
Important information about ABS statistical data ....................................................... 10
4.2
Extent of use of independent contractor arrangements ............................................. 11
4.3
Independent contractors – other statistics .................................................................. 12
4.4
Extent of use of labour hire employment arrangements ............................................ 12
4.5
State by State incidence of independent contractors and labour hire employees ..... 14
‘Employee’ vs ‘contractor’ ................................................................................................... 16
5.1
Background ................................................................................................................. 16
5.2
Different types of contractors? .................................................................................... 16
5.3
Statutory definitions .................................................................................................... 17
5.4
The common law ......................................................................................................... 20
5.5
The impact of the common law test and various statutory definitions........................ 21
5.6
Options ........................................................................................................................ 22
Labour hire arrangements .................................................................................................. 25
6.1
Labour hire arrangements and the Odco case ........................................................... 25
6.2
Role of labour hire arrangements ............................................................................... 28
6.3
The impact of fraudulent phoenix companies ............................................................. 29
6.4
Joint employment? ...................................................................................................... 30
7
Fairness: drivers in contractual negotiations between employers and workers including
inequality of bargaining power ................................................................................................... 33
7.1
Worker motivations for entering contracting and labour hire arrangements .............. 33
7.2
Employer motivations for contracting and labour hire arrangements ......................... 33
7.3
Bargaining power ........................................................................................................ 35
8
Concerns about sham contracting and labour hire arrangements: evasion by employers of
responsibilities owed to employees and others ......................................................................... 36
8.1
Overview ..................................................................................................................... 36
8.2
Payroll tax and superannuation .................................................................................. 37
© Commonwealth of Australia
5692639/8
9
8.3
Workers’ compensation and OHS .............................................................................. 37
8.4
National Employment Standards entitlements ........................................................... 38
8.5
Other effects of sham contracting and labour hire arrangements .............................. 38
Evasion by workers of taxation obligations ........................................................................ 41
9.1
Introduction ................................................................................................................. 41
9.2
Personal Services Income .......................................................................................... 41
9.3
Compliance problems ................................................................................................. 43
9.4
Costs of evasion ......................................................................................................... 44
10
The regulatory framework for sham arrangements in the building and construction
industry ....................................................................................................................................... 46
10.1
Fair Work Act 2009 ..................................................................................................... 46
10.2 The National Code of Practice for the Construction Industry and the National Code
Guidelines ............................................................................................................................... 51
10.3
Building and Construction Industry Improvement Act 2005 ....................................... 52
10.4
Independent Contractors Act 2006 ............................................................................. 53
10.5
The role of regulatory agencies .................................................................................. 55
Appendix A – Discussion questions............................................................................................... 58
Appendix B – References .............................................................................................................. 60
© Commonwealth of Australia
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1
Introduction
The Office of the Australian Building and Construction Commissioner (ABCC) is a
statutory office created under the Building and Construction Industry Improvement Act
2005 (BCII Act).1 The agency head is Australian Building and Construction
Commissioner (ABC Commissioner), Leigh Johns.
The ABC Commissioner and his office are responsible for ensuring that workplace laws
are upheld in the building and construction industry. The ABC Commissioner seeks to
achieve this by being a full service regulator:2

educating industry participants about their rights and responsibilities under
workplace laws;

investigating suspected contraventions of the law, the National Code of Practice
for the Construction Industry (National Code), federal enterprise agreements and
awards; and

instituting or intervening in proceedings when workplace laws are broken.
The ABC Commissioner’s role is to monitor and promote appropriate standards of
conduct throughout the building and construction industry. Consistent with the main
object of the BCII Act, the ABC Commissioner and his office seek to ensure that work is
carried out fairly, efficiently and productively for the benefit of all industry participants
and for the benefit of the Australian economy as a whole.3
In discharging his functions under the BCII Act, the ABC Commissioner has identified
the need to address the use of sham contracting and labour hire in the building and
construction industry.
The ABC Commissioner announced the scheme of the proposed inquiry into these
issues on 19 November 2010 and noted that the ABCC would convene a round table
conference as part of that inquiry.
1.1
Terms of reference
The matters that will be considered in this inquiry include the following:
1
2
3

The sham arrangement provisions in sections 337-359 of the Fair Work Act 2009
(Cth) (FW Act);

Employees, independent contractors, subcontracting and working arrangements
in the building and construction industry;

The role of labour hire companies in the building and construction industry;

The current definitions of ‘employee’ and ‘independent contractor’ at common law
and in statutes;

The evasion by employers of responsibilities owed to employees in the building
and construction industry by use of devices including subcontracting and labour
hire arrangements;
BCII Act, s 26(1).
BCII Act, s 10.
BCII Act, s 3(1); ABCC, About Us, <http://www.abcc.gov.au/abcc/Aboutus>, Role
<http://www.abcc.gov.au/abcc/Aboutus/Role/>.
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1

The evasion by workers in the building and construction industry of taxation and
other responsibilities by use of devices including creating businesses and
partnerships;

Competition and ‘undercutting’ in the building industry; the role played by labour
hire companies and subcontractors; and

Fairness: inequality of bargaining power as a driver in contractual negotiations
between employers and workers.4
When providing a response to this paper and/or participating in the round table
conference, parties may wish to address the adequacy of the above Terms of
Reference as a basis for exploring the issues concerning the use of sham
arrangements and labour hire in the building and construction industry.
1.2
Scope and purpose of this discussion paper
This paper raises issues for discussion in relation to the use of sham arrangements and
labour hire in the building and construction industry. It is intended to build upon
Discussion Paper Eleven published by the Royal Commission into the Building and
Construction Industry (Cole Royal Commission) entitled Working Arrangements –
Their effects on Workers’ Entitlements and Public Revenue (Discussion Paper
Eleven). Readers of this paper are encouraged to also have regard to Discussion
Paper Eleven.
The following concepts of ‘sham arrangements’, ‘labour hire‘ and ‘contractors’ are
examined in some detail in Parts 5 and 6 of this paper. A preliminary guide to the use
of these terms in this paper is set out below.
‘Building and construction industry’ has a corresponding meaning to the definition of
‘building work’ under the BCII Act, s 5. In summary, building work involves activities
involved in the building of:

buildings, structures or works on land (including land beneath water);

railways and docks; and

fitouts on land (including land beneath water).
Building work also involves the preparatory/finishing operations involved in any of the
building activities listed above. Building work however does not cover drilling and
extraction. Nor does it cover activities involved in building domestic housing in that it
does not cover any work that is part of a project for:

the construction, repair or restoration of a single dwelling house any building
structure of work associated with a single dwelling house; or

the alteration or extension of a single dwelling house, if it remains a single
dwelling house after the alteration or extension.
Nor does it cover a multi-dwelling development involving the construction of four single
dwelling houses or less.
A ‘contractor’ is a worker who is not an employee. Contractors are ‘self-employed’,
and perform work under a contract for services with another party, usually known as the
‘principal contractor’. In this paper, the term contractor includes ‘independent
contractors’ (who might be considered to be ‘genuine’ contractors, for example because
they provide services to more than one principal contractor); and ‘dependent’
4
Leigh Johns, ‘Keynote Address by ABC Commissioner Leigh Johns’ (Speech delivered at the Biennial Australian Labour
Law Association Conference, Adelaide, 19-20 November 2010), 8-9.
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2
contractors (who meet the common law tests for contractor status, but only provide
services to one client).
‘Labour hire’ involves an arrangement whereby a labour hire agency supplies workers
to work at a workplace controlled by its client in return for fees from the client. A
worker’s secondment to a particular client may be on a short term or long term basis.
The client is typically referred to as the ‘host business’, but there is usually no
contractual relationship between the host business and the worker. The worker usually
has a contractual relationship with the labour hire agency, whether as an employee
under a contract of service or an independent contractor under a contract for services.
The nature of these various relationships is sometimes unclear and uncertain. A close
examination of the particular circumstances of the labour hire agency, the ‘host
business and the worker is required to determine the true nature of the relationship
between the parties. For example, if the labour hire agency does little more than
administer the payroll, the ‘true employer’ may be the host business.
A ‘sham arrangement’ or ‘sham contract’ involves misrepresenting or disguising an
employment relationship as one involving a principal and contractor under a contract for
services. This most commonly occurs in one of three ways:

structuring contracts to emphasise features of a contracting arrangement rather
than an employment relationship;

engaging workers through third party labour hire agencies; and/or

interposing an entity that contracts with the business, rather than the worker in his
or her personal capacity.5
Certain conduct in relation to ‘sham arrangements’ is unlawful under Division 6, Part 3-1
of the FW Act. In this paper, the conduct that is regulated by the FW Act is referred to
as ‘FW Act sham arrangements’ or ‘FW Act sham contracting’.6
The purpose of this discussion paper is to provide a framework for:

examining the extent and nature of the use of sham arrangements and labour hire
in the building and construction industry;

considering the adequacy of the current regulatory framework applicable to sham
contracting and labour hire arrangements; and

finding ways to eliminate the use of sham arrangements, including inappropriate
use of labour hire to:
o
ensure that workers who are in fact employees receive their lawful employee
entitlements;
o
ensure that workers pay the appropriate amount of income tax; and
o
create a level playing field for competitors in the industry.
The ABCC welcomes comments on all aspects of this paper. Specific questions are
included in the body of this paper to assist interested parties to provide such comment.
However, the ABCC invites comment on any issues that are relevant to the use of sham
arrangements and labour hire in the building and construction industry.
This paper has been prepared for discussion purposes only. Whilst it has been
approved by the ABCC for release as a discussion paper, it does not represent the
views of the ABC Commissioner. Rather, it is designed to raise issues and enable
5
6
Andrew Stewart, ‘Redefining Employment? Meeting the Challenge of Contract and Agency Labour’ (2002) 15 Australian
Journal of Labour Law 235, 257-275.
See examples at paragraph 10.1(a) of this paper.
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3
responses to be taken into account for the purposes of the ABC Commissioner’s inquiry
into issues arising from the use of sham arrangements and labour hire in the building
industry.
1.3
Participation
Participation in this inquiry is voluntary.
Persons submitting a response or otherwise participating in the Roundtable conference
must understand that, unless specific arrangements are made to the contrary, the
information disclosed may be used either as a trigger to commence an investigation by
the ABCC or as evidence in civil penalty litigation.
(a)
Submissions
The ABCC invites interested persons to provide any written responses to this
paper to the ABCC by Monday, 7 March 2011. Responses must be submitted
through an online submission process at www.abcc.gov.au/shamcontracting.
The ABCC will treat all responses as public documents and publish them on its
website unless prior arrangements are made in relation to confidentiality.
Individuals who seek to make private and confidential complaints ought not use
this avenue, but rather should contact the ABCC in the usual way.
(b)
Roundtable conference
It is proposed that the Roundtable conference to be held for the purposes of this
inquiry will occur in a number of small sessions in Sydney, Melbourne, Brisbane,
Canberra and Perth. These sessions are presently being organised, but will
likely occur in at the end of March and early April 2011.
The invitees will include relevant Federal ministers and their departments, other
regulatory agencies, State ministers, unions and the Australian Council of Trade
Unions, employer organisations and other peak bodies, individual employees and
contractors, experts in accounting and taxation, labour researchers and members
of the community.
The ABCC invites interested stakeholders to register to attend the Roundtable.
Registration details are available at www.abcc.gov.au/shamcontracting
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2
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Background – inquiries, investigations and regulation
September 1997
The National Code of Practice for the Construction Industry
(National Code), developed by the Australian Procurement
and Construction Council, commenced operation.
March 1998
Introduction of the Australian Government Implementation
Guidelines for the National Code of Practice for the
Construction Industry (NC Guidelines).
July 2001
Alienation of personal services income (APSI) rules in the
Income Tax Administration Act 1997 (Cth) (ITAA)
commenced operation.
August 2001
By Letters Patent dated 29 August 2001, the Honourable
Terence Rhoderic Hudson Cole RFD QC was appointed a
Royal Commissioner to inquire into certain matters relating to
the building and construction industry (Cole Royal
Commission).
July 2002
APSI Rules began to apply with full effect in the building and
construction industry.
August 2002
The Cole Royal Commission’s Interim Report (Cole Royal
Commission Interim Report) was published.
September 2002
The Cole Royal Commission’s Discussion Paper Eleven was
published.
October 2002
The Building Industry Taskforce (BIT) was established.
February 2003
The Cole Royal Commission’s Final Report (Cole Royal
Commission Final Report) was presented to the GovernorGeneral. Sham contracting was addressed in Volume 9
Reform – National Issues (Part 3) (paragraphs 261-321).
October 2003
The Commonwealth Senate’s Employment, Workplace
Relations and Education References Committee inquiry into
the provisions of the draft Building and Construction Industry
Improvement Bill 2003 and related findings of the Cole Royal
Commission into the building and construction industry was
tabled in Parliament (2003 Senate Inquiry).
December 2003
NC Guidelines were amended.
June 2004
The 2003 Senate Inquiry final report, Beyond Cole - The
future of the construction industry: confrontation or cooperation? was tabled in Parliament (Beyond Cole Report).
December 2004
The then Minister for Employment and Workplace Relations,
the Hon. Kevin Andrews MP, asked the House of
Representatives Standing Committee on Employment,
Workplace Relations and Workforce Participation Committee
to inquire and report on independent contracting and labour
hire arrangements across Australia (2004 House of
Representatives Inquiry).
5
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June 2005
Report of the Inquiry into Labour Hire Employment in Victoria
(Victorian Inquiry) was published by the Victorian
Parliament’s Economic Development Committee.
August 2005
The 2004 House of Representatives Inquiry final report,
Making it work: Inquiry into independent contracting and
labour hire arrangements (Making it Work Report), was
tabled in Parliament.
September 2005
Building and Construction Industry Improvement Act 2005
(Cth) (BCII Act) commenced operation.
November 2005
NC Guidelines were amended.
June 2006
The Independent Contractors Bill 2006 and the Workplace
Relations Legislation Amendment (Independent Contractors)
Bill 2006 were referred to the Commonwealth Senate’s
Education, Employment and Workplace Relations Committee
for inquiry (Senate IC Bill Inquiry).
June 2006
NC Guidelines were amended.
August 2006
The IC Bill Senate Inquiry’s final report, Provisions of the
Independent Contractors Bill 2006 and the Workplace
Relations Legislation Amendment (Independent Contractors)
Bill 2006 was tabled in Parliament (Senate IC Bill Report)
November 2006
NC Guidelines were amended.
June 2007
Independent Contractors Act 2006 (Cth) (IC Act) and sham
arrangement provisions in the Workplace Relations Act 1996
(Cth) commenced operation.
July 2009
Fair Work Act 2009 (Cth) (FW Act) commenced operation.
August 2009
Labor Government’s revised NC Guidelines commenced
operation.
6
3
Abbreviations and frequently used terms
ABCC
Office of the Australian Building and Construction Commissioner
ABC
Commissioner
Australian Building and Construction Commissioner
ABN
Australian Business Number
ABS
Australian Bureau of Statistics
ACTU
Australian Council of Trade Unions
AIRC
Australian Industrial Relations Commission
APSI
Alienation of Personal Services Income
ATO
Australian Taxation Office
BCII Act
Building and Construction Industry Improvement Act 2005 (Cth)
Beyond Cole
Report
Senate's Employment, Workplace Relations and Education
References Committee report titled Beyond Cole - The future of
the construction industry: confrontation or co-operation?
BIT
Building Industry Taskforce
CFMEU
Construction, Forestry, Mining and Energy Union
Cole Royal
Commission
The 2001 Royal Commission to inquire into certain matters relating
to the building and construction industry
Cole Royal
The Cole Royal Commission’s Final Report handed to the
Commission Final Governor-General in February 2003
Report
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Discussion Paper
Eleven
The Cole Royal Commission’s Discussion Paper Eleven entitled
Working Arrangements – Their Effects on Workers’ Entitlements
and Public Revenue
DEEWR
Department of Education, Employment and Workplace Relations
DEWR
Department of Employment and Workplace Relations, now
DEEWR
Enterprise
agreement
A collective agreement made under the FW Act
FOES
Forms of Employment Survey
FW Act
Fair Work Act 2009 (Cth)
FW Regulations
Fair Work Regulations 2009 (Cth)
FWO
Office of the Fair Work Ombudsman
HIA
Housing Industry Association
IC Act
Independent Contractors Act 2006 (Cth)
ILO
International Labour Organisation
ITAA
Income Tax Assessment Act 1997 (Cth)
Making it Work
House of Representatives Standing Committee on Employment,
7
5692639/8
Report
Workplace Relations and Workforce Participation Committee
report titled Making it work: Inquiry into independent contracting
and labour hire arrangements
MBA
Master Builders Australia
National Code
National Code of Practice for the Construction Industry
NC Guidelines
Implementation Guidelines for the National Code of Practice for the
Construction Industry (as at August 2009)
NES
National Employment Standards
NIER
National Institute of Economic and Industry Research
OHS
Occupational health and safety
PAYG
Pay-as-you-go
PSI
Personal Services Income
Senate IC Bill
Inquiry
Commonwealth Senate’s Education, Employment and Workplace
Relations Committee 2006 Inquiry into the provisions of the
Independent Contractors Bill 2006 and Workplace Relations
Legislation Amendment (Independent Contractors).
Senate IC Bill
Report
Senate IC Bill Inquiry’s final report, Provisions of the Independent
Contractors Bill 2006 and the Workplace Relations Legislation
Amendment (Independent Contractors) Bill 2006
SGA Act
Superannuation Guarantee (Administration) Act 1992 (Cth)
TAA
Taxation Administration Act 1953 (Cth)
Vic OHS Act
Occupational Health and Safety Act 2004 (Vic)
WR Act
Workplace Relations Act 1996 (Cth), as amended by the Work
Choices Act
2003 Senate
Inquiry
Senate Employment, Workplace Relations and Education
References Committee inquiry into the provisions of the draft
Building and Construction Industry Improvement Bill 2003 and
related findings of the Cole Royal Commission into the building
and construction industry
2004 House of
Representatives
Inquiry
House of Representatives Standing Committee on Employment,
Workplace Relations and Workforce Participation Committee to
inquire and report on independent contracting and labour hire
arrangements across Australia
8
4
Profile of the building and construction industry in
Australia and the incidence of contracting and labour hire
arrangements
The building and construction industry is one of the most significant industries in the
Australian economy.
In the year 2007/08, its total production (as measured by the gross value added)
reached over $77 billion, accounting for approximately seven per cent of Australia’s
gross domestic product.7
The significant contribution that the industry makes to the Australian economy is also
evidenced by its labour force statistics. In November 2009, there were approximately
10.7 million people working in Australia.8 The construction industry alone employed or
engaged approximately 940,500 people, equating to around 8.8 per cent of Australia’s
total labour force.9
Contracting and labour hire arrangements have historically played, and continue to, play
a significant role in the building and construction industry. In its discussion paper
released as part of a House of Representatives inquiry into independent contracting and
labour hire arrangements in 2004 (2004 House of Representatives Inquiry), the
Department of Employment and Workplace Relations (DEWR) noted that such
arrangements are essential to Australian businesses as they enable them to compete
more effectively in Australian and international markets and adapt to changing
economic conditions. It was also noted that the construction industry is sensitive to the
economic cycle meaning the level of labour resources required at any one time changes
constantly. Contracting is one way in which businesses can reduce the need for ‘labour
hoarding’ or requiring employees to undertake significant amounts of overtime.10
In submissions made to the Royal Commission into the Building and Construction
Industry (Cole Royal Commission), industry participants confirmed the benefits of
legitimate contracting arrangements for both business and workers. In its submission to
the Cole Royal Commission, Master Builders Australia (MBA) expressed similar
sentiments to those above, stating:
the building and construction industry is characterised by the use of subcontracting
arrangements as a direct result of the efficiencies that can be gained by assembling
specialist skills for project-based work where that work is conducted for discrete and
finite periods.11
With regard to the potential benefits for workers, the Housing Industry Association (HIA)
submitted that:
...legitimate self employed workers are likely to be more motivated because they can
have a greater influence on their own output and potential remuneration. Furthermore
they are likely to have choice over their system of remuneration. This can be
expected to increase their productivity and lead to improvements in timeliness.12
7
8
9
10
11
12
ABS, 2009-10 Year Book Australia (Cat No. 1301.0), 590.
ABS, FOES – November 2009 (Cat No. 6359.0), 5.
Ibid, 590-591.
DEWR, Submission No 65 (Discussion Paper) to the 2004 House of Representatives Inquiry, 7-9
<http://www.aph.gov.au/house/committee/ewrwp/independentcontracting/subs/sub65dispaper.pdf>.
MBA, Submission No WA_021 to the Cole Royal Commission, 18 July 2001, 1
<http://www.royalcombci.gov.au/docs/submissions/WA_021.pdf>.
HIA, Submission No DP3_004 to the Cole Royal Commission, 5 July 2002, 4
<http://www.royalcombci.gov.au/docs/submissions/DP3_004.pdf>.
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9
Additional benefits for workers from contracting arrangements (identified in the DEWR
discussion paper) include the freedom to determine their working hours, who for and
what type of work they choose to undertake and when they take holidays.13
This Part outlines the extent and incidence of independent contracting and labour hire
arrangements in Australia relying on current publicly available data.
4.1
Important information about ABS statistical data
The information used in this Part is sourced from ABS statistics that pertain to the
‘construction industry’.
The Australian Bureau of Statistics (ABS) reference to ‘construction industry’ is different
to the scope of ‘building work’ that is used in the BCII Act.14
For the purposes of ABS statistics, the ‘construction industry’ includes work in
connection with:

the construction of buildings and other structures, additions, alterations,
reconstruction, installation, and maintenance and repairs of buildings and other
structures;

demolition or wrecking of buildings and other structures, and clearing of building
sites; and

blasting, test drilling, landfill, levelling, earthmoving, excavating, land drainage
and other land preparation.
Further, for ABS purposes, the ‘construction industry’ encompasses three subdivisions;
namely Building Construction, Heavy and Civil Engineering Construction and
Construction Services.15
Only the most recent ABS statistics refer to the term ‘independent contractor’.16 Prior to
this, independent contractors were predominantly captured under the definition of
‘owner managers’.17 For this reason, as well as to ensure that the most recent trends
are reflected in this discussion paper, the information contained here is principally
based on statistics from November 2008 onwards.
The new ABS definition of ‘independent contractor’ includes people who operate their
own business and who are engaged under a contract for services (a commercial
contract). It includes situations or arrangements where the worker has a direct
relationship with a client as well as where they obtain work through an intermediary.
The 2008 release of the Forms of Employment Survey (FOES) also introduced a
section dealing with workers who found their job through a labour hire firm or
employment agency. Again, these statistics should be considered carefully, as they
relate to all persons who found work via a labour hire firm/employment agency, and are
not limited to those directly engaged by the firm or agency. Further, they do not
distinguish between workers who remain in a contracting or employment relationship
with that firm or agency and those that become contractors or employees of the host
business to which they are referred.
13
14
15
16
17
DEWR, above n 10, 8.
See section 5
ABS, Australian and New Zealand Standard Industrial Classification 2006 (Cat No. 1292.0), 208-219.
The Forms of Employment Survey was redeveloped in November 2008 to better capture data relating to independent
contractors.
House of Representatives Standing Committee on Employment, Workplace Relations and Workforce Participation,
Parliament of Australia, Making it work: Inquiry into independent contracting and labour hire arrangements (2005) [2.31]
<http://www.aph.gov.au/house/committee/ewrwp/independentcontracting/report/fullreport.pdf> (Making it Work Report).
5692639/8
10
Finally, it is important to acknowledge that the information contained in this Part is
based on information provided by the persons who are a party to the arrangements; it
does not distinguish between legitimate and illegitimate arrangements.18
4.2
Extent of use of independent contractor arrangements
In November 2008, across all industries there were approximately 967,100 independent
contractors (with a further 134,100 identified as independent contractors in their second
job).19 The number of workers who categorised themselves as ‘independent contractor’
in their main job increased to approximately one million in 2009 (that is, approximately
9% of all Australian workers).20 Of these, 33 per cent were most likely to work in the
construction industry – a small increase from 32 per cent in 2008.21
Chart 1 is a comparison of the proportion of the labour force classified as employees
and independent contractors by industry, as at November 2009. The table highlights
that the proportion of employees is fairly even across most industries and that at 5.9 per
cent, the proportion of employees in the construction industry is the eight-largest across
all industries. However, the proportion of independent contractors working in the
construction industry (33 per cent) is easily the highest across all industries, with the
professional, scientific and technical services industry having the second-largest
proportion (14.6 per cent).
Source: Derived from ABS (Forms of Employment Survey: Australia, November 2009, Cat No. 6359.0) page 20
Note: the ABS advises that some of these percentages have a relative standard error of 25% to 50% and should be used
with caution
18
19
20
21
The difficulties associated with identifying legitimate contracting arrangements are discussed in Part 5 of this discussion
paper. The effects of illegitimate arrangements are discussed in detail in Parts 8 and 9.
ABS, FOES – November 2008 (Cat No. 6359.0), 6-7.
ABS, above n 8, 6.
ABS, above n 19, 6; ibid, 7.
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11
Chart 2 illustrates the incidence of contractors in the construction industry, broken down
by subcategories of the industry.
Note, that these figures are drawn from ABS statistics which used the term ‘own
account worker’ (rather than ‘independent contractor’). This term was defined to mean a
worker that hires no employees.
Source: Derived from ABS (2009-10 Year Book Australia, June 2010, Cat No. 1301.0) page 591
Note: the ABS advises that some of these percentages have a relative standard error of 25% to 50% and should be used
with caution
4.3
Independent contractors – other statistics
In November 2009, only 57 per cent of contractors had authority over their own working
procedures. This was a drop from 62 per cent in November 2008.22
The number of contractors who had been with their current business for less than one
year remained relatively steady between 2008 and 2009, fluctuating from 15 to 14 per
cent of all contractors. Similarly, the percentage of contractors who had a say in their
start or finish times remained relatively steady, going from 84 per cent to 83 per cent.23
These statistics are not limited to the construction industry. However, as noted above,
a high proportion of contractors are engaged in the construction industry.
4.4
Extent of use of labour hire arrangements
The 2004 House of Representatives Inquiry final report, Making it work: Inquiry into
independent contracting and labour hire arrangements (Making it Work Report),
observed that there is a ‘lack of reliable quantification’ concerning the extent of labour
hire arrangements. Reasons include the fact that different surveys include different
types of workers and employers in calculating the incidence of labour hire
arrangements.24
22
23
24
Ibid, 7.
Ibid.
Making it Work Report, above n 17, 5-6.
5692639/8
12
However, on the basis of the ABS statistics, it is clear that labour hire arrangements are
less common than direct contracting in the construction industry.
As illustrated by Chart 3 below, in November 2008 the manufacturing industry had the
largest proportion of workers who found work through a labour hire firm, followed by
professional, scientific and technical services. The construction industry had the
seventh largest proportion of workers who found their job through a labour hire firm or
employment agency – equating to approximately 6.1 per cent of all labour hire workers.
The total number of workers who found work through a labour hire firm, across all
industries, was approximately 576,700 (or five per cent of all workers). Of this figure,
three per cent (or approximately 17,300) were independent contractors.25 The total
number of contractors in the same year was approximately 967,100.
Source: Derived from ABS (Forms of Employment Survey: Australia, November 2008, Cat No. 6359.0) page 45
Note: the ABS advises that some of these percentages have a relative standard error of 25% to 50% and should
be used with caution
25
ABS, Labour Market Statistics – January 2010 (Cat No. 6105.0), 12.
5692639/8
13
Table 1 sets out a number of other relevant statistics for this category of employee. Of
particular note;22.8 per cent of employees were paid by the labour hire firm or
employment agency; almost two-thirds of engagements were for a duration longer than
a year and over thirty per cent were for over over three years.
Table 1: Key characteristics of all employees who found
work through a labour hire fire/employment agency
(November 2008)
Paid by labour hire firm/employment agency (%)
Yes
No
22.8
77.2
Currently registered with a labour hire firm/employment agency (%)
Yes
No
37.8
62.2
Still registered with the labour hire firm/employment agency that found job (%)
Yes
No
37.8
62.2
Continuous/ongoing work from a
labour hire firm/employment agency (%)
Yes
No
57.3
42.7
Length of continuous duration with current employer/business (%)
Less than one year
37.4
1-2 years
31.6
3-5 years
17.4
6-9 years
8.7
10-19 years
4.0
20 years and over
1.0
Source: Derived from ABS (Forms of Employment Survey: Australia, November 2009, Cat No. 6359.0) pages 39
and 49
Note: the ABS advises that some of these percentages have a relative standard error of 25% to 50% and should
be used with caution
4.5
State-by-State incidence of independent contractors and labour hire
employees
Finally, the following is an illustration of the breakdown of the incidence of contractors
and labour hire employees by State (Chart 4).
These figures cover all industries.
As can be seen, approximately one-third of all independent contractors and over onethird of all labour hire employees are usually resident in New South Wales. This is
closely followed by Victoria (comprising 24.2 per cent of independent contractors and
26.7 per cent of labour hire employees) and Queensland (with 21 per cent of
independent contractors and 15.9 per cent of labour hire employees).
5692639/8
14
Source: Derived from ABS (Forms of Employment Survey: Australia, November 2008, Cat No. 6359.0, pages 18
and 42
Note: the ABS advises that some of these percentages have a relative standard error of 25% to 50% and should
be used with caution
The ABCC invites views on the following questions:
5692639/8

Do the statistics accord with experience and perception about the incidence of
contracting and labour hire arrangements in the building and construction
industry?

Are contracting and/or labour hire arrangements more common in some parts of
Australia than others? Why?

What factors explain the relatively high incidence of contracting and labour hire
arrangements in the building and construction industry, compared to other
industries?
15
‘Employee’ vs ‘contractor’
5
Part 5 considers the current definitions of ‘employee’ and ‘contractor’ at common law
and under State and Commonwealth legislation.
5.1
Background
Traditionally, employees have been viewed as subject to the control and direction of
their employer. Contractors, on the other hand, have historically been viewed as
business owners who work under commercial contracts, rather than employment
contracts.
The law recognises these differences by distinguishing between ‘employees’, who are
engaged under a contract of service, and ‘contractors’, who are engaged under a
contract for services.
The distinction between a contractor and an employee is an important one because it
affects the rights and obligations of the parties to the contract. For example, only
employees have rights and obligations under the National Employment Standards
(NES) and industrial instruments including modern awards and enterprise agreements.
The employment relationship is also the basis upon which a range of other rights and
obligations arise, such as those relating to taxation and superannuation. For example,
contractors are responsible for certain aspects of the relationship for which an employer
would usually be responsible in an employment relationship, including remitting income
tax to the Australian Taxation Office (ATO), paying GST and making contributions to a
superannuation fund. Further, it has long been established that employers are
vicariously liable only for the wrongful acts of their employees, and not for those of
workers providing services as contractors.26
5.2
Different types of contractors?
There are some workers who do not fit comfortably into either of the traditional
categories of ‘employee’ or ‘contractor’.
In 2003, the International Labour Organsiation (ILO) identified that:
[m]idway between self-employment and dependent employment, there are
economically dependent workers, who are formally self-employed but depend on
one or a few clients for their income.27
Some countries have sought to tackle the problem of sham contracting by recognising
and regulating this intermediate category of workers.28
For example, in the UK, some employment-related statutes accord rights not only to
‘employees’ but also to ‘workers’ that are engaged:
under ... any other contract, whether express or implied and (if it is express)
whether oral or in writing, whereby the individual undertakes to do or perform
personally any work or services for another party to the contract whose status is
not by virtue of the contract that of a client or customer of any profession or
business undertaking carried on by the individual …’.29
26
27
28
29
There is authority from as early as the mid-nineteenth century that a person can be held responsible for the actions of their
employees, but not the actions of contractors they engage to carry out work: Quarman v Burnett (1840) 6 M & W 499; 151
ER 509, cited in Andrew Stewart, above n 5, 240.
International Labour Organisation, ‘Report V: The scope of the employment relationship’ (Report presented at the
International Labour Conference - 91st Session, Geneva, 2003) 28.
Andrew Stewart, above n 5, 266-268.
Employment Rights Act 1996 (UK), s 230(3).
5692639/8
16
The term ‘dependent’ contractor has been used to describe a worker who would be a
contractor under the common law, but provides service to only one client.30 Dependent
contractors are more like employees than independent contractors, and became
prominent through research on the use of artificial arrangements for engaging labour
commissioned by the ATO in the mid-1990s.31 However, this category of worker is not
separately recognised by the law in Australia.
The most common arguments advanced in support of the recognition of different
categories of contractor are that:

dependent contractors are typically more vulnerable and less skilled than
independent contractors and the law should provide greater protection to those
workers;32

the extent to which hiring contractors is a more attractive proposition to clients
than engaging employees should be limited;33 and

the law as it stands encourages sham arrangements, which can give rise to tax
evasion.34
On the other hand, providing different rules for different types of contractors could
increase complexity. It may also be difficult to determine whether a person is a
dependent or independent contractor at any particular time.
5.3
Statutory definitions
There are no universal definitions of ‘employee’ or ‘contractor’ under Australian law.
Different definitions are used for statutory purposes.
For example, legislation can:

deem workers to be employees (where they would not usually be regarded as
employees);

extend the definition of an employee to include contractors for certain specified
purposes;

specifically refer to workers under labour hire arrangements; and

not distinguish between employees and contractors, and therefore apply to (and
in many instances, protect) employees and contractors equally.
(a)
‘Employee’
(i)
Superannuation
The Superannuation Guarantee (Administration) Act 1992 (Cth)
(SGA Act), expands upon the common law meaning of ‘employee’
and makes particular provision to avoid doubt as to the status of
30
31
32
33
34
See, for example, Ian Watson, John Buchanan, Iain Campbell and Chris Briggs, Fragmented Futures: New Challenges in
Working Life (The Federation Press, 2003), chapter 6.
Breen Creighton and Andrew Stewart, Labour Law (The Federation Press, 5th ed, 2010) 168.
See, for example, New South Wales Government, Submission No 35 to the 2004 House of Representatives Inquiry, 11
March 2005, 49 <http://www.aph.gov.au/house/committee/ewrwp/independentcontracting/subs/sub35.pdf>.
See, for example, AMWU, Submission No 16 to the Senate Education, Employment and Workplace Relations Committee,
Provisions of the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent
Contractors) Bill 2006 (Senate IC Inquiry), July 2006, 2.
<http://www.aph.gov.au/Senate/committee/eet_ctte/completed_inquiries/2004-07/contractors06/submissions/sub16.pdf>.
For example, the Hansen Yuncken argued in its submission to the Cole Royal Commission that ‘[i]t is far better to
acknowledge the existence of day labour subcontracting and put in place laws which cause and allow for taxation to be
properly collected: Hansen Yuncken, Submission No WA_018, 11 July 2002 to the Cole Royal Commission, 1
<http://www.royalcombci.gov.au/docs/submissions/WA_018.pdf>. See also Part 9 of this paper for discussion about nonpayment of income tax by workers engaged under sham contracts.
5692639/8
17
certain workers, in section 12 which provides (so far as is relevant)
that:35
(1)
Subject to this section, in this Act, employee and employer
have their ordinary meaning. However, for the purposes of
this Act, subsections (2) to (11):
(a) expand the meaning of those terms; and
(b) make particular provision to avoid doubt as to the status
of certain persons.
...
(3)
If a person works under a contract that is wholly or
principally for the labour of the person, the person is an
employee of the other party to the contract.
...
(11)
(ii)
A person who is paid to do work wholly or principally of a
domestic or private nature for not more than 30 hours per
week is not regarded as an employee in relation to that
work.
Occupational Health and Safety
Section 21 of the Occupational Health and Safety Act 2004 (Vic) (Vic
OHS Act) provides that:
[a]n employer must, so far as is reasonably practicable, provide
and maintain for employees of the employer a working
environment that is safe and without risks to health.
Subsection 21(2) provides that for the purposes of the above
obligation:
(a) a reference to an employee includes a reference to an
independent contractor engaged by an employer and any
employees of the independent contractor; and
(b) the duties of an employer under those subsections extend to
an independent contractor engaged by the employer, and any
employees of the independent contractor, in relation to
matters over which the employer has control or would have
control if not for any agreement purporting to limit or remove
that control.
Similarly, in Western Australia, section 23F of the Occupational
Safety and Health Act 1984 (WA) provides amongst other things, that
labour hire agencies and host employers have duties in relation to
labour hire workers as if they were employees of both the agency and
the host.36
(iii)
Workers’ Compensation
In Victoria, sections 8 and 9 of the Accident Compensation Act 1985
(Vic) deem labour hire workers to be employed by the labour hire
35
36
SGA Act, s 12.
See discussion about this provision in Economic Development Committee, Parliament of Victoria, Final Report - Inquiry into
Labour Hire Employment in Victoria (2005) 149 <http://www.parliament.vic.gov.au/archive/edic/inquiries/Labour_Hire/EDCFinalReport_LabourHireEmployment_2005-07.pdf>.
5692639/8
18
agency that supplies their service for the purposes of the scheme of
workers’ compensation established under the legislation.
(iv)
Anti-discrimination
Commonwealth anti-discrimination legislation generally defines
‘employment’ to include contracting arrangements. For example,
section 5 of the Age Discrimination Act 2004 (Cth) provides that the
term employment includes ‘work under a contract for services’.37
(v)
Workplace Relations
Most entitlements provided for in the FW Act are contingent on the
existence of an employment relationship between an employer and
an employee. However, rather than setting out a comprehensive
definition of ‘employee’ or ‘employer’38, the FW Act relies on the
common law definitions of these terms39, that is, the tests that the
courts have developed over time to determine whether a person is or
is not an employee (see 5.4 below in relation to the common law
‘definition’ of employee).
The FW Act also extends some protections to contractors. For
example, the ‘general protections’ provisions in Part 3-1 (which
protects certain persons against ‘adverse action’ and other forms of
detrimental treatment) extend to independent contractors as well as
employees.40
(b)
‘Contractor’
The term ‘contractor’ is less commonly defined in legislation. Notably, the term
‘independent contractor’ is not defined in the Independent Contractors Act 2006
(Cth) (IC Act) except to say that the term is ‘not limited to a natural person’.41
The IC Act applies to ‘services contracts, defined in section 5(1) as contracts for
services to which an independent contractor is a party. The IC Act therefore
adopts the common law distinction between employees and independent
contractors.42
However, there are statutory tests that are used to identify contractors for specific
purposes. For example, under the Income Tax Assessment Act 1997 (Cth)
(ITAA), taxpayers who earn income under a contract for services are required to
assess on the basis of the ‘personal services income’ (PSI) test whether they are
a ‘personal services income business’ (that is, a genuine independent contractor)
for tax purposes. The test is intended to distinguish income earned through
genuine businesses activities from income earned under employment-like
arrangements. Each category is then subject to different tax treatment under the
ITAA (see Part 9 below for further information on the PSI test).
37
38
39
40
41
42
See also Disability Discrimination Act 1992 (Cth) s 4, Racial Discrimination Act 1975 (Cth) s 3, Sex Discrimination Act 1984
(Cth) s 4.
See FW Act, s 15, which refers to the ‘ordinary meanings’ of the terms ‘employer’ and ‘employee’.
Breen Creighton and Andrew Stewart, above n 31, 164.
For example, sub-section 342(1) of the FW Act defines adverse action to include situations where a person (the principal)
has entered into a contract for services with an independent contractor, and terminates the contract or injures the
independent contractor in relation to the terms or conditions of the contract (see further Items 3 and 4 of sub-item 342(1),
and, in relation to adverse action by an independent contractor, Item 6).
IC Act, s 4.
See Anthony Forsyth, ‘The 2006 Independent Contractors Legislation: An Opportunity Missed’ (2007) 35 Federal Law
Review 329, 331-332.
5692639/8
19
The PSI test uses a range of factors to distinguish a genuine independent
contractor from other workers engaged under contracts for services, namely
whether:
5.4

income is received for producing specified results or outcomes;

the worker provides their own tools and equipment;

the worker is liable for the cost of rectifying any defective work;

more than 80% of income is earned from each client;

the worker performs work for two or more clients who are unrelated;

the worker employs employees or apprentices, or engages subcontractors;
and

whether the worker has business premises that are physically separate
from their home.
The common law
The courts have developed a multi-factor or ‘multiple indicia’ test to determine whether
a worker is an employee or a contractor. This test was set out and applied in two
leading High Court decisions: Stevens v Brodribb Sawmilling Co Pty Ltd43 and Hollis v
Vabu Pty Ltd.44
The multiple indicia test involves looking at the totality of the relationship between the
parties,45 including how the relationship operates in practice. Courts have tended to
place greater weight on some factors as indicative of an employment relationship,
including the employer’s right to control the manner in which work is performed, and the
extent to which the worker is ‘integrated’ into (or ‘part and parcel of’) the business.46
While a written contract may specify that a relationship is one between ‘principal and
contractor’, this factor alone will not be determinative of the relationship’s legal status.47
As one judge famously stated:
[t]he parties cannot create something which has every feature of a rooster, but call it
a duck and insist that everyone else recognise it as a duck.48
The courts have also made it very clear that each case will turn on its own facts.49
For this reason, it is not possible to identify a definitive list of criteria by which a worker’s
status can be determined. As the High Court has explained:
The modern approach is... to have regard to a variety of criteria. This approach is not
without its difficulties because not all of the accepted criteria provide a relevant test in
all circumstances and none is conclusive. Moreover, the [employment] relationship
itself remains largely undefined as a legal concept except in terms of the various
criteria, the relevance of which may vary according to the circumstances. 50
However, it is possible to identify the key factors that courts have taken into account
when determining whether a worker is a contractor or an employee. These are
summarised in Table 2 below:
43
44
45
46
47
48
49
50
(1986) 160 CLR 16.
(2001) 207 CLR 21.
Hollis v Vabu Pty Ltd (2001) 207 CLR 21, at 33, 41.
See the authorities discussed in Breen Creighton and Andrew Stewart, above n 31, 181-182.
Narich Pty Ltd v Commissioner of Pay-roll Tax [1983] 2 NSWLR 597.
Re Porter (1989) 34 IR 179 at 184 per Gray J. This decision is also well known for Gray J’s articulation of the concept of
‘economic dependency’ as an indicator of the existence of an employment relationship, although this approach has not
subsequently been adopted to any appreciable extent: see Breen Creighton and Andrew Stewart, above n 31, 185–186.
Hollis v Vabu Pty Ltd (2001) 207 CLR 21; Damevski v Giudice 202 ALR 494.
Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 35 per Wilson and Dawson JJ.
5692639/8
20
Table 2: Key factors to be taken into account when
determining whether a worker is a contractor or an employee
Contractor
Employee
The worker chooses how, where and when to
The employer exercises, or has the right to
perform tasks.
exercise, control over the manner in which work is
performed, place of work and/or hours of work
The worker works on a number of different projects
The worker works exclusively for the employer.
for different principals or genuinely has the right to
do so.
The work can be delegated, outsourced or sub-
The work cannot be delegated, outsourced or
contracted to one or more third parties.
subcontracted to third parties
The worker provides and maintains their own
Tools and equipment are provided by the employer.
equipment.
The worker has separate places of work and/or
The worker is presented to the world at large as an
advertises their services at large.
emanation of the business (e.g. works at or from
the employer’s business location, is required to
wear a uniform).
The worker is responsible for business expenses
The employer deducts income tax and makes
such as income tax and insurance.
superannuation contributions on the worker’s
behalf.
The worker is paid by reference to completion of
The worker is paid a periodic wage or salary.
tasks.51
The worker carries a risk of loss or has the
The worker does not stand to make a profit/loss.
opportunity to profit from undertaking the work.
5.5
The impact of the common law test and various statutory definitions
Some commentators have suggested that reliance on the multi-factor test for
determining employee or independent contractor status exposes vulnerable workers to
exploitation and imposes significant compliance costs on businesses that engage a
diverse workforce.52 In particular, it has been pointed out that the common law test is
open to manipulation, in that ‘it effectively permits one or both parties to evade
obligations that would otherwise be imposed under employment legislation or industrial
instruments.53 On the other hand, others argue strongly that the flexibility achieved by
51
52
53
When considering this factor for the purposes of rights and obligations under the FW Act, it is important to note that the FW
Act recognises that special arrangements can be made for employees to be paid by reference to completion of tasks as
‘pieceworkers’ in some circumstances. Under the FW Act, pieceworkers are employees, not contractors. Whether or not
an employee is a pieceworker is determined by reference to the relevant industrial instrument (e.g. enterprise agreement or
modern award), or, in the case of an award/agreement-free employee, by the definition set out in regulation 1.12 of the Fair
Work Regulations 2009 (Cth) (FW Regulations). Piecework arrangements in industrial instruments are generally subject
to strict rules and safeguards. For example, clause 19.6 of the Building and Construction Industry General On-Site Modern
Award 2010 requires a written agreement to be made between the employer and the employee before piece rates can be
paid. Piece rates agreements can be terminated upon four weeks’ written notice. Where pieceworker arrangements are
properly in place, the fact that a worker is paid by reference to the completion of tasks will not indicate that a worker is a
contractor.
See, for example, Andrew Stewart, Submission No 69 to the 2004 House of Representatives Inquiry, 18 April 2005, 44
<http://www.aph.gov.au/house/committee/ewrwp/independentcontracting/subs/sub69.pdf>.
Breen Creighton and Andrew Stewart, above n 31, 188. These arguments are explored further in Andrew Stewart, above n
5, 242–251.
5692639/8
21
the common law test is desirable, as it ensures that the rights and obligations of the
parties reflect the substance, rather than merely the form, of an arrangement.54
Similarly, whilst the different statutory definitions and approaches reflect the specific
policy objectives of the legislation concerned and the belief that contractors should be
entitled to the same protections as employees in certain circumstances,55 the
differences can lead to inconsistent outcomes, with workers being found to be
employees for some purposes and contractors for others.56
5.6
Options
One way to clarify the status of ‘employee’ and ‘contractor’ would be to adopt consistent
definitions across Commonwealth and State legislation. This approach was suggested
in a number of submissions to both the Cole Royal Commission and the 2004 House of
Representatives Inquiry.57
Many of the submissions to these inquiries suggested that such a statutory definition
should incorporate components of the PSI test used by the ATO to identify contractors,
in addition to the indicia considered by the courts. 58
The House of Representatives Standing Committee ultimately made the following
recommendations:
Recommendation 2
The Committee recommends that the Australian Government maintain the
common law approach to determine employment status and distinguish
between employee and legitimate independent contractors.
Recommendation 3
The Committee recommends that the Australian Government when drafting
federal legislation, in addition to the common law position adopt components of
the Australian income tax assessment alienation of personal services income
legislation tests to identify independent contractors. 59
A common statutory definition could make it easier for employees, contractors and the
business that engage them to determine their rights and obligations. This could, in turn,
make it easier for enforcement agencies to hold to account businesses that practice
sham contracting.
Professor Andrew Stewart argued in 2002 for: ‘a standard or model definition of
employment that can be included in any legislation where it is considered necessary to
apply obligations or extend entitlements to or in respect of those who work for someone
54
55
56
57
58
59
See, for example, Evidence to the 2004 House of Representatives Inquiry, 26 April 2005 (P Anderson, Australian Chamber
of Commerce and Industry, and P Bosa, Labour Force Australia)
<http://www.aph.gov.au/hansard/reps/commttee/R8247.pdf>; Evidence to the 2004 House of Representatives Inquiry, 31
March 2005 (D Houlihan, IR Australia) <http://www.aph.gov.au/hansard/reps/commttee/R8200.pdf>.
Andrew Stewart, Stewart’s Guide to Employment Law (The Federation Press, 2nd ed, 2009) 45.
Compare, for example, Building Workers’ Industrial Union of Australia v Odco Pty Ltd (1991) 29 FCR 104 and Accident
Compensation Commission v Odco Pty Ltd (1991) 64 ALJR 606; Hollis v Vabu Pty Ltd (2001) 207 CLR 21 and Vabu Pty
Ltd v FCT (1996) 33 ATR 537.
See, for example, submissions to the Cole Royal Commission including the Master Builders Association of Western
Australia, Submission No WA_019, 15 July 2002, 2 <http://www.royalcombci.gov.au/docs/submissions/WA_019.pdf>; Civil
Contractors Federation, Submission No DP11_005, September 2002, 13
<http://www.royalcombci.gov.au/docs/submissions/DP11_005.pdf>; Andrew Stewart, Submission No DP11_014, 23
September 2002, 6-8 <http://www.royalcombci.gov.au/docs/submissions/DP11_014.pdf>.
See, for example, submissions to the 2004 House of Representatives Inquiry including HIA, Submission No 61, 24 March
2005, 6 <http://www.aph.gov.au/house/committee/ewrwp/independentcontracting/subs/sub61.pdf>; Ross Human
Directions, Submission No 54, March 2005, 3
<http://www.aph.gov.au/house/committee/ewrwp/independentcontracting/subs/sub54.pdf>; Courier and Taxi Truck
Association, Submission No 50, Attachment 2, 16 March 2005, 5
<http://www.aph.gov.au/house/committee/ewrwp/independentcontracting/subs/sub50.pdf>.
Making it Work Report, above n 17, xxii.
5692639/8
22
else in a subordinate and dependent capacity, but not those who are genuinely in
business on their own account’.60
Stewart’s proposed ‘redefinition’ of the concept of employment involves consideration of
some of the factors found in the common law test (for example, the extent of control
exercised by the worker and the level of integration into the other party’s business).61 It
also introduces a number of new elements, including (importantly) the extent of the
worker’s economic dependency on the other party. These various factors would be
used to inform consideration of whether a worker is ‘genuinely carrying on a business’
for purposes of an overall presumption of employee status where a worker: ‘contracts to
supply their labour to another ... unless it can be shown that the other party is a client or
customer of a business genuinely carried on by the worker’.
While Stewart’s proposals are worthy of further consideration, it must be acknowledged
that difficulties are likely to be encountered in importing a standard definition of
employment from one sphere of regulation to another, when each is driven by a
different set of policy objectives. This is one of the reasons why the Coalition
Government did not adopt the House of Representatives Standing Committee’s
recommendations (quoted above) when it introduced new legislation to tackle sham and
unfair contracting in 2006.
During the Second Reading Speech for the bill that became the IC Act and the bill to
insert the sham contracting provisions in the Workplace Relations Act 1996 (Cth) (WR
Act), the then Minister for Employment and Workplace Relations, Kevin Andrews, made
the Government’s position clear:
...we have not included in the definition [of ‘independent contractor’] components of
the Personal Services Income test used by the Australian Tax Office to identify
independent contractors, despite the Committee’s recommendation that we do so.
This test has been developed to address the specific requirements of taxation law. It
is a self-assessment test and is easily manipulated to achieve the desired outcome if
a worker is seeking to be classified as an independent contractor rather than an
employee.62
As indicated in 5.3 above, the FW Act continues to adopt the common law definitions of
employer and employee, and therefore, the common law test for distinguishing between
employees and contractors.
The ABCC invites views on the following questions:
60
61
62

Are the differences between an employee and a contractor clearly understood in
the building and construction industry?

Are there any factors other than those listed in Table 2 above that are relevant to
determining whether a person is a contractor or an employee in the building and
construction industry?

Would any of the options discussed in 5.6 above provide a better basis than the
common law multiple indicia test for distinguishing between employees and
contractors?

What could and should the ABCC do, if anything, to clarify when a person is an
employee and when they are a contractor?
Andrew Stewart, above n 5, 269.
Ibid, at 270-271. See also the slightly amended version of Stewart’s proposed definition referred to in the Senate IC Bill
Inquiry Report (Australian Democrats’ Minority Report, Attachment 2), August 2006,
<http://www.aph.gov.au/Senate/committee/eet_ctte/completed_inquiries/2004-07/contractors06/report/c04.pdf>.
Commonwealth, Parliamentary Debates, House of Representatives, 22 June 2006, 7.
5692639/8
23
5692639/8

Would there be merit in recognising or legitimising a ‘third category’ of worker in
the building and construction industry e.g. an ‘economically dependent
contractor’?

Should economically dependent contractors be treated differently to independent
contractors? If so, how? What attributes to be derived from independent
contractor relationships and employment relationships should characterise an
‘economically dependent contractor’?
24
6
Labour hire arrangements
Part 6 considers the role of labour hire arrangements in the building and construction
industry.
6.1
Labour hire arrangements and the Odco case
(a)
Labour hire
Labour hire typically refers to arrangements where a labour hire agency provides
workers to work at a host’s premises under the general supervision of the host
business.63 In return, the labour hire agency receives a fee or commission. This
three-way relationship is maintained throughout the worker’s placement with the
host business.64
Workers under a labour hire arrangement can be either an employee (an “on-hire
employee”) or a contractor (an “on-hire contractor”). As discussed above, if the
worker is an on-hire employee, s/he will be entitled to the benefits of industrial
instruments (e.g. modern awards and enterprise agreements) and minimum
statutory entitlements (such as those provided for in the NES under the FW Act).
These entitlements are enforceable by the on-hire employee against the labour
hire agency as the employer, not the host business.65 This type of labour hire
should more correctly be referred to as “on-hire employee services”. By
definition, it is not sham contracting
The following diagram illustrates a typical on-hire employee services
arrangement involving an employment relationship between the labour hire
agency and the worker.
Where the worker in the labour hire arrangement is an on-hire contractor, there is
no employment relationship between the worker and either the agency or the
host. The workers’ contractual entitlements are only enforceable against the
63
64
65
Note, however, that labour hire can be given a more expansive definition to include the provision of services (for example)
recruitment and consulting organisations, apprentice pooling organisations, umbrella companies’, or companies that pool
independent workers into tax effective work groups in return for a commission: see DEWR, above n 10, 24.
See generally discussion in DEWR, above n 10; Australian Government, Productivity Commission, Productivity
Commission Staff Working Paper: The Growth of Labour Hire Employment in Australia (2005)
<http://www.pc.gov.au/__data/assets/pdf_file/0020/60428/labourhire.pdf>; Steve O’Neill, Labour hire: issues and
responses, Research Paper No. 9 2003–04, (2004) <http://www.aph.gov.au/library/pubs/rp/2003-04/04rp09.pdf>.
However, note that an employee may be able to proceed in an action against the host in relation to contravention of the
general protections provisions in Part 3-1 of the FW Act. This issue was recently considered by Fair Work Australia
(Commissioner Roe) in the case of Jasevski v Australia Post [2010] FWA 9472 (8 December 2010).
5692639/8
25
other party (or parties) to the contract, which rarely includes the host (see (b)
below). These arrangements are commonly referred to as ‘Odco’
arrangements,66 after the leading case on that type of structure.
Properly applied, Odco arrangements do not involve sham contracting. However,
it may be necessary to look beyond the terms of the documents entered into by
the parties to consider whether the arrangements that have been put in place are
legitimate or merely set up to avoid employee entitlements. If the arrangements
put in place are not legitimate, they may amount to sham contracting or otherwise
breach workplace laws.
The following diagram illustrates an on-hire contractor arrangement where the
worker is a contractor with the labour hire agency (that is, an Odco arrangement).
(b)
Odco case (“On-hire contracting”)
The Federal Court considered ‘Odco’ on-hire contractor arrangements in several
cases in the late 1980s and early 1990s.67 The legitimacy of this type of
arrangement was ultimately confirmed in a 1991 decision of a Full Bench of the
Federal Court in Building Workers Industrial Union of Australia v Odco Pty Ltd.68
In that case, the labour hire agency carried on the business of supplying labour
by way of hire to builders, construction managers and contractors in the building
industry, and the issue arose as to whether workers sent to building sites by the
labour hire agency were its employees or employees of the host business.
The Court found that the workers in question were not legally employees of either
the labour hire agency or the host business. In reaching the conclusion that the
workers were not employees of the labour hire agency, the Court noted that the
workers had signed an agreement that expressly provided that they were not
employees, and had expressed a genuine intention to be independent. In
addition, the workers were paid on a weekly basis according to the work they
performed, deducted their own tax, had no expectation of continuing employment
and were subject to little or no control by the labour hire agency once on site.
Further, it was found that there was no contractual relationship between the
workers and the host business to which they were sent to work.
66
67
68
DEWR, above n 10, 25.
Steve O’Neill, above n 65, 10.
(1991) 29 FCR 104.
5692639/8
26
Some commentators suggest that the reasoning in Odco is capable of being
exploited by those seeking to avoid an employment relationship.69 In particular,
the Odco decision has been criticised as allowing form to prevail over substance
and making it relatively straightforward for those seeking to avoid an employment
relationship to construct working arrangements accordingly.70
(c)
Decisions subsequent to the Odco case
There have been a number of subsequent decisions that cite and consider the
Odco decision.71
These cases demonstrate that courts and tribunals are now more inclined to look
beyond the terms of the documents entered into by the parties, and consider
whether the arrangements are legitimate or merely set up to avoid employee
entitlements.72 In particular, courts and tribunals will assess the facts of each
situation to determine whether the worker is genuinely to be regarded as an
employee or a contractor of the labour hire agency or the host business.
In Wilton v Coal & Allied Operations Pty Ltd,73 the Federal Court considered
whether workers provided to a coal mining company through an on-hire
employee arrangement were employees of that company. The workers were
initially employed by the labour hire agency. However, they claimed that it should
be implied from their dealings with the coal mining company (including their
attendance for work at its mines) that they were employees of the company and
were therefore entitled to the same remuneration as its regular employees under
the applicable certified agreement.
In this case the Federal Court was not satisfied that there was an employment
relationship between the workers and the coal mining company because
(amongst other things), the company and the workers did not discuss or consider
essential contractual terms, and the workers did not act in a way which indicated
they regarded themselves as being employed by the coal mining company.
In Country Metropolitan Agency Contracting Services Pty Ltd v Slater,74 the
Workers Compensation Tribunal of South Australia considered a labour hire
arrangement whereby a worker was engaged as a contractor by an agency and
was placed to perform work as a tomato picker with a third party host business.
The worker had signed a contract with the labour hire agency which stated that
no employment relationship existed with the agency, and that the worker was
self-employed. The worker argued that she was either an employee of the labour
hire agency or the host business. Notwithstanding the express terms of the
contract, the Tribunal found that the worker was an employee of the labour hire
agency because there was, in practice, an employment relationship (based on an
application of the common law multiple indicia test).
69
70
71
72
73
74
See, for example, Andrew Stewart, above n 55, 4, 11.
See generally: Andrew Stewart, ‘Atypical Employment and the Failure of labour Law’ (1992) 18 Australian Bulletin of
Labour 217.
See cases referred to in this Part of the Discussion Paper. See also: Zhu v Treasurer of the State of New South Wales
(2004) 211 ALR 159; Golden Plains Fodder Australia Pty Ltd v Millard [2007] SASC 391; Wilton v Coal & Allied Operations
Pty Ltd (2007) 161 FCR 300; Centrestage Management Pty Ltd v Riedle [2008] FCA 938; Strang Aniokaka Ltd v Lihir Gold
Ltd (No 2) [2010] FCA 1065.
Economic Development Committee, Parliament of Victoria, Interim Report - Inquiry into Labour Hire Employment in Victoria
(December 2004) 32
<http://www.worksafe.vic.gov.au/wps/wcm/connect/c38040004071faaaa970ffe1fb554c40/edc_interim.pdf?MOD=AJPERES
>; see also Steve O’Neill, above n 64, 7-12.
(2007) 161 FCR 300.
(2003) 124 IR 293.
5692639/8
27
In Damevski v Giudice,75 a Full Court of the Federal Court found that a worker
remained an employee despite his employer’s attempt to end the employment
relationship and deal with the employee as a contractor through a labour hire
agency. In this case the employee was a cleaner who was forced to resign and
accept engagement as a contractor with the labour hire company. The Court
distinguished the circumstances in this case from a legitimate Odco on-hire
contractor arrangement on the basis that the interposition of the labour hire
company was not genuine.76 On the facts of the case, the worker was found to
remain an employee of his former employer because the labour hire agency did
nothing more than pay his wages, while the employer continued to direct the
employee, and required him to wear its business uniform.77 However, Creighton
and Stewart have observed that: ‘It is important to emphasise ... that Damevski
represents the exception rather than the rule. In that case, the parties simply did
not do enough to end Damevski’s relationship with the original employer and
replace it with a new contractual relationship with the agency.’78
6.2
Role of labour hire arrangements
It would seem that many participants in the building and construction industry recognise
that there is some role for legitimate labour hire arrangements to play.79 For example,
labour hire agencies can provide businesses with resources that complement an
existing workforce or support a particular project, including short term or temporary
labour, labour with particular skills or expertise and flexibility.80 However, participants
may not agree on how conditions of such arrangements should be managed.81
There are both positive and negative aspects associated with labour hire arrangements.
(a)
Benefits of labour hire arrangements
Both the House of Representatives’ Making It Work Report and the Productivity
Commission Staff Working Paper, The Growth of Labour Hire Employment in
Australia, note that, from a business perspective, labour hire arrangements can
help businesses:
75
76
77
78
79
80
81

access a large supply of suitable labour to meet peaks and troughs in
production and meet short-term business needs;

overcome skills shortages that they may experience and reduce delays and
costs associated with obtaining scarce skills;

outsource for specialist skills that may be needed from time-to-time;

have greater control over the amount of time they choose to employ
workers, and over the tasks workers carry out in that time;

cover staff on leave;

manage the risks and costs of recruitment by engaging labour without
entering into formal contracts of employment and allowing businesses to
assess individuals before offering permanent employment;
(2003) 202 ALR 494.
(2003) 202 ALR 494, 504-505 per Marshall J.
Damevski v Giudice (2003) 202 ALR 494, 496 per Wilcox J, 504 per Marshall J, 532 per Merkel J.
Breen Creighton and Andrew Stewart, above n 31, 208.
For example, see submissions to the 2004 House of Representatives Inquiry including DEWR, above n 10, 22; ACTU,
Submission No 60, March 2005, 8
<http://www.aph.gov.au/house/committee/ewrwp/independentcontracting/subs/sub60.pdf>; MBA Submission No 22, March
2005, 9-12 <http://www.aph.gov.au/house/committee/ewrwp/independentcontracting/subs/sub22.pdf>.
See submissions to the 2004 House of Representatives Inquiry including DEWR, above n 10, 28; ACTU, above n 79, 12.
See also Unions NSW submissions in the Secure Employment Test Case [2006] NSWIRComm 38, Chapter 2.
Making it Work Report, above n 17, [6.14].
5692639/8
28

transfer some of the actual or perceived risks of recruiting and laying off
some staff to the labour hire agency or the worker;

meet additional staffing requirements and cover employee absences;

reduce difficulties and inconvenience associated with filling positions; and

guarantee performance.82
Similarly, in its submission the 2004 House of Representatives Inquiry into
independent contracting and labour hire arrangements across Australia (which
led to the publication of the Making It Work Report), DEWR summarised the
benefits from the workers’ perspective, noting that labour hire arrangements can
allow workers to:

maintain a better balance between work and family life or study;

experience greater diversity in the work performed, skills and different
working environments;

reduce their responsibility for finding work;

have the opportunity to gain skills and experience where the workers are
young, unskilled, re-entrants to the labour market, or mature aged; and

reduce the amount of paper work and administration associated with being
self-employed.83
For a more detailed discussion of the benefits and factors that can motivate
businesses and workers to enter labour hire arrangements, refer to parts 7.1 and
7.2 below.
(b)
Concerns about labour hire arrangements
A number of concerns have been expressed about the use of labour hire
arrangements. These will be discussed in detail in parts 8 and 9 below. These
concerns include, amongst others, that labour hire arrangements can be used to
reduce or avoid wages and conditions of employment, thus undermining wages
and entitlements of employees and substituting labour hire employees for directly
employed workers.84 Whilst some labour hire workers may benefit from more
flexible arrangements, they do not receive the benefit of other minimum
conditions, such as paid leave.85
6.3
The impact of fraudulent phoenix companies
The underpayment of wages and other entitlements in the building and construction
industry has been further exacerbated by the use of fraudulent ‘phoenix’ companies.
The basic example of fraudulent phoenix activity involves a company which is set up to
operate at a loss for a short period and then liquidated, with another company with
similar principals taking over the operations shortly thereafter.86
82
83
84
85
86
Ibid, [2.61]. The Making It Work Report referred to a number of submissions on this issue, including a written submission
from the Queensland Government. See also Australian Government, Productivity Commission, above n 64, 1-3; DEWR,
above n 10, 28.
DEWR, above n 10, 28.
ACTU, above n 79, 12; Richard Hall, Labour Hire in Australia: Motivation, Dynamics and Prospects, Working Paper 76
(2002) 6 <http://www.wrc.org.au/documents/WP76.pdf>.
Queensland Department of Industrial Relations, Submission No 66 to the 2004 House of Representatives Inquiry, 15
<http://www.aph.gov.au/house/committee/ewrwp/independentcontracting/subs/sub66.pdf>.
Australian Government, Treasury, Action Against Fraudulent Phoenix Activity – Proposals Paper (2009), 2
<http://www.treasury.gov.au/documents/1647/PDF/Phoenix_Proposal_Paper.pdf>.
5692639/8
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In November 2009, Treasury issued a Proposals Paper, Actions Against Fraudulent
Phoenix Activity,87 calling for submissions in relation to proposed measures to address
fraudulent phoenix activity.88 At that time, the ATO estimated that the suspected
phoenix cases it was monitoring posed a risk to revenue in the order of $600 million.89
According to the ATO, fraudulent phoenix arrangements typically involve one entity
operating as a labour hire agency by providing labour to related entities (i.e. in the same
corporate structure).90
Common features of these arrangements are:

a closely held private group is set up, consisting of several entities one of which has
the role of hiring the labour force for the business;

the labour hire entity will usually have a single director who is not the ultimate
‘controller’ of the group;

the labour hire entity has few, if any, assets and little share capital;

the labour hire entity fails to meet its liabilities and is placed into administration or
liquidation by the ATO;

a new labour hire entity is set up and the labour moved across to work under this
new entity; and

the process is repeated, with little disruption to the day-to-day operation of the
overall business and the financial benefits from the unpaid liabilities are shared
amongst the wider group.91
One of the consequences of this type of arrangement is that the employing entity avoids
liability for employee entitlements.
Treasury’s Proposals Paper canvassed a number of options to reduce the impact of
phoenix companies, including the removal of incentives for engaging in phoenix activity,
and forcing company directors to take greater responsibility for taxation debts and
superannuation.92 The purpose of the Proposals Paper was to seek feedback and
advice from interested parties for the purposes of informing the Government’s approach
on the way forward in relation to this issue.93 Twenty-eight submissions were received
from interested parties, including a submission from the Construction, Forestry, Mining
and Energy Union (CFMEU) in relation to issues in the building and construction
industry.94
6.4
Joint employment?
In Australia it is generally accepted that an employee can only have one employer in
relation to a particular job in which he or she is employed.
87
88
89
90
91
92
93
94
Ibid, 14, 87, 94-96.
Phoenix activity was also raised as a serious concern in the building and construction industry by the Senate Employment,
Workplace Relations and Education References Committee in its 2004 report, Beyond Cole The future of the construction
industry: confrontation or co-operation?, <http://www.aph.gov.au/senate/committee/eet_ctte/completed_inquiries/200204/building03/report/bcii.pdf> (Beyond Cole Report).
Australian Government, Treasury, above n 86.
Ibid, 2, 6.
Ibid, 2.
Ibid, 12-21; see also Justice Berna Collier (Part-time Commissioner of the ALRC), ‘Corporate insolvency: restructuring the
financial sector and understanding the long terms effects of the GFC’ (Presentation to the Australian Women Lawyers
Conference, Brisbane, 7 August 2010) <http://www.alrc.gov.au/news-media/debt-and-insolvency/corporate-insolvencyrestructuring-financial-sector-and-understanding>.
Australian Government, Treasury, above n 86, iii.
Submissions are available at <http://www.treasury.gov.au/contentitem.asp?ContentID=1892&NavID=066>.
5692639/8
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However, the concept of ‘joint employment’ developed under United States law
recognises that there can be more than one employer in relation to the employment of
an employee in a particular job if the employers ‘share or co-determine those matters
governing essential terms and conditions of employment’.95 The effect of this approach
in the Australian labour hire context would be that both the labour hire agency and the
host employer would share responsibilities as the legal employer of the worker
concerned.
The essential element in determining whether there is joint employment under US law is
the degree of control exercised by the alleged joint employer (that is, the equivalent of
the host employer in Australia) over the workers in question. The factors determining
the relevant degree of control have been described (non-exhaustively) as follows:

the power to hire and have a worker removed/fired;

whether the employment takes place on the premises of the company;

the right to supervise, inspect and approve work;

the level of control over the worker’s work schedule and other conditions of
employment;

involvement in the collective bargaining process of the relevant workers;

the manner of determining of the rate and method of wage payments;

the ability to discipline workers;

the handling of dispute resolution; and

whether the worker may refuse to work for the company.96
The concept of joint employment has been considered on a few occasions in Australia.
In the case of Morgan v Kittochside Nominees Pty Ltd,97 the Australian Industrial
Relations Commission (AIRC) dealt with a situation where a pharmacy employee was
engaged by a corporate entity which was the trustee of the pharmacist’s family trust.
The AIRC indicated some willingness to accept that in these circumstances, both the
pharmacist and the company were employers of the employee – although it was not
necessary to decide this issue in the matter before the Commission.
More recently, in Orlikowski v IPA Personnel Pty Ltd98, Senior Deputy President Lacy
made the following observations about the current status of the concept of ‘joint
employment’ (footnotes in original):99
[t]he concept of joint employment is generally accepted in the United States of
America. While labour hire services facilitate flexibility the process has the
potential to undermine collective bargaining, occupational health and safety,
vicarious liability, accountability, job security and workplace harmony. There is
an increasing incidence in the use of labour hire providers in Australia and it
presents significant issues in termination of employment matters. First and
foremost the issue normally involves discernment of which of the putative or
potential employers is the actual employer. The fundamental question is
whether two, otherwise unrelated, legal entities share or co-determine those
matters governing essential terms and conditions of employment which
depend on the control one employer exercises, or potentially exercises, over
95
96
97
98
99
Texas World Service Co, Inc v NLRB 928 F 2d 1426 at 1432.
Rohen Cullen, ‘A Servant and Two Masters? - The Doctrine of Joint Employment in Australia’ (2003) 16 Australian Journal
of Labour Law 1.
(2002) 117 IR 152.
[2009] AIRC 565 (26 June 2009).
[2009] AIRC 565, at [42]-[43].
5692639/8
31
the labour relations policy of another. 100 If not, it is necessary to determine
who the employer is and who is responsible for the termination of
employment.
In 2002 a Full Bench of the Commission noted that there had been no
definitive ruling by a court on the doctrine of joint employment in Australia. 101
This remains the case, although the doctrine has gained some acceptance in
the Australian Industrial Relations Commission, 102 and in the Western
Australian103 and New South Wales104 Industrial Relations Commissions.
The United Kingdom, like Australia, has not yet endorsed the concept of joint
employment.105
The ABCC invites views on the following questions:
100
101
102
103
104
105

To what extent are labour hire arrangements essential to the efficient functioning
of the building and construction industry?

To what extent are the general concerns about some aspects of labour hire
practices evident in the context of the building and construction industry? How
can such concerns be addressed?

To what extent are Odco arrangements common in the building and construction
industry? Do these arrangements reflect the genuine preferences of workers, or
are they more often imposed as a condition of obtaining work?

To what extent are phoenix companies involving labour hire arrangements
common in the building and construction industry? What are the impacts of
these arrangements? What role, if any, should and could the ABCC play to
reduce these impacts?

Is the concept of joint employment worthy of further exploration in the context of
the building and construction industry?

How could the ABCC assist all stakeholders in the building and construction
industry to ensure that labour hire practices are both fair and efficient?
Texas World Service Co. Inc v NLRB 928 F 2d 1426.
Morgan v Kittochside Nominees Pty Ltd, PR918793 (13 June 2002).
See Bianchi v Staff Aid Services, PR937820 (12 September 2003); c.f. Staff Aid Services v Bianchi, PR945924 (5 May
2004). See also AWU (Queensland), PR973358 (19 July 2006); Jacinta Arcadia v Accenture Australia [2008] AIRC 108;
Kwee Sang Chong v Bridgestone Australia Ltd [2008] AIRC 177.
Matthews v Cool or Cosy Pty Ltd; Ceil Comfort Home Insulation Pty Ltd; Citigroup Pty Ltd (2003) WAIRC 7889.
See Geoff Harley, ‘Joint Employment’ (2002-2003) 8(9) Employment Law Bulletin 84, 85.
See Franks v Reuters Ltd [2003] EWCA Civ 417; Brook Street Bureau Ltd v Dacas [2004] EWCA Civ 217.
5692639/8
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7
Fairness: drivers in contractual negotiations between
employers and workers including inequality of bargaining
power
The factors that can motivate both workers and employers to enter into labour hire
arrangements in the building and construction industry were discussed briefly above in
part 6.2(a). This Part discusses in more detail the factors that motivate parties to enter
into contracting or labour hire arrangements, rather than direct employment
relationships, and also considers the inequality of bargaining power that can impact
contractual negotiations.
7.1
Worker motivations for entering contracting and labour hire arrangements
The factors that can drive workers to enter into contracting and labour hire
arrangements are discussed below.
(a)
Choice and independence
Workers may make a free and informed choice to be self-employed, rather than
being pressured into entering such an arrangement by employers. Workers may
prefer self-employment because of their desire for independence and control over
when they work.106
(b)
Flexibility and convenience
Self-employment can also offer flexibility to workers, including those with
dependants.107 In addition, labour hire arrangements can provide workers who
are unskilled, re-entrants into the labour market and mature aged workers with
increased exposure to different work environment and provide a diversity in skills
and experience, and an opportunity to balance work with family and study
commitments.108 In addition, labour hire agencies may help workers find work
more quickly and conveniently. For example, ABS statistics indicate the main
reason for workers using a labour hire firm/employment agency to find work was
the ease of obtaining work.109
(c)
Tax advantages and incentives for higher income and skilled workers
There are incentives for certain workers to prefer a contracting or labour hire
arrangement. Evidence indicates there is a trend for higher income earners to
become contractors and incorporate for income taxation purposes.110 In addition,
skilled workers in certain industries may prefer contracting or labour hire
arrangements where workers can demand higher remuneration and have
increased mobility.111
7.2
Employer motivations for contracting and labour hire arrangements
The factors that can drive employers to enter into contracting and labour hire
arrangements are discussed below.
(a)
106
107
108
109
110
111
Competitive pressures
Queensland Department of Industrial Relations, above n 85, 16-17.
Ibid, 17.
Making it Work Report, above n 17, 37.
ABS, above n 19, 39.
Making it Work Report, above n 17, 24.
Queensland Department of Industrial Relations, above n 85, 17.
5692639/8
33
Employers in the building and construction industry are facing increased
competitive pressures,112 including requirements to complete projects efficiently,
cost effectively and within finite periods of time.
One way to increase competitiveness is to optimise the use of labour, including
through labour hire arrangements.113 For example, MBA has argued that
subcontracting arrangements ‘play a fundamental part in the building and
construction industry due to its fluctuations, increasing labour costs and the move
towards specialisation’.114
Further, in its submission to the 2004 House of Representatives Inquiry, the
Queensland Department of Industrial Relations commented that contracting and
labour hire arrangements allow employers to gain a more predictable cost
structure because they can pay for the work to be completed at a specific time
(rather than per hour or day worked).115
(b)
Flexibility and responsiveness to demand
Reasons employers choose labour hire workers include sourcing additional staff,
replacing temporarily absent employees and overcoming skill shortages.116
Accordingly, labour hire arrangements can provide flexibility and can be used to
satisfy short term demands.
(c)
Reduced risks, costs and administrative burdens
Labour hire arrangements can also save on costs and other employee
entitlements such as annual leave, sick leave, termination and redundancy
payments, the costs of hiring, training and firing workers. Host businesses also
cite a reduction in administrative burdens as a reason for entering labour hire
arrangements, such as payroll administration.117 On-hire contractor arrangements
also allow employers to avoid having to comply with superannuation and taxation
costs associated with employees.118 In addition, using on-hire employee
arrangements shifts the responsibility for risks such as unfair dismissal from the
host business to the labour hire agency.119
(d)
Workers with specialist skills
Businesses requiring the services of a worker with specialist skills for a discrete
project or task may prefer to engage that worker under a contract for services.120
(e)
Method of limiting union presence
Given that the level of unionisation is typically low amongst labour hire workers,
concerns have been raised that companies may use labour hire arrangements as
a way of removing union presence in their workplaces.121
112
113
114
115
116
117
118
119
120
121
Australian Government, Productivity Commission, above n 64, xii.
Ibid, 3, 37.
MBA, Submission to the Board of Taxation, Alienation of Personal Services Income Rules - Post-Implementation Review,
July 2009, 6
<http://www.taxboard.gov.au/content/reviews_and_consultations/alienation_of_personal_services_income_rules/submissio
ns/Master_Builders_Australia.pdf>.
Queensland Department of Industrial Relations, above n 85, 15.
Australian Government, Productivity Commission, above n 64, xii.
Queensland Department of Industrial Relations, above n 85, 16; Australian Government, Productivity Commission, above n
64, 3.
Queensland Department of Industrial Relations, above n 85, 16.
JobWatch, Submission No 23 to the 2004 House of Representatives Inquiry, March 2005, 11-12
<http://www.aph.gov.au/house/committee/ewrwp/independentcontracting/subs/sub23.pdf>.
Queensland Department of Industrial Relations, above n 85, 17.
Ibid, 16.
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34
7.3
Bargaining power
Inequality of bargaining power can impact the contractual negotiations between
employers and workers and the kinds of arrangements they make concerning the work
performed.
It has been suggested that many workers engaged as contractors would prefer to be
engaged as employees but are compelled by employers to enter into a contract for
services. For example, in its submission to the Cole Royal Commission, the CFMEU
noted that ‘countless workers’ had approached the CFMEU over many years claiming
they had been forced into contracting arrangements.122 Such workers, the CFMEU
contends, did not wish to forego the benefits of employment, such as annual leave, sick
leave, rostered days off (RDOs) or the security of regular income in circumstances of
inclement weather, sickness and injury, but have no alternative.123
It has also been suggested that workers who choose to be engaged under labour hire
and contracting arrangements can be disadvantaged as a result of:

their reduced capacity to bargain collectively;124.

not knowing the true value of the employment benefits they forego by agreeing to
be engaged as a contractor;125 and

limited power to negotiate more attractive terms and conditions, especially when
issued with standard form contracts on a ‘take it or leave it’ basis.126
However, it is certainly not the case that all workers experience disadvantage, as some
workers – particularly those with specialist skills or skills that are in short supply –may in
fact enjoy a relatively strong bargaining position vis-a-vis the party that requires their
services. Further, it is not always the case that employers are taking advantage of an
imbalance in bargaining power with workers by entering into contracting or labour hire
arrangements. There are a number of factors that place pressure on employers to
accept contracting or labour hire arrangements, including competitive and cost
pressures. In addition, given the benefits that some workers receive under contracting
or labour hire arrangements, workers may request that the employers enter into
contracting or labour hire arrangements with them.
The ABCC invites views on the following questions:
122
123
124
125
126

Do business and/or workers use their bargaining power to induce the other
party to enter into independent contracting and labour hire arrangements
instead of traditional employer-employee relationships? If so, to what extent
does this occur in the building and construction industry

Are there any factors other than those discussed in 7.2 and 7.3 above, that
influence decisions to enter into contracting or labour hire arrangements in
preference to the traditional employer-employee relationship?
CFMEU, Submission No WA_024 to the Cole Royal Commission, undated, 21.
Ibid, 7.
ACTU, above n 79, 12.
B Creighton and A Stewart, Labour Law: An Introduction (2000, 3rd ed), 712-3 cited in Australian Government, Productivity
Commission, above n 64, 8.
Queensland Department of Industrial Relations, above n 85, 23; Senate IC Bill Inquiry Report, Provisions of the
Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendments (Independent Contractors) Bill
2006 (2006) 13 <http://www.aph.gov.au/Senate/committee/eet_ctte/completed_inquiries/200407/contractors06/report/report.pdf> (Senate IC Bill Report).
5692639/8
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8
Concerns about sham contracting and labour hire
arrangements: evasion by employers of responsibilities
owed to employees and others
As discussed in Part 7, parties may choose to enter into contracting or labour hire
arrangements, rather than direct employment relationships, for a range of reasons.
Undoubtedly, contracting and labour hire arrangements can be a lawful and legitimate
means by which to do business in the building and construction industry. However, this is
not true of sham arrangements, where an employment relationship is misrepresented or
disguised as a contracting arrangement.
This Part considers the impact of sham contracting on compliance by employers with their
obligations under taxation, superannuation, workers’ compensation, occupational health and
safety, and industrial relations law, as well as other responsibilities that arise from the
employment relationship.
8.1
Overview
The effects of sham contracting and labour hire arrangements were discussed at length
in a discussion paper released by the Cole Royal Commission and were also addressed
in its final report. Of particular concern was the effect of evasion by employers of their
responsibilities to employees and others, such as to pay payroll tax, workers’
compensation premiums, employee entitlements (such as annual and long service
leave) and superannuation.127
Submissions to the subsequent inquiry conducted in 2003 by the Senate Education,
Employment and Workplace Relations Committee (2003 Senate Inquiry) illustrated that
incentives continued to exist for employers to engage workers as independent
contractors even though the relationship is clearly one of employee-employer. The
Committee’s final report noted that in addition to evading obligations to pay payroll tax,
workers’ compensation premiums, superannuation contributions and redundancy
entitlements, it was estimated that employers saved a minimum of 25 per cent on
standard wages and 40 per cent on overtime hours by engaging contractors.128
In late 2008, the ABCC conducted an audit of the building and construction industry in
the Sydney metropolitan area and did not identify any sham contracting arrangements.
Senator Cameron questioned the utility of the audit based on the low number of
participants in the audit and his perception of the ‘long history of sham contracting’ in
the industry. Similar audits have not yet been completed in other states.129
Some industry participants say that these issues, raised in the earlier part of this
decade, remain of concern today. In 2009, the CFMEU referred to sham contracting as
an ‘epidemic’ in the building and construction industry, claiming that over the last
decade, subcontractors were forcing workers to obtain Australian Business Numbers
(ABN) before employing them, in a bid to avoid paying sick leave, annual leave and
127
128
129
Cole Royal Commission, Discussion Paper 11 - Working Arrangements - Their Effects on Workers' Entitlements and Public
Revenue (2002) (Discussion Paper Eleven) Chapters 2, 3, 6-8
<http://www.royalcombci.gov.au/docs/Complete%20Discussion%20paper%2011.pdf>; Cole Royal Commission, Final
Report (2003) (Cole Royal Commission Final Report) Volume 8
<http://www.royalcombci.gov.au/docs/finalreport/V08NatIss2_PressFinal.pdf>, Volume 9
<http://www.royalcombci.gov.au/docs/finalreport/V09NatIss3_PressFinal.pdf>.
Beyond Cole Report, above n 88, 92.
ABCC, Sham Contract Audit Report (2009)
<http://www.abcc.gov.au/Performanceandreports/Documents/20090302ShamContractAuditReport.pdf; Workplace Express,
‘ABCC audit meaningless, says Cameron’, 22 October 2009; Commonwealth, Parliamentary Debates, Senate Education,
Employment and Workplace Relations Legislation Committee Estimates 2009, 21 October 2009, 123-124
<http://www.aph.gov.au/hansard/senate/commttee/S12502.pdf>.
5692639/8
36
superannuation.130 The CFMEU expressed similar views again in November 2010,
claiming that sham arrangements were continuing to be used by employers as a tool to
evade their responsibilities to employees.131
8.2
Payroll tax and superannuation
An accurate assessment of the extent, and therefore effect, of tax evasion is difficult to
quantify given the extent of deliberate use of independent contracting and labour hire
arrangements.132 However, as an indication of its significance, the ATO raised $26
million in tax and penalties as a result of an investigation which commenced in 1997
into bogus labour hire companies in NSW.133 In its submission to the 2003 Senate
Inquiry, the ATO estimated that around 29 per cent of employers either fail to make
superannuation payments, or pay less than the entitlement, attributing this, in part, to
high levels of bogus contracting in the industry.134 More recently, the ATO audited 67
contractors (not limited to the building and construction industry) which it identified as
‘high risk’ based on data provided by labour hire firms and found that 84 per cent had
breached their tax obligations.135
From a superannuation perspective, the Building Union Superannuation Scheme of
Queensland, in its submission to the 2003 Senate Inquiry noted the implications on
Government of non-compliance. While not specifically addressing sham contracting or
labour hire arrangements, it did highlight that non-compliance with superannuation
obligations can have a significant impact on government as well as the Australian
community more broadly. It stated that:
[i]n the short term, the 15% contributions tax is not collected or remitted by the
superannuation fund. The uncollected monies are not invested, therefore no tax is
paid on their potential earnings.
In the longer term, there will be less people able to fund their own retirement and
consequently more people receive the aged pension in part or full than should be
necessary.
Also, individuals reliant upon the aged pension will not have the little extra to
supplement a better lifestyle which in turn leads to greater consumption and a
stimulus to the economy.136
8.3
Workers’ compensation and OHS
In the 2003 Senate Inquiry, the Committee noted that non-compliance with workers’
compensation obligations is ‘probably more widespread’ in the building and construction
industry.137
Similar to superannuation and tax, underpayment or non-payment of workers’
compensation has the potential to significantly affect all members of the Australian
community including:
130
131
132
133
134
135
136
137
Julian Drape, ‘CFMEU bemoans sham contracting’, The Age (online), 22 September 2009
<http://news.theage.com.au/breaking-news-national/cfmeu-bemoans-sham-contracting-20090922-g0my.html>.
CFMEU, ‘CFMEU call for round table on Sham Contracting’ (News Release, 8 November 2010)
<http://cfmeu.asn.au/branch/act/news/cfmeu-call-for-round-table-on-sham-contracting>.
ATO, Submission No 120 to the 2003 Senate Inquiry, 4 May 2004, 10
<http://www.aph.gov.au/senate/committee/eet_ctte/completed_inquiries/2002-04/building03/submissions/sub120.pdf>.
Ibid.
Beyond Cole Report, above n 88, 14.
Kirsty Needham, ‘Tax crackdown sought on sham contracting’, The Sydney Morning Herald (online), 17 December 2009,
<http://www.smh.com.au/business/tax-crackdown-sought-on-sham-contracting-20091216-kxlf.html>.
Building Union Superannuation Scheme Queensland, Submission No 34 to the 2003 Senate Inquiry, 4
<http://www.aph.gov.au/senate/committee/eet_ctte/completed_inquiries/2002-04/building03/submissions/sublist.htm>.
Beyond Cole Report, above n 88, 97.
5692639/8
37

uninsured employees and their families, who may find themselves without injury
compensation;

compliant employers who are forced to pay higher premiums, in some cases
making them uncompetitive with non-paying companies when tendering for work;

clients who must compensate contractors for the higher premiums that they pay;
and

the wider community who bears the cost not only through the higher price of
buildings, but also through the burden imposed on the social security and health
systems in caring for uninsured workers.138
With respect to OHS, the Queensland government, in its submission to a 2004 House of
Representatives inquiry, submitted a number of reasons for the effects that such
arrangements have on OHS. For example, incidents may occur because contracting is
based on the amount of work, not the time taken, and therefore contractors are
encouraged to minimise time in order to maximise profit.139 Other problems include
contractors and labour hire employees being less experienced on a particular building
site, lack of OHS training and the fact many labour hire employees are contracted to
perform in more hazardous industries.140 Labour hire employees, it has been found, are
more likely to be injured than direct employees, and their injuries are often more
severe.141
8.4
National Employment Standards entitlements
Divisions 3 to 12 of Part 2.2 of the FW Act set out the NES. These include:

maximum weekly hours (Division 3);

requests for flexible working arrangements (Division 4);

parental leave and related entitlements (Division 5);

annual leave (Division 6);

personal/carer’s leave and compassionate leave (Division 7);

community service leave (Division 8);

long service leave (Division 9);

public holidays (Division 10);

notice of termination and redundancy pay (Division 11);

Fair Work Information Statement (Division 12).
Sham contracting and labour hire arrangements, as noted above, can used by
employers seeking to evade their obligations with respect to the NES, particularly in
relation to the accrual and payment of leave entitlements.
Similarly, redundancy obligations may be evaded by employers where a relationship is
categorised as one of contracting or labour hire rather than employee-employer.
8.5
Other effects of sham contracting and labour hire arrangements
(a)
138
139
140
141
Training
Ibid, 96.
Queensland Department of Industrial Relations, above n 85, 23.
Making it Work Report, above n 17, 73.
Ibid.
5692639/8
38
It was suggested in evidence to the 2003 Senate Inquiry that there may be a
direct relationship between the trend towards subcontracting and skills
shortages.142
For example, Dr Philip Toner, Senior Research Fellow, Australian Expert Group
in Industry Studies, University of Western Sydney, stated that it is:
well known that, for a whole range of reasons, there is a very strong
relationship between the increase in firm size and the propensity to train.
Basically, if you have an industry where the average firm size is declining, it
reduces the capacity of the industry to train.143
Labour hire employment has been associated with limited training and skills
development and career prospects, which may disadvantage the worker and deplete
skills in the labour market.144
(b)
Unfair dismissal
Concerns have been raised that labour hire arrangements may be used to avoid
the finding of an employment relationship, necessary to lodge an unfair dismissal
claim against the labour hire agency or the host business.145
There may be some recourse available to contractors under the new General
Protections provisions under Part 3-1 of the FW Act, which have broader
application.
For example, sub-section 342(1) of the FW Act defines adverse action to include
situations where a person (the principal) has entered into a contract for services
with an independent contractor, and terminates the contract or injures the
independent contractor in relation to the terms or conditions of the contract.
However, these provisions have yet to be tested in relation to contractors.
(c)
Awards and agreements
There have also been concerns raised that workers engaged under an on-hire
contractor arrangement do not have a direct employment relationship with the
labour hire agency and therefore do not enjoy the same protections, rights and
entitlements as do direct employees (for example, under Awards).146
Award coverage may be less of a concern for workers engaged as on-hire
employees by a labour hire agency since the commencement of modern awards
on 1 January 2010 because awards now operate across an industry, rather than
by respondency.147 This means that the same modern award applies to all
employers and employees in the industry.
(d)
Job security
Another criticism is that despite some labour hire arrangements providing
workers with flexibility, workers may receive only sporadic work and have limited
job security under labour hire arrangements.148
142
143
144
145
146
147
148
Beyond Cole Report, above n 88, 14.
Evidence to 2003 Senate Inquiry, 7 April 2004, EWRE 83 (P Toner).
<http://www.aph.gov.au/hansard/senate/commttee/S7498.pdf>.
Richard Hall, above n 84, 6.
Making it Work Report, above n 17, 120.
Ibid, 38.
FW Act, s 48.
CFMEU, Submission No 5 to the 2004 House of Representatives Inquiry, undated, 13-14
<http://www.aph.gov.au/house/committee/ewrwp/independentcontracting/subs/sub5.pdf14>.
5692639/8
39
The ABCC invites views on the following questions:
5692639/8

To what extent do businesses enter into contracting and labour hire
arrangements to avoid obligations to employees?

If so, what responsibilities do businesses seek to evade:
o
to the worker?
o
to the government?

What is the effect of evasion by employers in the building and construction
industry?

How do the pay and conditions workers receive under labour hire arrangements
compare with those received by direct employees?
40
9
Evasion by workers of taxation obligations
9.1
Introduction
Among the consequences of arrangements that disguise employees as contractors is
the non-payment by workers of income tax.
In an employment relationship, the responsibility for paying income tax falls to the
employer and is not easily avoided. Under the pay-as-you-go (PAYG) withholding
system, employers withhold an amount in accordance with the applicable marginal rate
from their employees’ pay and send it to the ATO on their behalf.149
Withholding also applies to work performed under a contract for services when
withholding has been voluntarily agreed to by the contractor and client, or where the
contractor fails to provide an ABN.150 However, contractors who run their own business
are generally responsible for paying their own income tax.
That this has led to range of compliance issues in the building and construction industry
is uncontroversial. In 2002, the Cole Royal Commission found that avoidance and
evasion of taxation obligations was widespread.151
Tax evasion can occur when contractors:

fail to report income and/ or overstate their expenses; or

restructure their business to reduce their personal income tax liability.
Although these strategies may be used in tandem (for example, because contractors
who seek to avoid tax will select a business entity that enables them to hide income),
each demands its own policy response.
Failure to report income is addressed through enforcement. As part of its cash
economy activities in 2010-2011, the ATO has issued the following warning:
We will scrutinise businesses deliberately choosing to under report or omit income
from cash transactions. Where we find businesses deliberately using cash
transactions to hide income we will apply the full force of the law. We will apply
penalties and sanctions and raise default assessments where appropriate. Cases of
serious evasion will be referred for prosecution and tax practitioners deliberately
doing the wrong thing will be reported to the Tax Practitioners Board. 152
The ATO intends to review and audit the tax affairs of over 26,000 micro enterprises
(which it defines as an enterprise with a turnover of less than $2 million per annum) in
the current financial year.153
The use by contractors of business entities to reduce their tax obligations is addressed
by the taxation rules relating to PSI in the ITAA.
9.2
Personal Services Income
PSI is income that is mainly a reward for an individual’s personal efforts or skill that is
paid under a contract for services.154 It is ‘alienated’ when a business entity, such as a
company, trust or partnership is interposed between the worker and the person paying
for their services, so that the interposed entity, and not the worker, is taken to have
derived the income.155 This allows income to be split with other members of the
149
150
151
152
153
154
155
The PAYG withholding system is set out in Part 2-5 of Schedule 1 to the Tax Administration Act 1953 (Cth).
See generally, Part 2-5 of Schedule 1 to the Tax Administration Act 1953 (Cth).
Cole Royal Commission Final Report, above n 127, Volume 8, Chapter 3.
ATO, Compliance program 2010-11 <http://www.ato.gov.au/content/downloads/cor00248103_NAT7769.pdf>.
Ibid.
ITAA, s 84.5.
See generally ITAA, ss 86.1-86.10.
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41
interposed entity or retained, allowing less tax to be paid or the tax liability to be
deferred.156
(a)
Alienation of personal income rules
Specific rules regarding the tax treatment of PSI, known as the ‘alienation of
person services income rules’ (APSI rules), were introduced on 1 July 2001 to
address this problem. They have applied with full effect to the building and
construction industry since 1 July 2002.157 Divisions 84-87 of the ITAA and in
Division 13 in Schedule 1 to the Taxation Administration Act 1953 (TAA) contain
the APSI rules.
The APSI rules are aimed at ensuring that workers who are classed as
contractors but work in employment-like arrangements cannot claim higher
deductions than employees providing the same or similar services.158 They are
also intended to ensure that all PSI earned by such workers receives equal
taxation treatment, regardless of whether it is technically derived by the worker or
an interposed entity.159
Under the APSI rules, an individual or entity will be a personal service business
and exempt from the personal income tax regime if they:

satisfy the ‘results test’;160 or

satisfy the ‘80:20 rule’ and at least one of:

o
the ‘unrelated clients test’;
o
the ‘employment test’; or
o
the ‘business premises test’;161 or
obtain a personal services business determination from the Commissioner
of Taxation.162
Some industry participants were optimistic that the APSI rules would both
address tax evasion and stem the movement of employees into sham
arrangements.163
156
157
158
159
160
161
162
163
Australian Government, Board of Taxation, Post-Implementation Review into Alienation of Personal Services Income Rules
(2009)
9.<http://www.taxboard.gov.au/content/reviews_and_consultations/alienation_of_personal_services_income_rules/report/PI
R_Alientation_PSI_Rules.pdf>.
The APSI rules took effect from 1 July 2001, but did not fully affect the building and construction industry until 1 July 2002
due to the grant of an exemption to certain prescribed payment system payees: New Business Tax System (Alienation of
Personal Services Income) Act 2000 (Cth), Item 26 of Schedule 1. See also Commonwealth, Parliamentary Debates,
House of Representatives, 13 April 2000 (Mr Peter Costello MP) 15976.
Commonwealth, Parliamentary Debates, House of Representatives, 13 April 2000 (Mr Peter Costello MP) 15975; ITAA,
subdivisions 85-86.
Ibid.
The results test is satisfied if, in relation to 75 per cent of its income for the relevant financial year, the individual or entity
receives the income for producing a result, is required to supply the plant, equipment or tools of trade needed to perform
the work; and is liable for the cost of rectifying any defective work: ITAA, s 87.18.
The ‘80:20 rule’ is satisfied if receives less than 80 per cent of its personal services income from one source: ITAA, s 87.15.
The ‘unrelated clients test’ is satisfied if the worker receives income from two or more unrelated clients and provides
services to those clients as a direct result of offering those services (for example, by advertising) to the public: ITAA, s
87.20. The ‘employment test’ is satisfied if the worker has employees or subcontractors that perform 20 per cent of the
work or has apprentices for at least half of the year: ITAA, s 87.25. The ‘premises test’ is satisfied if the worker owns or
lease business premises that are physically separate from their residential premises, mainly uses the business premises for
work, and has exclusive use of the premises: ITAA, s 87.30.
ITAA, s 87.15.
For example, the HIA expressed the view that ‘from 1 July 2002 in the building and construction industry, there will be no
avoidance of tax by contractors who are not entitled to the deductions they claim, or by employees claiming to be
contractors.’: HIA, Submission No SEC_004 to the Cole Royal Commission, 5 July 2002,
<http://www.royalcombci.gov.au/docs/submissions/SEC_004.pdf>.
5692639/8
42
However, eight years after the APSI rules were introduced, many industry
participants have indicated concern that they may not have been achieving their
objectives.164
In particular, the CFMEU has suggested that the APSI rules have not achieved
their intended objective of reducing the incidence of sham contracting in the
industry because there has been no observable reduction in the number of
contractors engaged under employment-type arrangements since the APSI rules
began to apply to the industry in 2002.165
(b)
Compliance with the APSI rules
In mid-2009, the Assistant Treasurer and Minister for Competition Policy and
Consumer Affairs, asked the Board of Taxation to undertake a postimplementation review in the APSI rules.166
The Board found that the APSI rules had gone some way to achieving their
intention of improving integrity and equity in the tax system, but that the extent of
the improvement was inadequate.167
It formed this view based on evidence that:
9.3

there remains a low level of compliance with the APSI rules;

there is uncertainty about how the ASPI rules interact with the general antiavoidance provisions in Part IVA of the ITAA;

there is a lack of clarity about deductions that can be claimed; and

the APSI rules – especially the tests for determining whether an individual
or entity is a personal services business and the PAYG obligations that
arise when PSI is attributed to an individual worker – are difficult to apply.168
Compliance problems
Recent ABS and ATO data indicate that non-compliance can take one of two forms:

deliberate underreporting;

misunderstanding about the APSI rules.
(a)
Deliberate underreporting
Although data from the ABS records more than one million independent
contractors in Australia as at November 2009, ATO data indicates that only
368,000 individuals and entities declared PSI in their income tax returns in the
financial year ending four months before.169 Even taking into the account the
differences in definitions and methodology between the ABS and ATO data sets,
this represents an enormous deficit.
In 2008, the ATO reviewed 11,000 contractor entity records from labour hire
firms. It identified that of those 11,000 entities, over 8,000 (more than 72%) did
not declare PSI in the income tax returns.170
164
165
166
167
168
169
170
See Australian Government, Board of Taxation, above n 156, 5.
CFMEU, Submission to the Board of Taxation, Post Implementation of the Alienation of Personal Services Income Rules, 3
August 2009, 911.<http://www.taxboard.gov.au/content/reviews_and_consultations/alienation_of_personal_services_income_rules/submis
sions/Construction_Forestry_Energy_Mining_Union.pdf>.
Australian Government, Board of Taxation, above n 156, 5.
Ibid.
Ibid.
ABS, above n 19; Australian Government, Board of Taxation, above n 156, 21.
Australian Government, Board of Taxation, above n 156, 21.
5692639/8
43
In the same year, the ATO undertook compliance activities on 231 cases
identified as high risk on the basis of data provided by labour hire firms with
potential tax adjustment of over $5,000 each. Of the 164 cases reviewed and 67
cases audited, a total of 193 cases (or 83.5%) were found to not comply with the
APSI rules. During the reviews there were 138 voluntary disclosures of noncompliance.171
(b)
Misunderstanding about the APSI rules
The Board accepted evidence that the rules that determine whether an individual
or entity is a personal services business can be confusing in some
circumstances, giving contractors opportunity to interpret them as they wish. The
practical impact of this is that more contractors are accessing more favourable
tax treatment than the true nature of their working arrangement justifies.
If the APSI rules are difficult to apply, they are more likely to be construed by
taxpayers in ways that most benefit the individual concerned, or ignored
altogether. Furthermore, such difficulty also adds to the cost of compliance for
honest taxpayers who seek genuinely to make an assessment about their status
for the purposes of taxation.172
9.4
Costs of evasion
Many and varying estimates about the impact of tax evasion by contractors on the
revenue base have been offered over the years.
In a study commissioned by the AMWU in 2005, the National Institute of Economic and
Industry Research (NIER) found that growth in contracting is leading to a $14.38 billion
(or $13,897 per non-employee in the industry) per annum risk to the tax base.173 This
loss, it found,
is a mixture of tax evasion and tax avoidance, including the failure to report
substantial amounts of income, claims for fictional or improper deductions and ability
to split income with families and relatives and lower the average tax rate. 174
The compliance activities of the ATO referred to above raised $4.8 million – that is, an
average primary tax amount of $18,800 and average penalties and interest of $6,000
per case.175 Although neither these figures nor the 83.5% rate of non-compliance can
be extrapolated across the building and construction industry, they nevertheless
indicate that the evasion of taxation obligations should be a matter of public concern.
The ABCC invites views on the following questions:

To what extent do workers enter into contracting and labour hire arrangements
to obtain taxation benefits?

What is the effect of evasion by workers in the building and construction industry
on:
171
Ibid.
CPA Australia, Submission to the Board of Taxation, Post-Implementation Review into Alienation of Personal Services
Income Rules, 3 August 2009, 5
<http://www.taxboard.gov.au/content/reviews_and_consultations/alienation_of_personal_services_income_rules/submissio
ns/CPA_Australia.pdf>.
173
AMWU, Submission No 46 to the 2004 House of Representatives Inquiry, March 2005, 64
<http://www.aph.gov.au/house/committee/ewrwp/independentcontracting/subs/sub46.pdf>.
174
Evidence to 2004 House of Representatives Inquiry, 31 March 2005, (Doug Cameron, AMWU) EWRWP 69
<http://www.aph.gov.au/hansard/reps/commttee/R8200.pdf>.
175
Australian Government, Board of Taxation, above n 156, 21.
172
5692639/8
44
5692639/8
o
other workers?
o
businesses?
o
the government?
45
10
The regulatory framework for sham arrangements in the
building and construction industry
Part 10 considers the regulation of sham arrangements under the FW Act, the National
Code of Practice for the Construction Industry (National Code) and National Code
Guidelines (NC Guidelines) and the IC Act.
As noted in Part 1 of this paper, a ‘sham arrangement’ or ‘sham contract’ involves
misrepresenting or disguising an employment relationship as one involving a principal
and contractor under a contract for services. Such arrangements may or may not
involve the use of labour hire. Certain conduct in relation to ‘sham arrangements’ is
unlawful under Division 6, Part 3-1 of the FW Act. Part 3-1 contains various provisions
relating to ‘general protections’ which are aimed at ensuring fairness and representation
in the workplace by recognising and protecting the right to freedom of association,
preventing discrimination and preventing other unfair conduct.
10.1
Fair Work Act 2009
(a)
FW Act sham contracting provisions
Division 6 of Pt 3-1 of the FW Act contains provisions prohibiting various types of
conduct relating to sham contracting. These provisions commenced operation on
1 July 2009.
The FW Act sham contracting provisions prohibit an employer from:

misrepresenting an employment relationship as an independent contractor
arrangement where the employer knows or is reckless as to whether the
contract is one of employment rather than one for services: section 357;

dismissing or threaten to dismiss an employee in order to engage him or
her as an independent contractor to perform the same or substantially the
same work: section 358; and

making a statement to an employee or former employee that the employer
knows to be false in order to persuade or influence that person to become
an independent contractor and perform the same or substantially the same
work: section 359.
Each of these provisions is a civil penalty provision which attracts a maximum
penalty of 60 penalty units (currently $6,600) for an individual or 300 penalty units
(currently $33,000) for a body corporate.176
In addition to these penalties, where a court finds that a contravention of the
sham contracting provisions has occurred, it has the power to make any orders it
considers appropriate, including: 177
176
177

granting an injunction to prevent or remedy the contravention;

awarding compensation for any loss that a person has suffered because
of the contravention; or

reinstating a person.
FW Act, ss 539 (Item 11), 546
FW Act, ss 539(2) (Item 11), 545.
5692639/8
46
The FW Act sham arrangement provisions modify those that were inserted in the
WR Act by the Workplace Relations Legislation Amendment (Independent
Contractors) Act 2006 (Cth). It has been noted, in respect of the WR Act
provisions, that:
The word “sham” conjures up the notion of a deliberate disguise or mask,
intended to mislead or deceive. The choice of this word ... implies that only
those employers that have knowingly (or at least recklessly) engaged in
some stratagem to avoid employment law obligations will be held liable .178
This remains the position under the FW Act provisions, which are examined in
closer detail below.
(i)
The prohibition in section 357
Section 357 provides as follows:
(1)
A person (the employer) that employs, or proposes to employ, an
individual must not represent to the individual that the contract of
employment under which the individual is, or would be, employed by the
employer is a contract for services under which the individual performs,
or would perform, work as an independent contractor.
Note: This subsection is a civil remedy provision (see Part 4-1).
(2)
Subsection (1) does not apply if the employer proves that, when the
representation was made, the employer:
(a) did not know; and
(b) was not reckless as to whether the contract was a contract of
employment rather than a contract for services.
Both the prohibition and the defence set out in section 357 are in similar terms to
the equivalent provisions in the WR Act (except that those provisions dealt with
the prohibition during an existing employment relationship, and in the offering of
employment, separately).179 The burden of proof in relation to the defence is
upon the person who made the representation.180
(ii)
The prohibition in section 358
Section 358 of the FW Act provides as follows:
An employer must not dismiss, or threaten to dismiss, an individual who:
(a)
is an employee of the employer; and
(b)
performs particular work for the employer;
in order to engage the individual as an independent contractor to perform the
same, or substantially the same, work under a contract for services.
Note: This subsection is a civil remedy provision (see Part 4-1).
Unlike the equivalent provision in the WR Act, an employer will have contravened
section 358 of the FW Act if engaging the employee in a contracting arrangement
was one of the reasons (as opposed to the ‘sole or dominant reason’) for
178
179
180
Workplace Relations Legislation 2008: Forward with Fairness Edition, Workplace Relations Act 1996 with Overview and
Annotations (Thomson, Sydney, 2008) 783.
See WR Act, ss 900-901.
Explanatory Memorandum, Fair Work Bill 2008 (Cth), [1450].
5692639/8
47
terminating the employee’s employment.181 Section 358 therefore prohibits a
slightly wider range of behaviour than did the equivalent provision in the WR Act.
(iii)
The prohibition in section 359
Section 359 of the FW Act provides as follows:
[a] person (the employer) that employs, or has at any time employed, an
individual to perform particular work must not make a statement that the
employer knows is false in order to persuade or influence the individual to
enter into a contract for services under which the individual will perform, as an
independent contractor, the same, or substantially the same, work for the
employer.
Note: This subsection is a civil remedy provision (see Part 4-1).
(b)
Operation and effectiveness of the WR Act and FW Act sham contracting
provisions
Although intended to ‘send a clear message to employers that this sort of unscrupulous
behaviour will not be tolerated’,182 the sham contracting provisions in the WR Act were
rarely enforced.183
The FW Act sham contracting provisions may also only generate modest success in
addressing the widespread problem of sham contracting.
For example, the provisions only apply in circumstances where an employer has misled
or dismissed an employee. Simply being party to a sham arrangement attracts no
consequences for an employer, other than exposure to a limited range of actions for
underpayment of wages and other entitlements (see under heading ‘Other remedies in
relation to sham contracting’ below).
A more fundamental limitation of the FW sham contracting provisions is that they
‘depend for [their] efficacy’ on it being shown that the worker concerned is in fact an
employee, based on the fairly imprecise common law multiple indicia test184 (see Part 5
above).
In other words, the complexity of the common law concepts underpinning the sham
contracting provisions broadens the defence available under section 357(2), that if an
employer did not know or was not reckless as to the nature of an employment
relationship, the employer can not be guilty of misrepresenting it.185
The recent case of CFMEU v Nubrick Pty Ltd186 illustrates this difficulty. This case
concerned an alleged contravention of section 901 of the WR Act (which, as indicated
above, was one of the predecessor provisions to section 357 of the FW Act).
Case study
CFMEU v Nubrick Pty Ltd [2009] FMCA 981
Two workers were as engaged by Nubrick as ‘independent contractors’ under
181
182
183
184
185
186
WR Act, s 902.
Commonwealth, Parliamentary Debates, House of Representatives, 22 June 2006 (Mr Kevin Andrews MP) 8.
See for example, CFMEU v Nubrick Pty Ltd [2009] FMCA 981 (7 October 2009); Fair Work Ombudsman v Land Choice Pty
Ltd [2009] FMCA 1255; Fair Work Ombudsman v Centennial Financial Services Pty Ltd & Ors [2010] FMCA 863 (15
November 2010).
Breen Creighton and Andrew Stewart, above n 31, 539.
The defence may also be made out in cases where an employer has undertaken ‘reasonable due diligence (such as taking
legal advice)’, proving an absence of ‘recklessness’ as to the true nature of the relationship: Breen Creighton and Andrew
Stewart, above n 31, 539-540.
(2009) 190 IR 175.
5692639/8
48
what all parties understood to be contracts for services.
The terms and conditions of the arrangements included a flat rate of pay per
hour and fixed hours of employment with start and finish times at the direction
of the business. The workers were also provided with equipment and safety
gear by the business. The workers were told that they would be responsible
for their own tax, would need to provide an ABN and invoice the business for
work performed, and that they would not be entitled to annual leave, paid sick
leave or superannuation. The Court also accepted that at least one of the
workers was advised that he could delegate his work to someone else.
The Court considered these factors in the context of the multiple indicia test,
and it determined that the contracts were contracts of employment. However,
the Court also noted that it did not find that the contracts clearly demonstrated
what the relationship was.
The finding that the contracts were contracts of employment meant that the
matters set out in section 901(1) of the WR Act were satisfied, namely, the
business had misrepresented the nature of the contracts under which the
workers were engaged.
However, the application against Nubrick for a penalty was not successful
because the business was able to rely on the defence in subsection 901(2).
Although the business later became aware that there was a risk that the
workers could be employees rather than contractors it was able to prove that
at the time the representation was made, it did not know that the contracts
were contracts of employment and was not reckless as to whether the
contracts would be contracts of employment.
However, there have been two cases in which the Office of the Fair Work Ombudsman
(FWO) has brought successful prosecutions under the sham contracting provisions in
the WR Act.187
Case study
Fair Work Ombudsman v Centennial Financial Services Pty Ltd & Ors [2010]
FMCA 863 (15 November 2010)
In April 2007, financial services company Centennial asked a number of its
sales staff to enter into a ‘Sales Consultant Agreement’. Under the
Agreement, the workers were to be paid on a commission-only basis.
The Court accepted the applicant’s submissions that the actions of the
company did not change the nature of its relationship with its workers and the
workers were employees.
The Court found that Centennial had contravened sections 901 and 902 of the
WR Act by misrepresenting the nature of its relationship with the workers and
terminating their employment for the purpose of engaging them as
contractors.
It also found that the company’s sole director and shareholder and the
company’s human resources manager were involved in the contraventions
(within the meaning of section 728 of the WR Act) and consequently were
187
Fair Work Ombudsman v Centennial Financial Services Pty Ltd & Ors [2010] FMCA 863 and Fair Work Ombudsman v
Land Choice Pty Ltd [2009] FMCA 1255.
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themselves also liable for those contraventions.
Case study
Fair Work Ombudsman v Land Choice Pty Ltd [2009] FMCA 1255
Land Choice was the operator of a real estate business and employed a
salesperson to work as a real estate salesperson. The salesperson was
purportedly subject to an “Independent Contractor Agreement” under which
she was entitled only to commission payments.
During the three-month period of the salespersons’ employment, the
salesperson worked 40 hours per week but received only one payment of
$1,414.20 from Land Choice.
Land Choice admitted contraventions of nine provisions of the WR Act,
including, contrary to section 900(1) (now section 357(1) of the FW Act), that it
had been reckless as to whether it offered a contract of employment rather
than a contract for services. The sole director of Land Choice had previously
formally acknowledged that the salesperson was an employee for the
purposes of an application for her certificate of registration under the Property,
Stock and Business Agents Act 2002 (NSW).
Federal Magistrate Barnes imposed an $8,000 penalty on Land Choice and a
$1,600 penalty on the sole director in relation to the contraventions of section
900(1).
(c)
Other remedies in relation to sham contracting
In addition to the FW Act sham contracting provisions, there are other remedies
available to workers engaged under sham arrangements. These include the
capacity to recover unpaid wages and compensation for loss arising from other
unpaid entitlements. Penalties may also be sought against employers who fail to
pay employees (ostensibly engaged as contractors) their lawful entitlements.
These remedies arise where an employment relationship can be established
based on the common law multiple indicia test, irrespective of the motives and
knowledge of the parties involved.
For example, under the FW Act, employees, employee representatives and
inspectors have standing to apply to the courts for a civil remedy where the
employer has contravened the NES or the terms of a modern award in relation to
one or more employees.188 There is also a small claims procedure which is
designed to provide a more cost-effective alternative to traditional litigation as a
means of resolving claims of up to $20,000 relating to the underpayment of
entitlements.189
The question of whether a worker is an employee or a contractor may also arise
in unfair dismissal cases that come before Fair Work Australia under Part 3-2 of
the FW Act. This is because, while only employees can access remedies in that
jurisdiction, in some cases FWA (and the AIRC before it) has determined that a
188
189
FW Act, ss 44(1), 45, 539-540.
FW Act, s 548.
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50
worker ostensibly engaged as a contractor was (at law) an employee and
therefore entitled to bring an unfair dismissal claim.190
Case Study
Williams v JMZ Roof Restorations Pty Ltd [2010] FWA 6181
Williams was a painter who had been working full-time hours for JMZ Roof
Restorations (JMZ) for more than a year. He was required to use his ABN
and to provide tax invoices to JMZ for the work he performed. However,
Williams said he had agreed to do this because JMZ would not otherwise
have employed him. Williams also filled out a form entitled ‘Zorlan Pty Ltd
Contractor Information Form’, which JMZ sought to rely on to show that
Williams was a contractor and not an employee.
JMZ argued that Williams was not entitled to the unfair dismissal protections
in the FW Act because, amongst other things, he was not an employee who
could be ‘dismissed’.
FWA considered the totality of the relationship between Williams and JMZ and
found that Williams was an employee of JMZ. In reaching this conclusion
FWA noted that Williams was an ‘integral part of the business’ of JMZ and
was ‘not conducting his own business during the time he was engaged [by
JMZ]’.
As Williams was an employee of JMZ he was entitled to the unfair dismissal
protections in the FW Act and could seek a remedy in relation to the
termination of his employment.
10.2
The National Code of Practice for the Construction Industry and the National
Code Guidelines
The National Code sets out minimum standards that businesses must meet to be
eligible to undertake certain building and construction projects funded by the Australian
Government. It sets out best practice principles that reflect national workplace relations
laws.191
The National Code does not expressly deal with sham arrangements. However, it does
provide that all parties must comply with the provisions of applicable legislative
requirements.192
The NC Guidelines provide further details on National Code compliance requirements.
The NC Guidelines were first introduced in March 1998 and there have been a number
of subsequent amendments.193 The current NC Guidelines commenced operation on 1
August 2009 and apply in relation to projects that were subject to an expression of
interest or tender on or after that date.
Like previous versions, the current NC Guidelines provide generally that the National
Code requires compliance with all applicable legislation, court and tribunal orders,
directions and decisions and industrial instruments.194 However, the current guidelines
also deal specifically with sham contracting arrangements by providing that:
190
191
192
193
194
In addition to the case study below, see for example Bibic v First Interstate Security (AIRC Full Bench, Print S7290, 22
June 2000) and Storen v South City Plaster [2007] AIRC 497; compare, on the other hand, Fort v Toll Transport Pty Ltd
[2010] FWA 8648.
ABCC, National Code <http://www.abcc.gov.au/abcc/NationalCode/>.
National Code, 7.
December 2003, November 2005, June 2006 and August 2009
NC Guidelines, s 6.1.1.
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[t]he FW Act and the Independent Contractors Act 2006 protect genuine employees
from ‘sham’ contracting arrangements which are sometimes used by employers to
avoid paying employee entitlements (e.g. annual leave). Sham contractor
arrangements are inconsistent with the Code and Guidelines. 195
The NC Guidelines do not provide further guidance in relation to what might constitute a
‘sham contractor arrangement’.

The NC Guidelines establish the Code Monitoring Group (CMG), an inter-agency
body whose responsibilities in relation to the Code and Guidelines include: setting
the strategic direction for the education and compliance activities of DEEWR and
the ABCC;

reviewing reports of alleged breaches; and

recommending sanctions for breaches of the Code and Guidelines.196
The ABCC is a non-voting member of the CMG.197 It has primary responsibility for
monitoring and promoting compliance with the Code and Guidelines, through a range of
educational and enforcement activities, including site visits, inspections and audits.198
If the CMG is advised that a breach of the workplace relations aspects of Code or
Guidelines has occurred, it may refer the matter for investigation to the ABCC.199
Where a business is found to have breached the Code or Guidelines, and has not
voluntarily rectified the breach, a sanction may be imposed by the CMG.200 Sanctions
range from a formal warning to preclusion from tendering for construction projects that
are funded by the Australian Government for a fixed period.201
10.3
Building and Construction Industry Improvement Act 2005
In 2003, the Cole Royal Commission Report recommended that:
[t]he Commonwealth initiate, through the Workplace Relations Ministers’ Council, the
development of a Code of Conduct and Practice for Labour Hire in the building and
construction industry.202
The BCII Act does not include specific provisions about sham arrangements. However,
it does empower the Minister for Workplace Relations to issue a code of conduct that is
binding on some industry participants.
Relevantly, section 27 of the BCII Act provides as follows:
(1) The Minister may issue one or more documents that together constitute a code of
practice (the Building Code) that is to be complied with by persons in respect of
building work.
...
(3) The Building Code cannot require a person to comply with the Code in respect of
particular building work (the current work) unless:
(a)
195
196
197
198
199
200
201
202
the person is a building contractor that is a constitutional corporation; or
NC Guidelines, s 6.1.4
NC Guidelines, s 7.2.1.
NC Guidelines, s 7.2.2.
NC Guidelines, s 7.4.
NC Guidelines, 8.1.1.
NC Guidelines, 8.2.1.
National Code, 10; NC Guidelines, s 8.2.
Cole Royal Commission, above n 127, Volume 1, 105.
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52
(b)
the person is a building industry participant and the current work is to be
carried out in a Territory or Commonwealth place.
...
(5) A document issued under subsection (1) is a legislative instrument for the
purposes of the Legislative Instruments Act 2003.
Under section 28 of the BCII Act, the ABC Commissioner could direct a person required
to comply with the Building Code to provide a written response about the extent to
which that person has complied with the Building Code in relation to particular building
work. Failing to comply with such a direction would attract a maximum penalty of 100
penalty units (currently $11,000) for a corporation and 20 penalty units (currently
$2,200) for an individual.203
If the written response disclosed (or any investigation revealed) that breaches of the
Building Code had occurred, the ABC Commissioner could, if he considered it to be in
the public interest to do so, publish details of the non-compliance, including the names
of the persons concerned.204 Details of any person’s failure to comply with the direction
of the ABC Commissioner could also be publicised.205
The power in section 27 of the BCII Act to create a Building Code has not been
exercised by the Minister.
10.4
Independent Contractors Act 2006
Part 3 of the IC Act contains provisions enabling contractors covered by that legislation
to apply to the Federal Court or Federal Magistrates Court for review of harsh or unfair
contracts. Similar provisions have applied under federal industrial legislation since
1992.
As under the FW Act, the terms ‘contractor’ and ‘contract for services' in the IC Act take
their meaning from the common law.206 However, an application under Part 3 of the IC
Act may only be made in relation to a contract for services if:


at least one of the parties to the contract is:
o
a constitutional corporation;
o
the Commonwealth or a Commonwealth authority; or
o
a person resident or corporate incorporated or having its primary place of
business in an Australian Territory; or
the work will be performed or the contract entered into in an Australian territory.207
In reviewing a contract, the Court may have regard to the parties’ relative bargaining
power, whether any undue influence or pressure was exerted or unfair tactics were
used against a party, whether the contract provides for remuneration less than that of
an employee performing similar work and any other matter the Court considers
relevant.208
If the Court decides that a contract is harsh or unfair, the Court may make orders:

203
204
205
206
207
208
setting aside the whole or a part of the contract; and/or
IC Act, s 28, 49(2)(b).
BCII Act, s 67(a).
BCII Act, s 67(b).
See discussion under heading 5.3(b) in this paper, above.
IC Act, s 5(2). See also s 11, on the application of Part 3 of the IC Act.
IC Act, s 15(1).
5692639/8
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
varying the contract.209
The IC Act is not directed at addressing sham contracting and makes no distinction
between ‘dependent’ contractors and independent contractors genuinely engaged in a
business enterprise. Rather, it provides remedies to parties who are contractors within
the meaning of the common law.
As Anthony Forsyth has observed:
The IC Act... seeks to recognise the legitimacy of independent contracting as a
primarily commercial form of work arrangement, prevent interference with the terms
of genuine contractor relationships and provide for the regulation of those
relationships by commercial (rather than industrial law) including the applicable
contract, the common law, and relevant legislation. 210
However, the IC Act can create a disincentive for sham contracting because it can
provide potential remedies under Part 3 in relation to an unfair arrangement even if the
worker cannot establish that they are an employee. In particular, relevant to the Court’s
inquiry into whether a contract is harsh or unfair is how the remuneration they receive
compares with the wages and benefits to which a comparable employee would be
entitled.211 If the remuneration provision compares poorly, the Court may vary the
contract with retrospective effect, so that a worker may recover fair payment for work
performed from the date the contract commenced.
On the other hand, Part 3 of the IC Act provides for narrower grounds of review, and
narrower remedies, than the ‘harsh or unfair contract’ review provisions in NSW and
Queensland industrial legislation.212 State and Territory fair trading legislation can also
provide protections in some circumstances.213
As a general rule, State provisions are overridden by the federal legislation to the extent
that the latter applies.214 There are however, some exceptions in relation to State laws
that deal with outworkers and owner-drivers, which continue to operate.215
Like the FW Act sham contracting provisions the unfair contract provisions of the IC Act
have not frequently been used. However, the following two cases provide examples of
effective use of Part 3 of the IC Act and predecessor provisions.
Case Study
Keldote Pty Ltd and Ors v Riteway Transport Pty Ltd (2008) 176 IR 316
The applicants were owner-drivers who provided linehaul trucking services to Riteway
under contracts based on the terms of an agreement with the relevant union. Riteway
advised the owner-drivers that the contract would be terminated if they did not upgrade
their trucks at their own cost.
The owner-drivers contended that their contracts were unfair or harsh within the
meaning of section 12 of the IC Act because, amongst other reasons, Riteway could
require the owner-drivers to replace their vehicles without compensation.
209
210
211
212
213
214
215
IC Act s 16(1).
Anthony Forsyth, above n 42, 330.
IC Act, s 15(1)(c).
See further Anthony Forsyth, above n 42, 341-342. For example, applications for relief under the unfair contract provisions
in the Industrial Relations Act 1996 (NSW) (NSW IR Act) can be made by a party to a contract or any industrial
organisation of employers or employees whose members work in the industry to which the contract relates under any
contract or arrangement. They also allow courts to make a wider range of orders, including orders prohibiting a party from
entering into a specified kind of contract in the future: NSW IR Act, ss 105, 107-108.
See for example Fair Trading Act 1999 (Vic), Parts 2A and 2B.
Independent Contractors Act 2006 (Cth), s 7(1); Explanatory Memorandum, Independent Contractors Act 2006 (Cth), 32.
Subsection 7(2) of the Independent Contractors Act 2006 (Cth) explicitly preserves the operation of Chapter 6 of the
Industrial Relations Act 1996 (NSW) and the Owner Drivers and Forestry Contractors Act 2005 (Vic).
5692639/8
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Federal Magistrate Cameron agreed that the relevant terms of the contracts were unfair
and ordered that they be varied.
Following a series of appeals, the variation to the contracts was held to have
retrospective effect, creating an enforceable right to sue for damages for breach of the
contract as varied. Ultimately, Riteway was ordered to pay the applicants monetary
damages for notice of termination and goodwill.216
Case Study
Buchmueller v Allied Express Transport Pty Ltd (1999) 88 IR 456
The applicant was a truck driver engaged as a contractor under terms which were not
completely clear to him at the time. The effect of his contract was that his earnings were
less than he would otherwise have earned as a casual employee.
Dowsett J of the Federal Court noted that the fact that a contractor stands to earn less
than they otherwise would under an award does not in itself compel a finding that the
contract was unfair or harsh. However, he noted in this case that there were no factors
sufficient to offset the ‘substantial financial disadvantage’ incurred by the applicant. It
was held that the bulk of the disadvantage derived from the unfairness of the contract.
Dowsett J made a compensation order based on difference between the contractor’s
earnings under the contract, and the otherwise applicable award.
10.5
The role of regulatory agencies
The ABCC is responsible for ensuring that workplace laws are upheld in the building
and construction industry, which it seeks to achieve by educating industry participants
about their rights and responsibilities under workplace laws, investigating suspected
contraventions of the law, the National Code, federal agreements and awards and
instituting or intervening in proceedings when workplace laws are broken.217
The FWO is also responsible for promoting harmonious, productive and co-operative
workplace relations and ensuring compliance with workplace laws.218
(a)
Investigation and prosecution
The ABCC has a range of powers in relation to FW Act sham contracting,
underpayments and the unfair contracting provisions of the IC Act in the building
industry, including powers to:

investigate and seek penalties against industry participants;219

intervene in court proceedings and make submissions in proceedings
before FWA;220 and

publish details of non-compliance by industry participants if it is in the public
interest to do so.221
Until recently, the ABCC had not pursued FW Act sham contracting matters or
underpayments, including those associated with sham arrangements. However,
it has since taken a more active approach, including commencing proceedings on
216
217
218
219
220
221
Keldote Pty Ltd v Riteway Transport Pty Ltd (2010) 195 IR 423.
BCII Act.
FW Act, s 682.
BCII Act, ss 73-73A; FW Act, ss 357-359; 539.
BCII Act, ss 71-72.
BCII Act, s 67.
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26 August 2010 in the Federal Magistrates Court in Sydney against an ACT
construction company for allegedly breaching the FW Act sham contracting
provisions.222 The ABCC is also currently investigating more than a dozen cases,
with that many again having been referred to its legal department.223
The FWO also has jurisdiction under the FW Act in relation to FW Act sham
contracting provisions and underpayment matters. As at late October 2010 the
Office of the Fair Work Ombudsman had six sham contracting matters pending
before the courts.224 On 11 October 2010, the ABC Commissioner wrote to the
Fair Work Ombudsman in relation to the overlapping jurisdiction that each has in
relation to FW Act sham contracting and underpayments in the building industry.
Whereas underpayment matters in the building industry were previously referred
to the FWO in accordance with a Memorandum of Understanding between the
two agencies, it is now intended that from 1 March 2011, all building industry
underpayment matters will be pursued by the ABCC.225
Obstacles for regulators in relation to investigating and prosecuting sham or
unfair contracting may include:

potential complainants choosing not to approach a regulator for
assistance for fear that their own taxation and business arrangements will
come under scrutiny; and

workers not being sufficiently aware of their rights under the FW Act and
IC Act to complain to a regulator.
Even when litigation is successful,226 success is necessarily restricted to a result
in a particular case, and at most gives rise to an individual employer being fined.
Therefore, civil penalty litigation, while important, may not, on its own, be
sufficient to generate significant change in the industry.
(b)
Advice and education
An important function of both the FWO and the ABCC is providing advice and
education about the rights and responsibilities of employers, employees and other
workplace participants.227 This involves presenting to industry groups,
associations, unions, companies and staff groups, making site visits, publishing
fact sheets and liaising with the media.228
Both agencies also publish Guidance Notes. Guidance Notes are a means by
which the regulators publish information on the interpretation of the laws they
enforce or about its internal policies and procedures.229 Both regulators publish
Guidance Notes from time to time on a range of subjects, including those
suggested by the public.230 Neither regulator has published a Guidance Note on
FW Act sham contracting.231
222
223
224
225
226
227
228
229
230
231
Darlaston v Risetop Construction, Rummukainen and Rummukainen (application filed 26 August 2010).
Commonwealth, Parliamentary Debates, Senate Education, Employment and Workplace Relations Legislation Committee,
Estimates 2010, 20 October 2010, EEWR 34.
Ibid, 81.
Ibid, 86.
See the cases discussed at 10.1 and 10.4 above.
ABCC, About us – Role <http://www.abcc.gov.au/abcc/Aboutus/Role/>; FWO, Our role <http://www.fairwork.gov.au/aboutus/our-role/pages/default.aspx>.
Ibid.
ABCC, ABCC Litigation Policy <http://www.abcc.gov.au/NR/rdonlyres/B6077407-7D7D-410C-9DE2F5804D07CB8B/0/ABCCLitigationPolicy.pdf>; FWO, FWO Litigation Policy <http://www.fairwork.gov.au/guidancenotes/GN1-FWO-Litigation-Policy.pdf>.
Ibid.
However, the ABCC does have a ‘Fact Sheet’ on Sham Contract Arrangements – see
<http://www.abcc.gov.au/abcc/FactSheets/ShamContractArrangements.htm>.
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The ABCC is also responsible for educating the industry and monitoring
compliance with the National Code and NC Guidelines.232 As discussed above
(see part 10.2), the National Code and NC Guidelines require industry
participants working on Commonwealth-funded projects to comply with, among
other things, the FW Act sham contracting provisions.233
The ABCC educates industry participants about the National Code and NC
Guidelines through:

providing advice and assistance over the phone and in person;

presenting to small and large groups; and

distributing a suite of fact sheets.
Its monitoring activities in relation to the National Code and NC Guidelines
include site visits, site inspections and audits.234
The ABCC invites views on the following questions:
232
233
234

Are the sham contracting provisions in the FW Act an effective way of
addressing the problem of sham arrangements in the building and construction
industry? If not, why not?

Are the unfair contracts provisions in the IC Act an effective way of addressing
the problem of sham contracting in the building and construction industry? If not,
why not?

What, alternatives to litigation, if any, could and should the ABCC use to address
the problem of sham contracting in the building and construction industry?

Would a code of practice in relation to contracting and labour hire in the building
and construction industry be an effective way of addressing the problem of sham
arrangements? Should such a code be issued by the ABCC, or, given
legislative status (i.e. made by the Minister under section 27 of the BCII Act?)?

How could the ABCC encourage workers and employers affected by sham
arrangements or unfair contracts to come forward?

What more could and should the ABCC do to provide education and information
about sham contracting and unfair contracts in the building and construction
industry?

In what ways could the ABCC and the FWO cooperate more effectively to
reduce the incidence of sham contracting and unfair contracts in the building and
construction industry?
ABCC, Monitoring the National Code <http://www.abcc.gov.au/abcc/NationalCode/MonitoringtheCode/>.
ABCC, National Code <http://www.abcc.gov.au/abcc/NationalCode/>.
ABCC, above n 227.
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Appendix A – Discussion questions
The ABCC invites views on the following questions:
Profile of the building and construction industry in Australia and the incidence of contracting and
labour hire arrangements

Do the statistics accord with experience and perception about the incidence of
contracting and labour hire arrangements in the building and construction industry?

Are contracting and/or labour hire arrangements more common in some parts of Australia
than others? If so, why?

What factors explain the relatively high incidence of contracting and labour hire
arrangements in the building and construction industry, compared to other industries?
‘Employee’ vs ‘contractor’

Are the differences between an employee and a contractor clearly understood in the
building and construction industry?

Are factors other than those listed in Table 2 relevant to determining whether a person is
a contractor or an employee in the building and construction industry?

Would any of the options discussed in paragraph 5.6 provide a better basis than the
common law multiple indicia test for distinguishing between employees and contractors?

What could and should the ABCC do, if anything, to clarify when a person is an employee
and when they are a contractor?

Would there be merit in recognising or legitimising a ‘third category’ of worker in the
building and construction industry e.g. an ‘economically dependent contractor’?

Should economically dependent contractors be treated differently to independent
contractors? If so, how? What attributes to be derived from independent contractor
relationships and employment relationships should characterise an ‘economically
dependent contractor’?
Labour hire arrangements

To what extent are labour hire arrangements essential to the efficient functioning of the
building and construction industry?

Are the general concerns about some aspects of labour hire practices evident in the
context of the building and construction industry? How can such concerns be addressed?

Are Odco arrangements common in the building and construction industry? Do these
arrangements reflect the genuine preferences of workers, or are they more often
imposed as a condition of obtaining work?

Are phoenix companies involving labour hire arrangements common in the building and
construction industry? What are the impacts of these arrangements? What role could
the ABCC play to reduce these impacts?

Is the concept of joint employment worthy of further exploration in the context of the
building and construction industry?

How could the ABCC assist all stakeholders in the building and construction industry to
ensure that labour hire practices are both fair and efficient?
Fairness: drivers in contractual negotiations between employers and workers including inequality
of bargaining power
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
Do business and/or workers use their bargaining power to induce the other party to enter
into independent contracting and labour hire arrangements instead of traditional
employer-employee relationships? If so, to what extent does this occur in the building
and construction industry

Are there any factors other than those discussed in 7.2 and 7.3 above, that influence
decisions to enter into contracting or labour hire arrangements in preference over a
traditional employer-employee relationship?
Concerns about sham contracting and labour hire arrangements: evasion by employers of
responsibilities owed to employees and others

Do businesses enter into contracting and labour hire arrangements to avoid obligations to
employees?

If so, what responsibilities do businesses seek to evade:
o
to the worker?
o
to the government?

What is the effect of evasion by employers in the building and construction industry?

How do the pay and conditions workers receive under labour hire arrangements compare
with those received by direct employees?
Evasion by workers of taxation obligations

Do workers enter into contracting and labour hire arrangements to obtain taxation
benefits?

What is the effect of evasion by workers in the building and construction industry on:
o
other workers?
o
businesses?
o
the government?
The regulatory framework in the building and construction industry

Are the sham contracting provisions in the FW Act an effective way of addressing the
problem of sham arrangements in the building and construction industry? If not, why not?

Are the unfair contracts provisions in the IC Act an effective way of addressing the
problem of sham contracting in the building and construction industry? If not, why not?

What, alternatives to litigation, if any, could and should the ABCC use to address the
problem of sham contracting in the building and construction industry?

Would a code of practice in relation to contracting and labour hire in the building and
construction industry be an effective way of addressing the problem of sham
arrangements? Should such a code be issued by the ABCC, or, given legislative status
(i.e. made by the Minister under section 27 of the BCII Act?)?

How could the ABCC encourage workers and employers affected by sham arrangements
or unfair contracts to come forward?

What more could and should the ABCC do to provide education and information about
sham contracting and unfair contracts in the building and construction industry?
In what ways could the ABCC and the FWO cooperate more effectively to reduce the incidence
of sham contracting and unfair contracts in the building and construction industry?
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Appendix B – References
Royal Commission and Parliamentary Committee Reports, Submissions and Other
Evidence
Commonwealth, Royal Commission into the Building and Construction Industry, Discussion
Paper 11 - Working Arrangements - Their Effects on Workers' Entitlements and Public Revenue
(2002)
Commonwealth, Royal Commission into the Building and Construction Industry, Final Report
(2003)
Andrew Stewart, Submission No DP11_014, 23 September 2002
Civil Contractors Federation, Submission No DP11_005, September 2002
Hansen Yuncken, Submission No WA_018, 11 July 2002
HIA, Submission No DP3_004, 5 July 2002
HIA, Submission No SEC_004, 5 July 2002
Master Builders Association of Western Australia, Submission No WA_019, 15 July
2002
MBA, Submission No WA_021, 18 July 2001
House of Representatives Standing Committee on Employment, Workplace Relations and
Workforce Participation, Parliament of Australia, Making it work: Inquiry into independent
contracting and labour hire arrangements (2005)
ACTU, Submission No 60, March 2005
AMWU, Submission No 46, March 2005
Andrew Stewart, Submission No 69, 18 April 2005
CFMEU, Submission No 5 (undated)
Courier and Taxi Truck Association, Submission No 50, Attachment 2, 16 March 2005
DEWR, Submission No 65 (Discussion Paper), 2005
HIA, Submission No 61, 24 March 2005
JobWatch, Submission No 23, March 2005
MBA Submission No 22, March 2005
New South Wales Government, Submission No 35, 11 March 2005
Queensland Department of Industrial Relations, Submission No 66 (undated)
Ross Human Directions, Submission No 54, March 2005
Evidence to the Inquiry, 31 March 2005 (D Houlihan, IR Australia)
Evidence to the Inquiry, 31 March 2005 (Doug Cameron, AMWU)
Evidence to the Inquiry, 26 April 2005 (P Anderson, Australian Chamber of Commerce
and Industry, and P Bosa, Labour Force Australia)
Senate Employment, Workplace Relations and Education References Committee, Parliament of
Australia, Beyond Cole The future of the construction industry: confrontation or co-operation?,
(2004)
ATO, Submission No 120, 4 May 2004
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Building Union Superannuation Scheme Queensland, Submission No 34 (undated)
Evidence to the Inquiry, 7 April 2004 (P Toner)
Senate Employment, Workplace Relations and Education Legislation Committee, Parliament of
Australia, Provisions of the Independent Contractors Bill 2006 and the Workplace Relations
Legislation Amendments (Independent Contractors) Bill 2006 (2006)
AMWU, Submission No 16, July 2006
Economic Development Committee, Parliament of Victoria, Interim Report - Inquiry into Labour
Hire Employment in Victoria (December 2004)
Economic Development Committee, Parliament of Victoria, Final Report - Inquiry into Labour
Hire Employment in Victoria (2005)
Australian Government, Board of Taxation, Post-Implementation Review into Alienation of
Personal Services Income Rules (2009)
CFMEU, 3 August 2009
CPA, 3 August 2009
MBA, Submission, July 2009
Research, Working, Discussion and Other Papers/Reports
ABCC, Sham Contract Audit Report (2009)
<http://www.abcc.gov.au/Performanceandreports/Documents/20090302ShamContractAuditRepo
rt.pdf>
ATO, Compliance program 2010-11
Australian Government, Productivity Commission, Productivity Commission Staff Working Paper:
The Growth of Labour Hire Employment in Australia (2005)
Australian Government, Action against fraudulent pheonix activity - Proposals Paper (2009)
Richard Hall, Labour Hire in Australia: Motivation, Dynamics and Prospects, Working Paper 76
(2002)
Steve O’Neill, Labour hire: issues and responses, Research Paper No. 9 2003–04 (2004)
Legislation, Regulations, Codes and Guidelines
Accident Compensation Act 1985 (Vic)
Age Discrimination Act 2004 (Cth)
Building and Construction Industry Improvement Act 2005 (Cth)
Disability Discrimination Act 1992 (Cth)
Employment Rights Act 1996 (UK)
Fair Work Act 2009 (Cth)
Fair Work Regulations 2009 (Cth)
Implementation Guidelines for the National Code of Practice for the Construction Industry (as at
August 2009)
Income Tax Assessment Act 1997 (Cth)
Independent Contractors Act 2006 (Cth)
Legislative Instruments Act 2003 (Cth)
National Code of Practice for the Construction Industry
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Occupational Health and Safety Act 1984 (WA)
Occupational Health and Safety Act 2004 (Vic)
Racial Discrimination Act 1975 (Cth)
Racial Discrimination Act 1975 (Cth)
Sex Discrimination Act 1984 (Cth)
Superannuation Guarantee Act (Administration) Act 1992 (Cth)
Tax Administration Act 1953 (Cth)
Workplace Relations Act 1996 (Cth) (repealed)
Hansard
Commonwealth, Parliamentary Debates, House of Representatives, 22 June 2006
Commonwealth, Parliamentary Debates, Senate Education, Employment and Workplace
Relations Legislation Committee Estimates 2009, 21 October 2009
Commonwealth, Parliamentary Debates, Senate Education, Employment and Workplace
Relations Legislation Committee, Estimates 2010, 20 October 2010
Books and journal articles
Andrew Stewart, ‘Atypical Employment and the Failure of labour Law’ (1992) 18 Australian
Bulletin of Labour 217
Andrew Stewart, ‘Redefining Employment? Meeting the Challenge of Contract and Agency
Labour’ (2002) 15 Australian Journal of Labour Law 235
Andrew Stewart, Stewart’s Guide to Employment Law (The Federation Press, 2nd ed, 2009)
Anthony Forsyth, ‘The 2006 Independent Contractors Legislation: An Opportunity Missed’ (2007)
35 Federal Law Review 329
Breen Creighton and Andrew Stewart, Labour Law (The Federation Press, 5th ed, 2010)
Geoff Harley, ‘Joint Employment’ (2002-2003) 8(9) Employment Law Bulletin 84
Ian Watson, John Buchanan, Iain Campbell and Chris Briggs, Fragmented Futures: New
Challenges in Working Life (The Federation Press, 2003)
Rohen Cullen, ‘A Servant and Two Masters? - The Doctrine of Joint Employment in Australia’
(2003) 16 Australian Journal of Labour Law 1
Workplace Relations Legislation 2008: Forward with Fairness Edition, Workplace Relations Act 1996
with Overview and Annotations (Thomson, Sydney, 2008)
Cases
Accident Compensation Commission v Odco Pty Ltd (1991) 64 ALJR 606
AWU (Queensland), PR973358 (19 July 2006)
Bianchi v Staff Aid Services, PR937820 (12 September 2003)
Brook Street Bureau Ltd v Dacas [2004] EWCA Civ 217
Buchmueller v Allied Express Transport Pty Ltd (1999) 88 IR 456
Building Workers Industrial Union of Australia v Odco Pty Ltd (Trouble Shooters case) (1991) 29
FCR 104
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Centrestage Management Pty Ltd v Riedle [2008] FCA 938
CFMEU v Nubrick Pty Ltd [2009] FMCA 981
Country Metropolitan Agency Contracting Services Pty Ltd v Slater (2003) 124 IR 293
Damevski v Giudice and Others (2003) 202 ALR 494
Darlaston v Risetop Construction, Rummukainen and Rummukainen (application filed 26 August
2010)
Fair Work Ombudsman v Centennial Financial Services Pty Ltd & Ors [2010] FMCA 863
Fair Work Ombudsman v Land Choice Pty Ltd [2009] FMCA 1255
Franks v Reuters Ltd [2003] EWCA Civ 417
Golden Plains Fodder Australia Pty Ltd v Millard [2007] SASC 391
Hollis v Vabu Pty Ltd (2001) 207 CLR 21
Jacinta Arcadia v Accenture Australia [2008] AIRC 108
Jasevski v Australia Post [2010] FWA 9472
Keldote Pty Ltd and Ors v Riteway Transport Pty Ltd (2008) 176 IR 316
Kwee Sang Chong v Bridgestone Australia Ltd [2008] AIRC 177
Matthews v Cool or Cosy Pty Ltd; Ceil Comfort Home Insulation Pty Ltd; Citigroup Pty Ltd (2003)
WAIRC 7889
Morgan v Kittochside Nominees Pty Ltd, PR918793 (13 June 2002)
Narich Pty Ltd v Commissioner of Pay-roll Tax [1983] 2 NSWLR 597
Orlikowski v IPA Personnel Pty Ltd [2009] AIRC 565 (26 June 2009)
Quarman v Burnett (1840) 6 M & W 499; 151 ER 509
Re Porter (1989) 34 IR 179
Secure Employment Test Case [2006] NSWIRComm 38
Staff Aid Services v Bianchi, PR945924 (5 May 2004)
Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16
Strang Aniokaka Ltd v Lihir Gold Ltd (No 2) [2010] FCA 1065
Texas World Service Co, Inc v NLRB 928 F 2d 1426
Vabu Pty Ltd v FCT (1996) 33 ATR 537
Wilton v Coal & Allied Operations Pty Ltd (2007) 161 FCR 300
Zhu v Treasurer of the State of New South Wales (2004) 211 ALR 159
Other Materials
ABCC, About Us, <http://www.abcc.gov.au/abcc/Aboutus>
ABCC, Litigation Policy <http://www.abcc.gov.au/NR/rdonlyres/B6077407-7D7D-410C-9DE2F5804D07CB8B/0/ABCCLitigationPolicy.pdf>
ABCC, Monitoring the National Code
<http://www.abcc.gov.au/abcc/NationalCode/MonitoringtheCode/>
ABCC, National Code <http://www.abcc.gov.au/abcc/NationalCode/>
ABCC, Role <http://www.abcc.gov.au/abcc/Aboutus/Role/>
ABS, 2009-10 Year Book Australia (Cat No. 1301.0)
ABS, Australian and New Zealand Standard Industrial Classification 2006 (Cat No. 1292.0)
ABS, Forms of Employment Survey - November 2008 (Cat No. 6359.0)
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ABS, Forms of Employment Survey - November 2009 (Cat No. 6359.0)
ABS, Labour Market Statistics – January 2010 (Cat No. 6105.0)
Building and Construction General On-site Award 2010
CFMEU, ‘CFMEU call for round table on Sham Contracting’ (News Release, 8 November 2010)
<http://cfmeu.asn.au/branch/act/news/cfmeu-call-for-round-table-on-sham-contracting>
Electrical, Electronic and Communications Contracting Award 2010
Explanatory Memorandum, Fair Work Bill 2008 (Cth)
Explanatory Memorandum, Independent Contractors Bill 2006 (Cth)
ILO, R198 Employment Relationship Recommendation, 2006 <http://www.ilo.org/ilolex/cgilex/convde.pl?R198>
ILO, ‘Report V: The scope of the employment relationship’ (Report presented at the International
Labour Conference - 91st Session, Geneva, 2003)
Julian Drape, ‘CFMEU bemoans sham contracting’, The Age (online), 22 September 2009
<http://news.theage.com.au/breaking-news-national/cfmeu-bemoans-sham-contracting20090922-g0my.html>
Justice Berna Collier (Part-time Commissioner of the ALRC), ‘Corporate insolvency: restructuring
the financial sector and understanding the long terms effects of the GFC’ (Presentation to the
Australian Women Lawyers Conference, Brisbane, 7 August 2010)
<http://www.alrc.gov.au/news-media/debt-and-insolvency/corporate-insolvency-restructuringfinancial-sector-and-understanding>.
Kirsty Needham, ‘Tax crackdown sought on sham contracting’, The Sydney Morning Herald
(online), 17 December 2009, <http://www.smh.com.au/business/tax-crackdown-sought-on-shamcontracting-20091216-kxlf.html>
Leigh Johns, ‘Keynote Address by ABC Commissioner Leigh Johns’ (Speech delivered at the
Biennial Australian Labour Law Association Conference, Adelaide, 19-20 November 2010)
Nicholas Ellery, ‘Joint Employment. Legal Myth or Practical Reality?’ (delivered to the Industrial
Relations Society of Western Australia on 13 October 2004)
Workplace Express, ‘ABCC audit meaningless, says Cameron’, 22 October 2009
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