Office of the Australian Building and Construction Commissioner

Recommendation 1:

That the ABCC coordinate a more integrated whole of government strategy aimed at eliminating sham contracting in the building and construction industry through strengthening its relationships with:

• the Australian Taxation Office in order to:
• more effectively refer instances of worker-driven sham contracting to the Australian Taxation Office; and
• to obtain aggregate data of the outcomes of Australian Taxation Office compliance activity that arises from such referrals.
• Australian Securities and Investments Commission in order to better enable ASIC to undertake compliance activity in relation to phoenix activity in the building and construction industry; and
• Department of Immigration and Citizenship in order to better identify and protect vulnerable migrant workers from being involved in sham contracting.

Recommendation 2:

That the ABCC conduct research to build an accurate picture of sham contracting in the building and construction industry.

This research should be designed to address the following questions:

• How wide spread is the problem of sham contracting in the building and construction industry?
• Are there any geographic, worker classification or industry sector factors that increase the likelihood of sham contracting or in relation to which sham contracting is more prevalent?
• For those workers engaged through sham contracting arrangements, were the arrangements initiated by the employer or the worker?
• What do employers and workers perceive as the benefits of being engaged as a worker, rather than an employee?
• Are workers aware of the entitlements under the Fair Work system which they forgo by working as a contractor?

An appropriate researcher to undertake the research should be determined through an open market process to ensure the widest possible range of entities can tender for this project.

The request for tender should also not prescribe a particular survey methodology, other than to ensure that the survey is conducted using a random-sample of employers, contractors and employees and will result in a statistically valid estimate of the prevalence of sham contracting, including at a disaggregated level.

The results of the research would be shared with other government departments and made public.

Recommendation 3:

That the ABCC undertake education activities (including in partnership with key industry stakeholders and the ATO) to specifically inform employers and employees in the building and construction industry regarding the appropriate use of Australian Business Numbers.

Recommendation 4:

That, after the completion of the research identified in Recommendation 2, the ABC Commissioner convene a high level social partner working group to examine the outcomes of the research, including whether legislative amendments to eliminate sham contracting in the building and construction industry would be effective.

Recommendation 5:

That the ABCC consider the mechanisms and models proposed by Inquiry participants in developing its 2012-13 education strategy.

In particular that the ABCC:

• develop a sham contracting guidance note;
• seek to enter into partnering arrangements with relevant employer associations, accounting/legal professional associations and unions to better facilitate education of building industry participants; and
• seek to further develop its capacity to provide on-site education to workplace parties in relation to sham contracting.

Recommendation 6:

That the ABCC consider the mechanisms and models proposed by Inquiry participants in developing its 2012-13 compliance strategy.

In particular that the ABCC:

• make greater use of FW Act compliance tools, such as compliance notices and enforceable undertakings;
• ensure that research undertaken in accordance with recommendation 2 facilitates future targeted compliance activity; and
• analyse the outcomes of the concreting and finishing trades audit currently being conducted by the ABCC.

Recommendation 7:

That, in consultation with key industry stakeholders, the ABCC develops an ABCC Fair Work Contractor Statement for voluntary distribution to independent contractors prior to engagement. The Contractor Statement would provide contractors with information regarding the common law test for employment as well as the consequences of engagement as a contractor, rather than an employee.

Recommendation 8:

That the ABCC review its National Code activities to ensure adequate resources are devoted to the identification of sham contracting on National Code worksites.

Recommendation 9:

That the ABCC, in consultation with key industry stakeholders, further consider the cost, scope, advantages and disadvantages of a negative licencing scheme which would:

• be administered by the ABCC;
• be a voluntary system;
• allow individuals to seek registration as a contractor;
• require applicants to provide evidence from a legal practitioner or other suitably qualified professional that the circumstances of the worker have been assessed as those of a contractor;
• provide registration only in relation to the employee's circumstances as assessed by the relevant professional;
• provide registration that is time limited; and
• have the consequence of individuals being precluded from registration, where misuse of the system occurs.

Recommendation 10:

That the ABCC not pursue:

• the development of a labour hire code of conduct;
• the concept of joint employment; or
• the creation of a third category of worker - the 'dependent contractor'.