02 May 2013Court orders NSW employer to pay $10k in FWBC sham contracting case

The Federal Circuit Court of Australia at Sydney has ordered an employer to pay a $10,000 penalty for misrepresenting to eight foreign workers that they were independent contractors. Fair Work Building & Construction (FWBC) Acting Director Brian Corney said the penalty would be distributed amongst the workers.

"These eight workers should have been engaged by Focal Group Pty Ltd as employees under the Building and Construction General On-site Award 2010," Mr Corney said.

"Instead the employer engaged them on a flat rate of $20 an hour which meant they also missed out on annual leave and Rostered Days Off (RDOs) to which they were entitled.

"Fair Work Building Industry Inspectors calculated that Focal Group Pty Ltd owed the eight workers a total of $33,345 in unpaid wages and entitlements. Focal Group Pty Ltd has since gone into liquidation and FWBC decided to pursue its directors for that underpayment."

Mr Corney said a director of Focal Group Pty Ltd, Christopher Jarrett, entered an agreement with FWBC, in which he admitted to contravening s357(1) of the Fair Work Act 2009 and agreed to pay a $10,000 penalty.

FWBC brought the case against Mr Jarrett and the other director of Focal Group Pty Ltd, Serdar Tunc, but has been unable to serve Mr Tunc who he has left Australia.

"The eight workers will be reimbursed some of the money they are owed as a result of this FWBC prosecution of sham contracting contraventions," Mr Corney said.

"The court’s judgment serves as a reminder to employers in the construction industry that they will not get away with engaging their workforce as independent contractors using Australian Business Numbers (ABNs) and paying them a flat rate when they are entitled to the benefits of employee status.

"Any building industry employers who are unsure about the difference between an employee and independent contractor should contact FWBC on 1800 003 338 for assistance. Our website also has a dedicated page about the distinction."

For more information on this matter, please see the media backgrounder which was issued when the case was filed.

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