FWBC provides new guidance to industry on sham contracting

Fair Work Building & Construction (FWBC) today released its first guidance note addressing a substantive area of workplace law - sham contracting. The guidance note is designed to give the building and construction industry information about how FWBC interprets the laws it enforces. 

Sham contracting has been a focus of FWBC since Leigh Johns commenced as the head of the predecessor agency in October 2010.  Mr Johns will leave FWBC at the end of this week to take up an appointment as a Fair Work Commissioner.

In 2010 Mr Johns announced an inquiry into sham contracting and released a discussion paper at the end of that year.  In 2011 the Sham Contracting Inquiry was conducted.  Consistent with the principal recommendation of the Sham Contracting Inquiry, further independent national research was conducted in 2012. That research revealed that as many as 13 per cent of contractors in the industry could be on sham contracts.

Guidance Note 7 describes FWBC’s sham contracting policy and delivers upon two further recommendations arising out of the Sham Contracting Inquiry. Recommendation 5 – develop a sham contracting guidance note and recommendation 7 – develop an independent contractor information statement.

FWBC chief executive Leigh Johns said FWBC consulted with the agency’s Advisory Board made up of industry representatives as part of the development process for the new guidance note.

“We also received feedback from industry stakeholders including the MBA, CFMEU, AiG and HIA in relation to Guidance Note 7,” Mr Johns said. “The suggestions made by industry stakeholders have led to a guidance note and information statement better targeted at those in the industry.  FWBC is committed to this process of co-design with industry.”

Guidance Note 7 broadly describes how FWBC investigates alleged contraventions of sham contracting provisions (sections 357-359) of the Fair Work Act 2009 and the enforcement options available. This Guidance Note also contains an Information Statement that FWBC recommends principals in the building and construction industry provide to all new contractors prior to their engagement.

“The publication of this guidance note and information statement will, I hope, go a long way to better informing the industry about how to detect and prevent sham contracting.  At the same time the guidance note and information statement will support legitimate contracting that is, and will continue to be, an important part of the industry,” Mr Johns said.

FWBC guidance notes are available at FWBC’s website. More information on the Sham Contracting Inquiry is available here.

PDF icon FWBC provides new guidance to industry on sham contracting.pdf