Outcomes of the Sham Contracting Inquiry

The Office of the Australian Building and Construction Commissioner (ABCC) released the Sham Contracting Inquiry Report 2011 on Tuesday 29 November 2011.

The Inquiry sought information through public submission. Participants had the opportunity to tender their views about the incidence and impact of sham contracting in the building and construction industry. There was no pre-determined outcome to this Inquiry, and the ABCC welcomed frank and open discussion on the topic.

The purpose of the Inquiry was to generate ideas and clarify definitions of independent contracting relationships, in order to reduce the incidences of sham contracting arrangements in the building and construction industry.

Sham Contracting Research Advisory Committee

The then ABC Commissioner Leigh Johns established a Sham Contracting Research Advisory Committee in December 2011, consisting of eight academics and industry stakeholders.

The Committee formulated the terms of reference for a request for tender for independent research into sham contracting arrangements in the building and construction industry.

On 13 February 2012, the ABCC published a Request for Tender on the Australian Government’s AusTender website calling for tenders to conduct research into sham contracting. Tender submissions closed on 19 March 2012.

The Sham Contracting Research Advisory Committee considered the applications, in accordance with Commonwealth Government procurement guidelines, and made a recommendation to the ABC Commissioner.

 

Final Sham Contracting Research report

On 21 December 2012, Fair Work Building & Construction released the final report into ‘Working Arrangements in the Building & Construction Industry.

The key findings of the research were that:

  • 13% of self-defined contractors are possibly misclassified (i.e. they should be being treated as employees);
  • misclassified contractors appear more likely to:

o    include non-English speaking workers;

o    be based in metropolitan areas (with a greater concentration in NSW and Queensland – this finding is certainly consistent with FWBC’s own investigation activity);

o    be engaged with small to medium size businesses; and

o    be less attached and more transient in their role;

 

  • in terms of drivers for sham contracting:

o    worker-driven arrangements are associated with a sense of power and control in setting work arrangements and a perceived attraction of financial gain, control and stability

o    employer-driven arrangements are associated with the opportunity to take advantage of sometimes vulnerable and less informed workers.

 

Working Arrangements in the Building and Construction Industry research report

FWBC response to sham contracting research and independent contractor information statement

 

Need more information about sham contracting arrangements in the building and construction industry?

Sham contracting matters are handled by the Fair Work Ombudsman (FWO). For further information or assistance please contact FWO.