Sham contracting research released

A Fair Work Building & Construction-commissioned research report has revealed as many as 13 per cent of contractors in the industry are on sham contracts.

The study was conducted by independent firm TNS Research, with assistance from eminent academics in the workplace relations field.

FWBC Chief Executive Leigh Johns said “This is the first national research into sham contracting, and involved telephone interviews with 900 workers and 450 employers in the building and construction industry.

“The report tells us that some 50,000 people could potentially be on sham contracts. This means they are missing out on entitlements like annual and sick leave and their employer making superannuation contributions,” Mr Johns said.

Of those people surveyed, one in eight who classified themselves as independent contractors were potentially misclassified, that is, they exhibit practices and arrangements typical of an employee and may be on a sham contract. In addition, awareness of the term ‘sham contracting’ was low, with 54 per cent of workers and 23 per cent having never heard of it.

Mr Johns said this reinforced the importance of the work FWBC is doing to raise awareness of and stop sham contracting, which carries a heavy penalty under the Fair Work Act 2009.

 “The results reinforce FWBC’s belief that sham contracting is a serious issue in the building and construction industry and will inform our continued work towards stamping out illegal employment arrangements.”

The study also showed that non-English speaking workers were particularly vulnerable to sham contracts. Mr Johns said FWBC’s recently launched culturally and linguistically diverse (CALD) workers campaign was aimed at raising awareness among CALD workers of their rights.

“FWBC is committed to educating people in the building and construction industry about sham contracting and prosecuting where appropriate,” Mr Johns said.

Since October 2010, FWBC and its predecessor agency have:

-       Commenced 193 investigations into allegations of sham contracting;

-       Commenced seven civil penalty proceedings, with a further 11 presently being considered for litigation

-       Successfully litigated four civil proceedings in relation to sham contracting securing $99,380 in civil penalties

To read the report in full, click here. To view FWBC’s response to the report, click here.


PDF icon Sham contracting research released.pdf