Legal Advice Employment Law

Independent contractors or sham contracting: Here’s some Employment Law Advice

A Senate inquiry seeks to determine if the so-called “gig” economy is sham contracting, and if it is, they want to determine if young workers are exploited. Evidence has been presented that gig contracting is a means for corporations to avoid legislation that protects workers and workplace rights. For example, young workers perform temporary work, but they do not receive safety insurance or minimum pay.

Work under the “gig” economy are usually piecemeal, short-term contracts or engagements. Young workers work on internet platforms such as Uber, Foodora, Deliveroo, and Airtasker. They criticise these large corporations working through internet platforms for their flagrant disregard for legislation and avoidance of obligations to workers. These digital platforms receive commissions or fees from each short-term contract fulfilled by young workers.

One problem is, these internet platforms engage young workers as independent contractors but do not provide the workers with minimum conditions or entitlements. Young workers do not receive hourly rates for the work they perform. They are often paid per task regardless of how many hours are spent on the job. Some may be paid by the hour, but the hourly rate may not comply with the minimum hourly wage set by law.

Workers seek an amendment to the Fair Work Act to make sham contracting a strict liability offence. They want “gig” economy internet platforms to be included in the definition of “employers” so that the young workers who sign contracts will be protected as “employees”. They especially want the internet platforms to be responsible for their worker’s safety by providing their workers, health and safety insurance.

The same trend has been noted and complained of in the fashion industry where young workers are selected as “interns” to learn the ins and outs of the fashion industry. The young interns are not paid a salary or any form of compensation. They have none of the entitlements of employment, and they have no health or medical insurance. They receive the benefit of experience, the right to put their internship on their resume as work experience, and they obtain introductions to influential persons who can provide them with future employment or further mentoring. They work long hours, often beyond the regular eight (8) hours of work per day without pay for overtime for work rendered after hours.

If you are an employer, you might find it cost-effective for your company to hire independent contractors. You may find that using an internet platform to obtain workers for short-term tasks helps curb your overhead expenses. The only risk is one contractor filing a claim for work entitlements, underpayment of salaries, or unjust dismissal.