Has your boss put you on a sham contract? Here are the warning signs

Are you a casual or a contractor? Do you work in the gig economy? Has your boss told you to get an ABN but you’re not sure why? While of course there are bosses that play within the rules, there are some dodgy employers out there who may have you on a sham contract.

With the rise of casualisation, contracting out and the gig economy, it has become easier for unscrupulous employers to put their workers on sham contracts and call them ‘independent contractors’ when they should be employees.

By putting people on sham contracts instead of making them employees, dodgy bosses deny workers their rights to fair pay, leave entitlements and job security.

Workers on sham contracts work alongside regular employees doing the same or similar tasks – even using tools and equipment supplied by the same employer. They often do the same work as full-time permanent employees but are treated as contractors and denied employment rights.  

Let’s look at some red flags that could mean you’re on a sham contract.

How can you tell if you’re on a sham contract?

Just one red flag might not mean you’re on a sham contract, but the more you spot, the more likely it is to be true. You might be on a sham contract if: 

• your employer controls what you do, how you do it, what hours you work and where you work (usually in the same place as your supervisor) 
• you need permission to work for others or aren’t allowed to do so at all your employer gives you tools and equipment to use 
• your employer requires you to perform the work yourself instead of passing it on to your own employee or a sub-contractor of your choosing
• your employer requires you to wear a uniform 
• you have business cards that also have your employer’s name on them 
• your employer deducts tax from your pay and contributes to your super 
• your employer pays you routinely for the hours you work, no matter what tasks you did 
• your employer pays the business costs – like wages and insurance – and then keeps the profits. 

Unions make sham contracts history

Daniel McCourt was a construction worker engaged via a labour hire company to work across two Hassen sites in Western Australia.  

But he was required to work under an ABN for 25 per cent less than Award pay – earning only $22 per hour while working over 50 hours a week with no additional allowances.  

CFMEU National Construction Secretary Dave Noonan said the union couldn’t just walk away. They supported McCourt through the Federal Court, and ultimately ended up in the High Court. 

“The WA Branch of the CFMEU had to pursue this matter all the way to the High Court of Australia to get the law to reflect the reality that if a worker is told where, when and what to do, then they are exactly what they appear to be – an employee,” Noonan said.  

Union members have long argued that such sham contracting arrangements are unlawful. So, it was a huge victory when the High Court found that McCourt was indeed an employee and should be treated like one.  

Not only have Hanssen learned their lesson and are now recruiting everyone as employees on Award wages, but the union also won a massive backpay claim for workers. 

Workers on Hanssen projects alone will receive $60 million and workers are now getting an extra $400 a week.  

CFMEU WA state secretary Mick Buchan celebrated that due to the pursuit of justice, union members in all across the construction industry would benefit.  

“This decision is why workers need unions. No individual worker could take on a case like this and win, it’s almost impossible,” he said.  

Together we can make insecure work a thing of the past

There are about 1.4 million people who work for themselves and who don’t have any employees. Some of these will be on genuine contracts but regardless, this figure is a massive chunk of our population who are in insecure work if not on sham contracts. 

Insecure work can be easy enough to spot, but we all suffer when dodgy employers make it easier to deny workers their rights. But when you’re a union member, you never have to navigate through uncertainty alone.  

And like we saw with the High Court decision, a union-led case that started with just one worker can end up benefiting an entire industry of workers.  

All union members get access to advice and legal representation if things go wrong in the workplace. Think of it like a safety net – you pay small, regular membership dues, but you’re covered big time if something goes wrong. 

Cover photo credit: Photo by Andrea Piacquadio