Liam asks: I’ve been doing the same work for about 10 years. In 2010 someone bought the business and told me I’d have to get an ABN. He said I would be self-employed. I did this because I needed to keep my job. That’s the only thing that’s changed though I still work about 35 hours a week and my pay’s the same. My mate told me I was being ripped off but my wages haven’t dropped.
Your wages might not have dropped in the sense of the hourly rate you’re paid, but if you think about what your boss is saving in hiring you as a sub-contractor you’re definitely missing out.
Saving number one is they don’t have to pay you sick pay, holiday pay (or a loading if they call you in irregularly).
Saving number two is that they may try to tell you they will no longer be paying your superannuation. We hear of employers who think by changing their workers to contractors they can avoid paying superannuation. However they should still pay you, even though they are now calling you a contractor.
The ATO informs businesses that: “If you pay your contractors under a contract that is wholly or principally for labour, you have to pay super contributions for them. This is even if the contractor quotes an Australian Business Number (ABN). These contractors are considered your employees for Superannuation Guarantee purposes.”
If your boss says that once you are a contractor they no longer have to pay your superannuation they are not telling the truth and are trying to avoid paying you an important entitlement.
The ATO can assist with claims for unpaid superannuation. You can call them on: 13 10 20
So let’s say you work 35 hours a week and for argument’s sake you’re a level 1 gardener/landscaper. The minimum adult wage under the Gardening and Landscaping Service Award is $17.35 an hour.
As an employee you’d earn $607.25 per week before tax. The superannuation your boss would have to pay on that (at 9.5%) is $57.68. Bear in mind this is paid on top of your earnings.
Now let’s multiply that by 52 weeks in a year: $2999. You say you’ve been working as if you’re self-employed for five years. Therefore he or she has saved about $15,000 in superannuation.
That’s $15,000 which could be earning you interest in a super fund. So in reality your wages have dropped because you’re not receiving this money.
And that’s not factoring in unpaid sick leave, holidays, or any applicable penalty rates or loadings.
Working for yourself can be a great thing; you can work when you want, where you want. You can take on multiple jobs juggling them to fit your workload. If you find you have too much on you can hire people to help you. You have control of your working life.
Increasingly though we hear of people like yourself who are employees but with none of the benefits.
You have no say over when, how or where you work. You follow company policy and work as directed – but you have to pay your own superannuation and very often buy your own tools and other resources.
It’s called sham contracting and it’s unlawful.
So how can you tell if you’re stuck in a sham contracting situation?
• Have their work and the way they work directed and controlled by their employer.
• Usually have an ongoing expectation of work (although casuals have no guarantee of hours).
• Have income tax deducted by their employer.
• Have their tools or a tool allowance supplied by their boss.
• Are paid a salary or wages regularly.
• Permanent workers are entitled to paid leave.
• Are entitled to receive superannuation
• Are usually hired for a specific task or time.
• Have a high level of control over how their work is done including the capacity to hire other people to help them.
• Supply their own tools and materials.
• Pay their own tax.
How does your situation measure up using this checklist?
If you think you have in fact been hired under a sham contracting arrangement why don’t you give our advice line a call on 1300 486 466? It’s a free confidential service and one of our organisers can talk about what action you can take and anything else which might be worrying you at work.
They can also help you join a union if you wish – that is the best thing any worker can do to make sure they’re protected and have someone on their side if things go wrong.
I hope we get to speak with you soon.