No 'sham' contracts under new laws, says Govt

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No 'sham' contracts under new laws, says Govt

The Federal Government has denied claims that its independent contractors legislation will result in 'sham' contracts, claiming it will have 'toughest penalties in the world' for any employer found to have broken the laws.

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The Federal Government has denied claims that its independent contractors legislation will result in 'sham' contracts, claiming it will have 'toughest penalties in the world' for any employer found to have broken the laws.

The claim

The claim of sham contracts was made by NSW Minister for Industrial Relations John Della Bosca in a submission to a Senate inquiry today.

Della Bosca said the sham contract arrangements would strip workers of entitlements, including superannuation, and workers compensation. He said the law would allow employers to bully their workers into becoming contractors so they forfeit the protection of awards.

However the Acting Employment and Workplace Relations Minister, Philip Ruddock, said today the Australian Government's new Independent Contractors Bill will outlaw sham contracting arrangements.

Fines on employers

'Under the new laws any corporation that forces a genuine employee into a sham contracting arrangement will face a $33,000 fine or $6,600 for an individual employer,' Andrews said.
'Contrary to the misleading claims of Della Bosca, an employer will not be allowed to force employees into sham contracting arrangements.

'[Della Bosca] has further asserted that employee entitlements such as superannuation and workers compensation will be affected by the Bill. This is simply untrue.'

Ruddock said the Bill explicitly provides for specific penalties to be imposed on employers who seek to avoid their obligations under employment law:

  • by disguising their employees as 'sham' independent contractors; or
  • who coerce their employees to become independent contractors; or
  • for dismissing or threatening to dismiss an employee with the purpose of re-engaging them as an independent contractor.'

Ruddock said the Office of Workplace Services (OWS) had been given additional funding of $6.2 million for the next four years to pursue these matters on behalf of employees.

'The protections under the Bill couldn't be more clear and explicit,' he said.

Own boss

'Australians have the right to choose be their own boss and the legislation protects them as genuine contractors from being roped-in to restrictive state-based workplace systems, which give unions the right to interfere in their business.

'The Bill ensures that genuine employees are protected, as are the interests of all independent contractors.'

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