Sham contracting occurs when an agreement incorrectly classifies an employee as an independent contractor. Sham contracting situations may occur accidentally, but they are usually designed to mislead parties about the true nature of the employee-employer relationship.
Sham contracts are usually most beneficial to the employer because they often cause the worker to miss out on the social and economic benefits of being an employee.
Benefits such as long service leave, annual leave, superannuation payment, and public holiday pay can all be lost when you are classified as a contractor or sub-contractor instead of an employee.
If you are concerned that you are working under a sham contract and missing out on your entitlements, contact the contract lawyers at McDonald Murholme. We can determine the exact nature of your contractual arrangements and help you take the next steps.
The Consequences of Sham Contracting
Workers in sham contracting arrangements can lose many of the rights that would usually be conferred upon an employee through statutes such as:
- The Accident Compensation Act
- The Superannuation Guarantee Act
- The Fair Work Act; and
- The Income Tax Assessment Act
Employers who knowingly force their workers into sham contracts can end up paying significant penalties if they are found guilty.
If a sham contract is mutually beneficial and both parties are found to have colluded to avoid their legal responsibilities, then both the employer and the worker could end up paying a high price.
Talk to Our Contract Lawyers in Melbourne for Expert Advice
If you are worried that you are involved in a sham contracting arrangement, talk to McDonald Murholme. Our contract lawyers can provide expert, objective advice at short notice.
Determining whether or not you are operating under a sham contract isn’t always straightforward. In some cases, a sub-contracting arrangement can be seen as genuine in one industry, while a very similar arrangement may be regarded as artificial in another sector.
The criteria for identifying a sham contract, and how those criteria are applied, can be very confusing, especially if you aren’t familiar with contract law.
The experts at McDonald Murholme can separate genuine contractual arrangements from artificial or sham contracts and help you claim compensation for your losses.
Talk to Our Expert Contract Lawyers in Melbourne, Sydney, Canberra, Adelaide, Brisbane and Across Australia
Do you believe that you’re missing out on employee benefits because of a sham contract? For expert legal advice and an assessment of your situation, contact McDonald Murholme today. We can help you understand your circumstances and take the next step.
Call 9650 4555 or enquire online.
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The McDonald Murholme team is headed by Mr Alan McDonald.Contact Us
For the transfer to be genuine, a significant change to the treatment of your employment must be established to ensure that it does not give rise to a sham contract arrangement.
There are multiple factors which indicate whether a worker is either an employee or contractor however, control is the main factor. The element of control focuses on how the work is done and who controls it. If the employer controls most of the work, it is more likely that the worker is an employee.
If the worker has been wrongly classified as a contractor, they are entitled to be back paid all of their employment entitlements for up to 6 years.
Only employees are eligible to lodge unfair dismissal applications. If you apply for an unfair dismissal application, your employer may submit a jurisdictional objection to your claim. You will be required to prove your employment status before proceeding with the unfair dismissal claim.
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