Sham contracting leads to licence cancellations
30 June 2022
The Labour Hire Authority (LHA) is running a compliance campaign targeting sham contracting in the labour hire industry. So far, over 40 businesses have been contacted to monitor their compliance.
Sham contracting is an arrangement where an employer attempts to disguise an employment relationship as an independent contracting arrangement. It is used by some labour hire businesses to unlawfully reduce labour and taxation costs and avoid responsibility for employee entitlements.
Last month, the LHA reported about businesses responding to educational material about sham contracting by voluntarily converting their workers from independent contractors to employees to comply with their legal obligations. In further good news, 10 more businesses were found to be compliant with their legal obligations after they provided material about their operations in response to the LHA’s campaign.
Non-compliant businesses face consequences
Unfortunately, not all businesses have demonstrated a willingness to comply with their legal obligations. As part of the campaign, the LHA obtained documents from providers relating to taxation and wages to assess if their independent contractors have been engaged fairly and correctly.
As a result, six businesses in the horticulture industry have been put on notice for cancellation as the LHA cannot be satisfied the providers are compliant with their requirements under the Labour Hire Licensing Act 2018.
The LHA has also moved to cancel the labour hire licences of five businesses in the security services, horticulture and hospitality industries. All licence holders are required to meet license conditions relating to annual reporting requirements, fees and adherence to workplace and taxation laws.
The campaign is ongoing, with a further 19 providers still having their documents assessed under the campaign.
How can I help?
If you have concerns that a provider may be engaging in sham contracting or not complying with their licence conditions, you can report a problem to the LHA online or by calling 1300 545 200.