A look through the number of sales roles advertised on a leading jobs board for the Sunshine Coast found close to 300 jobs currently available. That’s a lot of opportunities for Coast residents looking for work and that is great news for job seekers. Right?
Yes, if the employee contract is a traditional hourly paid rate with commissions included for exceeding sales targets. Not so much if at interview, it is identified that the business expects the applicant to have an ABN (registered Australian Business Number for engagement as a contractor) and work on a commission only basis.
An employee can be paid on a commission only basis when an award, enterprise agreement or other registered agreement states an employee can be paid this way. For rules about paying award and agreement free employees on a commission only basis see Award and agreement free wages and conditions. An award or registered agreement can set out specific rules about how the commission can be paid.
The Fair Work Commission frowns on such arrangements particularly if it denies the employee owed benefits and entitlements that s/he would have received if they were traditional employees. Therefore, it is important for businesses to first seek legal advice on the legality of a proposed scheme.
A few key elements differentiating an employee from a contractor is that the contractor has a higher level of control on how the work is done, is usually contracted for a specific task, determines his/her own hours of work, bears the risk and responsibility for work related injuries (contractors generally have their own insurance policy) and they pay their own superannuation.
A sham arrangement usually bears out when an employer attempts to disguise the employment relationship as an independent contracting arrangement to avoid the responsibility of paying employee entitlements.
Fair Work imposes serious penalties for contraventions of these provisions. Employees and independent contractors can request assistance from the FWO if they feel their rights have been contravened. The Fair Work Act 2009 protects genuine employees from ‘sham’ independent contracting arrangements and outlines employers’ obligations when establishing an employment relationship.
Under the sham contracting provisions of the FW Act, an employer cannot:
- misrepresent an employment relationship or a proposed employment arrangement as an independent contracting arrangement
- dismiss or threaten to dismiss an employee for the purpose of engaging them as an independent contractor
- make a knowingly false statement to persuade or influence an employee to become an independent contractor
An illustration of the above was seen earlier this year when Quest South Perth Holdings was successfully taken to task by Fair Work and fined close to $59,000 for terminating two housekeeping employees then immediately rehiring them as contractors to perform the same job.
Sham contracting arrangements are illegal and a detriment to establishing a fairer workplace.
Further reading: Company fined $59,000 for sham contracting
Please contact Lauren Morrison at Lauren@lmhr.com.au or Mob: 0400 225 499 if you would like to learn more about how LM HR Consulting can assist your business with your HRM requirements.
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