Media release

19 May 2011

Sydney photography business breaches sham contracting laws

The Fair Work Ombudsman has recovered $3950 back-pay for a sales consultant at a Sydney photography business who was underpaid as a result of sham contracting.

The worker had been employed part-time by Signature Portrait Studios, based in Seaforth, for about three months in 2009 when she told business owner-manager Lynne Brabban she was pregnant.

Ms Brabban responded by terminating the worker’s employment with Signature Portrait Studios and engaging her as an independent contractor.

Fair Work Ombudsman Executive Director Michael Campbell says this breached sham contracting provisions of workplace laws because the worker’s correct classification was as an employee, not a contractor.

“Sham contracting occurs when an employer disguises or misrepresents an employment relationship as an independent contracting arrangement, often to avoid paying entitlements,” Mr Campbell said.

Fair Work inspectors discovered the sham contracting when they investigated a complaint made by the worker.

As a result of the sham contracting, the worker was underpaid $3950 in wages and leave entitlements.

Inspectors also discovered that Signature Portrait Studios had underpaid another employee $250 and had breached workplace laws relating to frequency of payment, record-keeping and issuing of payslips.

Ms Brabban admitted the contraventions and voluntarily rectified the underpayments.

She has entered into an Enforceable Undertaking with the Fair Work Ombudsman in which she has agreed to donate $250 to the Kingsford Community Legal Centre and receive training to develop systems for ensuring compliance before she employs any workers in the future.

Signature Portrait Studios is currently not operating.

Mr Campbell says all employers should realise that just because a worker is labeled an independent contractor, it does not necessarily mean they can legally be classified and paid as a contractor.

“Where we suspect sham contracting is occurring, we look behind the documents and apply workplace laws to determine the true state of affairs,” he said.

“It is vital we ensure workers are classified correctly, because if they are incorrectly classified as independent contractors, they can miss out on
employee entitlements.”

The Fair Work Ombudsman is currently conducting a national education and compliance campaign targeting sham contracting.

Employers and workers seeking advice or assistance regarding independent contracting and sham contracting can visit the Fair Work Ombudsman’s website at www.fairwork.gov.au/contractors.

Employers or employees seeking assistance should contact the Fair Work Infoline on 13 13 94 or visit www.fairwork.gov.au.

A free interpreter service is available on 13 14 50.

Copy of undertaking: Signature Portrait Studios Pty Ltd Undertaking (pdf 678KB) pdf icon

Media inquiries:

Cameron Jackson, Media Adviser, Media and Stakeholder Relations
0457 924 146 
cameron.jackson@fwo.gov.au

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Page last updated: 19 May 2011