The Fair Work Ombudsman and the Courts have taken hard line approach to sham contracting in recent years due to systemic exploitation of workers by businesses across multiple industries, in particular, hospitality and tourism, manufacturing, agriculture and marketing. In most of these cases, the workers have been unsophisticated, unskilled, or semi-skilled labourers with little to no business knowledge. In such cases, the Courts have held that it is highly improbable that work being performed by labourers could
support a finding that they were conducting a business for themselves. So on the other hand, individuals working in positions requiring specialist skills and qualifications, and properly engaged to perform specific tasks for a fee, are far more likely to be held to be independent contractors.
Despite the recent trends in Australia, businesses should still consider using independent contractors as an option due to the flexibility and potential labour costs savings, parti-cularly in the long term. However, businesses need to be mindful that it is not possible to eliminate all risk of an adverse finding of sham contracting and therefore they should seek legal advice before engaging staff as independent contractors.
The most important issue to consider when engaging independent contractors in Australia, is that the substance of the contracting relationship must reflect the character of a business relationship, and so the written contract, and day-to-day management of the relationship, must be structured accordingly.