Federal court proceedings against a Queensland-based transport company has unveiled a sham contract warning for small businesses from The Fairwork Ombudsman. The transport company had disguised employees and misclassified four of their delivery drivers to underpay and avoid payments of various entitlements.

The four misclassified delivery drivers had underpayments totaling $63,803 between 2016 and 2018. Three of the four workers were underpaid hourly overtime rates and public holiday rates, and not paid for any annual or personal leave. Underpayment of loading and unloading duties and cents-per-kilometre were also found to have been missed. The four misclassified drivers were not listed as employees, and listed as contractors, when in fact they were technically employees of the business.

Sandra Parker from Fairwork Ombudsman has said, “If employers misclassify employees as independent contractors and pay flat rates that undercut entitlements, they face serious consequences such as court action, hefty back-payment bills and penalties”.

FWO has stated indicating sham contracting will be one of its focus points for 2020 and warns businesses to keep in mind that under the Fair Work Act companies don’t get to decide the nature of an employment relationship.

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