The former Office of Workplace Services (OWS), now called the Workplace Ombudsman (WO) warned that employers who attempt to short change workers - especially younger workers - by unlawfully treating them as contractors and not employees under "sham" contracting arrangements, can expect the full force of their legal powers.

A "sham" contract is where an employer intentionally or recklessly disguises an employment relationship as an independent contracting arrangement, usually to avoid responsibility for employee entitlements.

The warning comes after OWS recently initiated legal action in the Federal Magistrates Court in Sydney against a Cabramatta building supply business, BM Sydney Building Materials Pty Ltd (BMS), for allegedly underpaying a 19 year old worker more than $4000 in circumstances where an employment relationship was misrepresented as an independent contracting arrangement.

"Young workers are particularly vulnerable in understanding their employment rights and the OWS will not hesitate to act against an employer to protect them," OWS Director Nicholas Wilson said.

OWS has completed an extensive investigation into claims that BMS had employed a young worker for a number of months in their building supply business as a sub-contractor, yet the worker:

- worked daily regular hours;
- held limited skills;
- was on company directions at all times; and
- the company assumed all responsibility.

The OWS investigation revealed the incorrect practice and a substantial underpayment. When drawn to the attention of BMS, the company co-operated and agreed to pay the worker $4361.14 plus outstanding superannuation entitlements.

However, OWS is seeking penalties against the company for breaches of the Storemen & Packers, General (State) Award (NSW) because of the seriousness of this kind of behaviour under the law, the vulnerability of the worker at that age and the size of the underpayment relative to the worker's income, and to deter any employer from the practice of sham contracting.

"The Workplace Relations Act 1996, provide serious penalties for breaches if an employer intentionally or recklessly disguises a person's employment as an independent contracting arrangement," said Wilson.

"Don't risk it - make sure you are doing the right thing by all workers or risk investigation, prosecution and Court penalties of up to $33 000 per breach of the law", Wilson said.

If any employer or worker is in any doubt about their employment relationship, the OWS is ready to help with information or to receive a claim for investigation, with a range of materials on its website www.ows.gov.au and a specific fact sheet on independent contracting issues.

"OWS, now the Workplace Ombudsman, is committed to ensuring that the rights and obligations of workers and employers under workplace law are protected, understood and enforced fairly", said Wilson.

In just over one year as an independent agency, OWS has recovered over $11.4 million for more than 7400 employees across Australia.

Employers and employees who would like more information on their rights and obligations should contact the Workplace Infoline on 1300 363 264 or visit the WO website.

Source : http://www.industrysearch.com.au/news/viewrecord.asp?id=26120