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Overview and commentary on first sham contract prosecution (Nubrick)

11 October 2009

For the Federal Magistrates Court's determination (7 October), go here.

The first sham contract prosecution has had an outcome. The Federal Court has found that two 'contractors' were in fact employees, but that no sham existed.

The construction union says that because there was no finding of a sham contract, the federal act needs to be changed. They are wrong. In fact the court outcome proves that the sham contract provisions work.

There are major implications, however, for all businesses that seek to use independent contractors. With more than 2 million self-employed people working in Australia, there are probably not many larger businesses that do not engage independent contractors.

ABN error

The company that engaged the 'contractors' seemed to think that if the workers each had an Australian Business Number (ABN) that they were contractors. This has always been false. ABNs are an administrative instrument of the Australian Taxation Office used only to manage GST and BAS obligations. The ABN legislation makes it clear that the holding of an ABN by an individual is NOT an indicator, one way or the other, of whether a person is self-employed/independent contractor or an employee.

To read the rest of this analysis, you'll need to be an ICA member. Click here for that extended analysis.

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