General protections; sham contracting

The general protections of the Fair Work Act contain a provision to the effect that it is unlawful for a person (the employer) that employs or proposes to employ an individual must not represent to the individual that the contract of employment under which the individual is or wold be employed by the employer is a contract for services under which the individual performs or would perform work as an independent contractor; Fair Work Act 2009, sec 357.

In other words it is unlawful for an employer, whether a corporation or a persons or persons, to represent to an employee that he or she is an independent contractor.

“Applicable principles

Sham contracting – s 357 FWA

By s 357 of the Act, an employer is prohibited from misrepresenting to an employee that the employee performs work as an independent contractor. Section 357 lies within Div 6 of Part 3-1 of the Act, one object of which is to protect workplace rights. One workplace right under the Act includes the benefits to which a person is entitled as an employee under a workplace instrument or the National Employment Standards that are set out in Part 2-2 of the Act.

In substance, the prohibited representation that is proscribed by s 357 concerns the character of the contract which exists or would exist between an employer and employee and under which the employee performs or would perform work. “The content of the prohibited representation is that the contract of employment is or would be a contract for services under which the employee performs or would perform work as an independent contractor”: Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd (2015) 256 CLR 137, [14]. As the reasoning in Quest South Perth makes clear, liability may attach under s 357 where a prohibited representation is made to an employee. Conversely, if the parties are not in the relationship of employee and employer, s 357 is not engaged.”

Jensen c Cultural Infusions (Int) Pty Ltd (2018) FCCA delivered15 August 2018 per  Kelly