Employment Contract: Fair Work Ombudsman v Maclean Bay Pty Ltd [2012] FCA 10

Fair Work Ombudsman v Maclean Bay Pty Ltd [2012] FCA 10

In the case of Fair Work Ombudsman v Maclean Bay, the practise of converting employees into contractors, otherwise known as ‘sham contracting’ was examined.

Maclean Bay concerned the dismissal of casual employees who were employed on a regular basis, only to be reoffered their old positions as contractors.  One employee was approached by her manager who advised her that a director, Mrs Wells, wanted all casual staff at the resort to be engaged as independent contractors; and as such she would be required to register her own ABN and workers compensation insurance. After advising her employer that she did not wish to become a contractor, the employee was dismissed by Mrs Wells.

A second employee was also asked to become a contractor.  During the conversation the employee told the manager he could not afford to become a contractor as the insurance premiums would be greater than his weekly earnings.  The following week the employee was terminated.

As a result of these matters, Maclean Bay was found to have breached the sham contracting provisions relating to its employees. Mrs Wells, as director and decision maker, was also found to be liable.

This case demonstrates the serious repercussions for breaches of the sham contracting provisions. In a later judgment, penalties were awarded against both Maclean Bay and Mrs Wells, being $280,500 and $13,860 respectively

 

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