Australia is well known and showcased for its lifestyle and opportunity and working for yourself as an independent contractor or starting a small business goes hand in hand with the Aussie “fair go” motto. Many Australian’s will leave school, learn a skill or trade and promptly start their own business or contract themselves independently without ever seeking any form of employment.

In the Australian economy, many employers prefer to engage independent contractors to do specific and timely tasks. The Australian workforce is full of independent contractors who essentially run their own small business enterprise. To operate in this manner, the contractor needs to obtain an Australian Business Number and will need to arrange to pay their own taxation each year.

Independent contracting is a viable and potentially lucrative way for people to earn a living. However, as with any small business enterprise, the risks associated with being independent are not suitable for many people let alone those who have just arrived in Australia. Independent contracting is best suited to people who value their own independence and have the skills, commitment and drive to source and deliver quality work. As an independent contractor, you can set your own hourly rate and choose the work that is best suited to your skills – but you only get paid for the work that you complete and payment will often be upon receiving an invoice for work completed.

While life as an independent contractor has some advantages, particularly for those working in skilled trades who can move between worksites with ease, there has traditionally been some abuse of the independent contracting process by employers seeking to cut costs. This process is known as “sham contracting” and involves the employer requesting that the employee work as an independent contractor. In doing so, the employee is no longer afforded the protections of an employee award and will get no entitlements to sick leave, annual leave or superannuation. They will also be responsible for meeting taxation obligations rather than having tax deducted from their wage on a pay as you go basis by an employer. 

When employers seek to employ people permanently on an independent contractor basis, there may be a chance that they are acting unfairly and perhaps even illegally. When an employment relationship becomes regular and the employee is earning the vast majority of their income from one source, it is reasonable to expect that the employee is treated as an employee and be given the wages and award privileges that this permanency implies.

Unfortunately, some unscrupulous employers have used independent contracting to circumvent their responsibilities as an employer

The Australian government is mindful of the potential abuses of the system and has placed responsibility for the monitoring and control of this potential abuse of the system with the Fair Work ombudsman.

If you believe that you may have been a victim of the sham contracting process, you may be able to seek help from the Fair Work Ombudsman’s office. They will be happy to investigate the circumstances of your employment and if there has been an abuse of the system they may be able to seek compensation on your behalf.

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