Sham contracting arrangements and definition along with cases and penalties. Independent contractor in the security industry. Employment contracts and workplace rights public liability insurance. Employment law Australia income protection insurance and public liability.
A sham contracting arrangement occurs where an employer attempts to disguise an employment relationship as an independent contractor agreement, usually for the purposes of avoiding responsibility for employee entitlements. Under the sham contracting provisions of the Workplace Relations Act 1996, an Employer can not:
The Act provides serious penalties for breaches of employment law. Employees and Independent Contractors can request assistance from the Fair Work Ombudsman if they feel their have been breached.
You can compare your situation by clicking here and decide if you are an employee or a contractor.
When security companies contract to supply security services to a business they take into account all the costs concerned as well as adding a profit margin. Security Contractors account for the costs and conditions contained in the Security Services Award.
When a security contractor makes a proposal to supply security services, the hourly rate charged for the provision of security services is approximately the same.
Some Security businesses are engaging in sham sub-contractual arrangements to reduce or do away with conditions such as overtime, penalty rates and leave entitlements. Work is offered on the condition that a worker obtains an Australian Business Number (ABN).
They are then asked to invoice the employer for work performed, thus becoming a sub-contractor.
If you are being paid under a contract that is wholly or principally for labour, then the person or business paying you has to make super contributions on your behalf, even if you quote an Australian business number (ABN).
In many cases, hourly rates are very low that there appears little margin between the amounts invoiced and what a person would receive on award wage.
Many security sub-contractors are clearly employees. They work exclusively for the Security Contractor, they work as directed, use no personal plant or equipment, have settled hours, are paid regularly. The average on-cost for a employee to a security company is 22% to 25% and the average on-cost for a sub-contractor is under 10%.
Security Sub-contractors do not have coverage by employment laws or collective agreements negotiated by a union, therefore have the least bargaining power.
If you choose to enter into a sub-contracting arrangement with a Security company, consider the following points.
Judge whether it is in your interests or the interests of the Security company for you to enter into this legally binding agreement as an independent contractor.
Be aware that in the states of New South Wales and Victoria, if you sub-contract to do security work, you must hold an additional security license. In New South Wales, it is the Masters Licence and Victoria it is the Private Security Business Licence
A sub-contracting arrangement shifts responsibility from the Security Contractor to the individual sub-contractor for:
If you are currently working as a Security Sub-Contractor, go to the Pay Calculator page and enter your details as if you were an employee. Because holiday pay and sick leave are accrued, designate yourself as a 'Casual'. This is because these entitlements are expressed as a dollar figure in the Casual Loading.
This calculator gives you the minimum amount you would receive as an employee at this time. Allow for pay increases over the years that your contract extends. Now add to this the cost of income protection insurance, public liability insurance or approximately 25% more. Make sure the Contractor is paying your superannuation instalments.
Unless you are receiving at least 25% or more for your work than an employee then the Security Contractor has your money in his pocket.
If you know of Security businesses engaging in Sham contracting arrangements then report them to the Fair Work Ombudsman and expose them with a post to the Security Guard Forum.