Labour supply business faces Court for alleged building site underpayments

The Fair Work Ombudsman has commenced legal action against a labour supply company in Perth, alleging it misclassified young labourers as independent contractors, when they were in fact employees, and underpaid them thousands of dollars.

Facing the Federal Court is Personnel Contracting Pty Ltd, which trades as Construct Contractor Solutions and provides labour to the operators of construction sites in Perth, including those operated by building company Hanssen Pty Ltd. The Fair Work Ombudsman alleges Personnel Contracting underpaid five labourers aged between 16 and 21 a total of $19,111 for work performed over a four-month period in 2016 at a construction site operated by Hanssen Pty Ltd at 189 Adelaide Terrace, East Perth.

In documents lodged in the Federal Court, the Fair Work Ombudsman alleges inspectors found that Personnel Contracting Pty Ltd had purported to engage five workers as “self-employed contractors”, but that under workplace laws, the workers were actually employees of Personnel Contracting.

A 16-year-old employee was paid an hourly rate of $16 for all work performed; a 17-year-old was paid $17 an hour and a 19-year-old was paid $19 an hour. The two workers aged 20-21 were allegedly paid $23 to $25 an hour.

However, the Fair Work Ombudsman stated the workers were entitled to receive the minimum wage rates and entitlements under the Building and Construction General On-Site Award 2010. It is alleged that the rates Personnel Contracting paid them were not sufficient to meet the Award rates and entitlements.

It is alleged the five workers were underpaid their minimum hourly rates for ordinary hours, casual loadings, overtime rates, allowances and minimum engagement pay. Underpayments range from $2324 to $6539, and that the underpayments remain outstanding.

Acting Fair Work Ombudsman Kristen Hannah said a decision was made to commence legal action because the matter involves vulnerable young workers allegedly being denied basic lawful minimum employment entitlements and protections. She adds that misclassification of workers is a priority for the Fair Work Ombudsman, not just because of the direct impact of these arrangements on individual workers, but because it can involve businesses obtaining an unfair competitive advantage by depriving workers of their lawful minimum employment conditions and protections.

“All businesses that treat the individuals who perform work for them as contractors must take great care to ensure that they have classified those individuals correctly,” Ms Hannah said. “If we are successful in this matter, we hope that a key outcome will be Personnel Contracting classifying all workers correctly in future and paying all workers’ full lawful minimum entitlements.”

The Fair Work Ombudsman also stressed that there are no allegations against Hanssen Pty Ltd but has provided the company with information about steps it can take to ensure the workers on its work sites are receiving their full lawful entitlements, even if it does not directly employ the workers. On the other hand, Personnel Contracting faces penalties of up to $54,000 per contravention.

The Fair Work Ombudsman is also seeking Court Orders for Personnel Contracting to: back-pay the workers in full; display workplace notices detailing employees’ workplace rights; and commission an external audit of its compliance and report the results to FWO.

If the legal action is successful, the Fair Work Ombudsman will also seek a Court Order requiring Personnel Contracting to provide information about the changes to its labour arrangements. A case management hearing has been scheduled in the Federal Court in Perth for 25 July.

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