A Gold Coast tour bus operator will face the Federal Circuit Court in Brisbane over claims it engaged in sham contracting and underpaid two workers from non-English speaking backgrounds a total of $43,477.
The Fair Work Ombudsman initiated the case against AVA Travel Pty Ltd, along with its operations manager Terry Huang, sole director Chin Kuen Yung and partner firm JTH Enterprises Pty Ltd after receiving a request for assistance from an employee.
The request for assistance centred on a claim that staff received a text message in September 2014 requiring them to provide an ABN and informing them that they would be engaged as independent contractors from 1 October 2014 onwards. Workers continued to perform work in the same manner as they had previously done and were to be paid the same flat rate, however they were not paid any superannuation.
The FWO alleges that this amounts to sham contracting as the workers were still in an employer and employee relationship with AVA Travel and were not genuinely engaged as independent contractors.
In addition to allegations of sham contracting, an investigation carried out by the FWO found that by paying employees a flat rate of $20.59 for all hours worked, AVA Travel had significantly underpaid its workers. The underpayments were a result of failing to pay the correct rates for a range of work including weekend hours, public holiday hours and overtime.
Inspectors calculated that one employee was short-changed a total of $27,938.61 while the second employee was underpaid by $15,538.60.
AVA Travel has acknowledged the underpayments and set in place a payment plan to reimburse the workers.
Fair Work Ombudsman Natalie James says the agency took the matter to court due to the nature of the alleged contraventions and the significant amount of underpayments that occurred over such a short timeframe.
“The FWO has commenced proceedings relating to sham contracting in the passenger vehicle industry previously and the allegations put forward in this case are also very concerning,” James said.
Sham contracting is a serious contravention of the Fair Work Act 2009 where employers attempt to avoid their obligations by disguising employment arrangements as independent contracting arrangements.
“It is important that employers in all industries understand that they cannot avoid their obligations under workplace laws by applying a false label to an employment relationship,” James said.
Inside Small Business