Aus Guards Blog

Workplace sham contracting arrangements can present significant risks for employers who are seeking to avoid the employment related statutory obligations, such as superannuation, payroll tax, workers compensation, leave entitlements and withholding tax. However employers who intentionally disguise employees as individual contractors face serious financial penalties of up to $6,600 for individuals and $33,000 for corporations if convicted. Sham contracting occurs where an employer engages a worker under the same conditions as a normal employment relationship, but classifies the worker as an individual contractor. The arrangement may be as blatant as an employer dismissing its employees then re-engaging them once an ABN is provided. In more discreet cases, there may be difficulties in establishing whether a sham contracting arrangement exists. 

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