If this sounds familiar, it is worth finding out where you stand. Call 1800 UNFAIR (1800 863 247). The first call is free, with no obligation.
What sham contracting is
Under the Fair Work Act, an employer must not misrepresent an employment relationship as an independent contracting arrangement. In plain terms, they cannot pretend they are offering you a job as a contractor when the role is really employment.
A classic example: an employer telling someone they need to get an ABN and register as their own business before they start, when in reality the person will be working as an employee, set hours, doing the employer's work, under the employer's direction.
Why it matters to you
If you were really an employee but were labelled a contractor, you may have missed out on entitlements that employees get, and you may have rights you did not know you had, including the ability to bring an unfair dismissal claim if you were let go.
Employers do this to avoid paying for leave, superannuation, and other employee entitlements, and sometimes to sidestep unfair dismissal protection. That does not make it legal.
Employee or contractor, really?
The label on your contract is not the end of the story. What matters is the true nature of the relationship. In an employment relationship, you are essentially trading your time, skill and effort for pay, working within someone else's business rather than running your own.
from 26 August 2024, the Fair Work Act uses a "whole of relationship" test. Whether you are an employee or a contractor is decided by looking at the real substance, practical reality and true nature of the relationship, taking in the whole of how you actually worked, not just what the contract called you. That means the written label matters far less than what happened day to day: how much control the business had over your work, who supplied the tools, whether you carried real financial risk, whether you could delegate, and how integrated you were into the business.
This is genuinely complex law that has shifted in recent years, which is exactly why it is worth talking through rather than guessing.
The employer's defence
The sham contracting protection does not apply if the employer can prove they did not know, and were not reckless about, whether the arrangement was really employment. So the employer's knowledge and conduct matter, and that is often where these cases turn.
What you can do
Sham contracting sits within the general protections part of the Fair Work Act. If you were dismissed, there are tight deadlines: generally 21 days from when the dismissal took effect. If it was not a dismissal, different timeframes apply.
Find out if you were misclassified
Whether you were truly a contractor or an employee dressed up as one turns on the real substance of your work, not the paperwork. That is worth a proper conversation with someone who assesses it regularly.
Call 1800 UNFAIR (1800 863 247). The first call is free and there is no obligation. Monday to Friday 9am to 9pm, weekends 9am to 5pm.
We are paid agents, not lawyers. We represent employees at the Fair Work Commission and we will tell you honestly whether you have something worth pursuing.