Recommendations from the inquiry into sham contracting

The Australian Building and Construction Commissioner Leigh Johns has released the report of the ABCC’s inquiry into sham contracting in the building and construction industry.

“The recommendations of this inquiry include a set of regulatory remedies aimed at eliminating sham contracting in the industry,” said Johns. One million Australians work in the building and construction industry and almost one-third of these workers operate as contractors, most of them legitimately so, said Johns. The report sets out a roadmap for the ABCC to work with industry to address sham contracting. The ABCC Inquiry was concerned with any situation in which a worker in the building and construction industry was described as, or asserted to be, a contractor when they should have been an employee.

“These proposed solutions range from looking at the legislative definitions of ‘employees’ and ‘contractors’, developing whole-of-government regulatory responses and examining how the ABCC might better conduct its core work investigating breaches of Australia’s workplace laws. “The findings from this inquiry set out a clear program of activities that will help the ABCC to develop, in partnership with industry, a more effective response to sham contracting.”

This program of activities will include:

• The ABCC conducting further research to build an accurate picture of the incidence and impact of sham contracting in the building and construction industry.
• After the completion of the research, the ABC Commissioner convening a high-level social partner working group to examine the outcomes of the research.
• The ABCC undertaking education activities (including in partnership with key industry stakeholders and the ATO) to specifically inform employers and employees in the building and construction industry regarding the appropriate use of Australian Business Numbers.
• The ABCC strengthening its relationships with other government agencies including the ATO, ASIC and the Department of Immigration and Citizenship to ensure that the ABCC’s work to eliminate sham contracting in the building and construction industry is coordinated with the programs of these other agencies.
• In consultation with key industry stakeholders, the ABCC developing an ABCC Fair Work Contractor Statement for voluntary distribution to independent contractors prior to engagement. This Contractor Statement would provide contractors with information regarding the common law test for employment as well as the consequences of engagement as a contractor, rather than an employee.

"Industry representatives, academics, major contractors, subcontractors and other stakeholders provided invaluable insights. This positive contribution made by industry partners significantly bolsters the efforts of the ABCC and legitimate operators in the industry to eradicate sham contracting."

Full details of the recommendations, a copy of the report and further information about the inquiry are available at: www.shamcontractinginquiry.gov.au.