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, which trades as Construct Contractor Solutions and provides labour to the operators of construction sites in Perth, including those operated by building company Hanssen.
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 at 189 Adelaide Terrace, East Perth.
Inspectors commenced a self-initiated investigation into compliance with workplace relations laws at the site after concerns were raised about general compliance issues following a fatal workplace accident at the site in 2016.
In documents lodged in the Federal Court, the Fair Work Ombudsman alleges inspectors found that Personnel Contracting had purported to engage five workers as ‘self-employed contractors’ - but that under workplace laws, the workers were actually employees of Personnel Contracting.
It is alleged that Personnel Contracting paid the workers flat hourly rates and that three of the workers were paid rates that coincided with their ages.
It is alleged that 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 alleges the workers were entitled to receive the minimum wage rates and entitlements under the Building and Construction General On-Site Award 2010. Underpayment of individual workers ranges from $2324 to $6539, which is still outstanding.
Acting Fair Work Ombudsman Kristen Hannah says 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.
“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,” says Hannah.
“Courts have found again and again that merely labelling the relationship to be one of independent contracting does not make it so, and it is the substance of the relationship that decides the status of the workers and the regulatory requirements that flow.
“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.”
A case management hearing has been scheduled in the Federal Court in Perth for July 25.