Charity Workers take Legal Action on Sham Contracting

By Andrew Heaton

(image via Huffington Post)

Workers in the charity sector in Australia are taking action against a company which claims to be the largest donor recruitment agencies in the world over allegations of sham contracting.

In its latest announcement, Canberra based law firm Chamberlains Law Firm said it had filed a class action law suit for sham contract in in the Federal Court of Australia against international direct sales and marketing agency Appco.

In a notice on the company’s web site, Chamberlains said those who had worked for Appco as a contractor may have been denied their legal rights under an illegal sham contracting arrangement.

“If you work, or have worked, as an independent contractor for the Appco Group anywhere in Australia, you may have been ripped off in a massive sham contracting scam,” the notice read.

“This means you could be entitled to compensation for underpayment.”

Used by some employers to avoid payment of entitlements such as superannuation contributions and various forms of leave, sham contracting arrangements see workers who are in effect employees wrongly classified as contractors.

Recent statements from the Fair Work Ombudsman suggest that the practice is in fact common among in respect of workers of fundraising companies who are engaged by charities in order to conduct fundraising activities.

Under the Fair Work Act, a worker is considered to be an employee at law in Australia if in fact the underlying substance of the relationship indicates that the person is in reality working as an employee as opposed to carrying on an independent business or enterprise.

As outlined within the Act, those who are in fact employees rather than contractors typically perform work under the direction and control of their employer on an ongoing basis, work standard or set hours, has an ongoing expectation of work, uses tools and equipment which are provided by their employer, has tax deducted by their employer, is paid regularly and is entitled to leave (or a loading in lieu of leave in the case of casual employees).

The opposite is typically the case for contractors, who typically pay their own tax, often set their own hours, are usually engaged for the performance of specific tasks, use their own tools and often have a degree of flexibility as to how the work is done.

According to a report on Probono, Chamberlains Law Firm director Rory Markham says that individuals engaged in charitable fundraising activities for Appco were in fact paid an hourly rate which in fact amounted to $6 or less.

That report suggests that Appco in fact employs somewhere in the realm of 4,000 to 8,000 workers in Australia, and that the workers in question were not paid their fair entitlements which a normal employee would receive such as hourly wages, annual leave, sick leave and other loading.

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