The Chamber of Commerce and Industry of WA (CCI) has strongly opposed an inquiry into ‘sham contracting’ in the building and construction industry.
The Chamber of Commerce and Industry of WA (CCI) has strongly opposed an inquiry into ‘sham contracting’ in the building and construction industry.
CCI was one of 17 organisations to publish a response to a discussion paper by the Australian Building and Construction Commissioner identifying the need to “address the use of sham contracting and labour hire”.
Commissioner Leigh Johns said sham contracting occurred when people who ought to be treated as employees were treated as independent contractors. “Unlike legitimate contracts, sham contracting means workers miss out on entitlements and decent employers in the building and construction industry can be placed at a competitive disadvantage,” he said.
Commissioner Johns also said sham contracting could result in unfair tax, insurance and occupational health and safety outcomes.
The CCI said the launch of the inquiry was underpinned by an assumption that there were ‘endemic’ problems in the building industry that required regulation.
“CCIWA submits there is no compelling evidence to suggest that problems within the industry are widespread or that the current regulatory framework is inadequate. Workers and contractors in the industry are protected by the current regulatory framework,” it said.
In CCI’s view, the Fair Work Act 2009 adequately prohibits sham contacting and any fraudulent behaviour that occurs in labor/hire or independent contracting arrangements. It emphasised that imposing regulations allowing a third party to interfere with a contract for services could have a negative impact on the industry.
“Heavier regulation over contracting in the industry may not only disadvantage many employers and employees who wish to engage in legitimate arrangements, but will have a detrimental effect on the rest of the Australian economy,” it said.
Major Australian building and construction industry association, Master Builders Australia, has taken a different view and expressed its support for the ABCC inquiry.
It is calling for amendments to legislation to clarify when a person is an ‘employee’ and when they are a ‘contractor’. “The law is overly complex. The law should encourage a bright line division between the two methods of engagement,” it said.
The Centre for Employment and Labor Relations Law at Melbourne University has called for a different approach.
It has suggested an introduction of a licensing regime for labour hire employers in the building and construction industry, similar to an existing model in the UK. It submitted that labour hire providers should meet certain standards to qualify for and retain a licence to operate in the regulated industries.
