A young labourer classified as an ‘independent contractor’ was paid 25 percent less than the award rate – and it’s legal.
Currently, workplace laws allow unskilled workers to be classified as contractors, instead of employees.
As a result, employers can pay below industry minimum wages.
The Chief Justice of Australia’s Federal Court slammed the law, saying it defies common sense.
Labourer classified as ‘independent contractor’
The case involves Daniel McCourt, a 22 year-old British man in Australia for a working holiday.
Labour hire company Personnel Contracting found him a position with Perth building company, Hanssen.
However, neither Hanssen or Personnel Contracting employed McCourt, instead they engaged him as an “independent contractor”.
Classifying workers as “independent contractors” is a common way companies avoid paying award wages and entitlements.
It is common in the gig economy.
In McCourt’s case, the company paid him a rate less than 25 percent of the minimum award for workers under the relevant construction industry award.
Chief Justice slams law
The CFMEU brought the wage theft case on behalf of McCourt.
Chief Justice James Allsop and Justice Michael Lee criticised the existing law.
They said the division between contractors and employees is increasingly struggling to capture the way people work in 2020.
The court noted McCourt did tasks his boss on site asked him to do, often putting in 50 hour weeks.
He therefore had no ability to run his own business as an “independent contractor” given how much he worked.
Justice Allsop said:
“The notion that Mr McCourt was an independent contractor when working on the building site and that Hanssen was not liable for his negligence would defy any rational legal principle and common sense.”
He also said if there hadn’t been a history of cases going the other way, he would rule McCourt was a casual employee of the labour hire company.
However, the court concluded it is bound by past rulings which found independent contracts are valid because companies relied on their legality.
The CFMEU is considering appealing the case.