The Australian Building and Construction Commission has taken court action against Perth company Inner Strength Steel Fixing and its director, Vishuddha Shane Sacha, over allegations they engaged in sham contracting.
Inner Strength was engaged by Diploma Construction to work on its commercial development at 36 Adelaide Terrace in East Perth.
The case revolves around the terms on which five workers were engaged between 2008 and 2010
The ABCC alleges that Inner Strength and Mr Sacha contravened the Workplace Relations Act and the Fair Work Act, by making representations that a contract of employment was actually a contract for services as an independent contractor, thereby engaging in sham contracting.
“Notwithstanding the representations made by Inner Strength and Mr Sacha, all of the above employees, as a matter of fact and law, were employed under a contract of employment,” the ABCC said in a statement.
Its legal action comes in the midst of an inquiry into sham contracting.
The inquiry has been opposed by some employer groups, who believe sham contracting is not widespread and that the ABCC should retain its traditional focus on union militancy.
The ABCC announced in May it would commission research to gain a better understanding of the extent and impact of sham contracting on Australia’s building and construction industry.
“I anticipated empirical evidence on the incidence and cause of sham contracting would come out strongly through the submission process (to the inquiry),” ABCC commissioner Leigh Johns said.
“Instead, submissions to the inquiry called for reliable empirical information about the extent of sham contracting in the industry and what sectors of the industry it impacts.”
The final report of the sham-contracting inquiry was to be published in June but has been postponed until the completion of the research.
A directions hearing on the Inner Strength case will be heard in the Federal Court on August 12.
The ABCC has filed a notice of motion that the matter be heard in tandem with two other matters against the Construction, Forestry, Mining and Energy Union (CFMEU) and its officials, including Joe McDonald, because these matters also related to Diploma Construction projects.
The maximum penalties for a contravention of the Workplace Relations Act or the Fair Work Act are $6,600 for an individual and $33,000 for an organisation.