Employing someone as an employee or contractor is a decision many businesses will make and given the investigations being done by the Fair Work Ombudsman businesses need to ensure they get that decision right. 

The Fair Work Ombudsman has released the findings of his office's audit into sham contracting in the cleaning services, hair and beauty, and call centre industries.

The report found that "a significant number" of trading enterprises using contractors should have been treating those workers as employees instead. 

 Of 91 workplaces investigated, 21 were found to be misclassifying employees as contractors and one-third of those were knowingly doing so, and "are therefore suspected of having contravened the sham arrangement provisions of the Fair Work Act".  The Ombudsman said litigation is being pursued.

There were other complaints, specifically about "rent a chair" operations in hair and beauty salons, and also about massage therapists working on a contract basis in day spays.

 "While these occupations may require specific training or even formal qualifications, the degree of control over the working arrangements can result in these workers being assessed as employees," the report states.

The Ombudsman said a number of employers had received advice from accountants on how to structure their operations. Since workplace law is different to taxation law and financial accounting practices, the Ombudsman said it appeared the legality or appropriateness of the arrangements under relevant workplace laws was often not considered.

The Workplace Relations Team at TCCI provides comprehensive IR advice to assist business in managing their employment statutory and legal requirements, including advice on the interpretation of the Fair Work Act.