Stop the race to the bottom in our industry

Monday, 24 September 2012

sm ataeaMany workers in the live theatre, film and television industries have been forced to establish themselves as Freelance or contract employees (Independent contractors). The Alliance is concerned at the proliferation of these arrangements and that some of these arrangements are bogus and could be termed "sham" contracts.

What is sham contracting?
Federal Legislation says that sham contracting is illegal. It is a growing practice in the Australian Entertainment industry. It occurs when a Company signs up workers as independent contractors (also known as ABN workers), to avoid paying benefits, protections and entitlements those employees are legally entitled to, as employees under Collective Agreements or Awards. Simply quoting an ABN (Australian Business Number) does not automatically make someone an independent contractor. There is a test (see table below). Employees on sham contracts miss out on rights and entitlements such as;

  • paid sick leave, holiday leave and long service leave
  • overtime, night loadings and public holiday rates
  • protection against unfair dismissal
  • superannuation payments from employers
  • workers' compensation insurance
  • travel allowances, turn arounds and meal breaks and more.

What does this mean for workers?
Think about it. No sick leave, long service leave or paid holidays means every day you don’t work, you earn no money. If your employer doesn’t pay Superannuation, you can end up with no pension. If the boss doesn’t pay Workers’ Compensation, who is going to cover you if you are injured at work?

How do I know if I'm on a Sham Contract?
The attached table describes if you are an employee or an independent contractor. If you are a legitimate independent contractor you must answer yes to the entire column below.

Indicator

Employee

Independent Contractor

Degree of control over how work is
performed

Performs work, under the
direction and control of their employer, on an ongoing basis.

Has a high level of control in how
the work is done.

Hours of work

Generally works standard or
set hours (note: a casual employee’s hours may vary from week to week).

Under agreement, decides what
hours to work to complete the specific task. Determines the starting and finishing times

Expectation of work

Usually has an ongoing
expectation of work (note:
some employees may be engaged for a specific task or specific period).

Usually engaged for a specific task.
Risk Bears no financial risk (this is
the responsibility of their
employer)		 Bears the risk for making a profit or
loss on each task. Usually bears
responsibility and liability for poor work or injury sustained while performing the task. As such, contractors generally have their own insurance policy.

Superannuation

Entitled to have
superannuation contributions
paid into a nominated superannuation fund by their employer.

Pays their own superannuation
Tools and equipment Tools and equipment are
generally provided by the employer, or a tool allowance
is provided.		 Uses their own tools and
equipment (note: alternative arrangements may be made within
a contract for services).
Tax Has income tax deducted by
their employer.		 Pays their own tax and GST to the
Australian Taxation Office.
Method of payment Paid regularly (for example,
weekly/fortnightly/monthly).		 Has obtained an ABN and submits
an invoice for work completed or is
paid at the end of the contract or project.

 

Why do we need to stamp out sham contracting?
Sham contracting erodes the wages and conditions of workers in this industry. When workers who should be employees are put on sham contracts, they are denied many of the benefits and protections that employees are legally entitled to. The community misses out as well. By disguising employment relationships as independent contracts, Production companies avoid paying payroll tax. That means less money for our schools, roads and hospitals.

When production companies don’t pay superannuation, it shifts the burden of funding workers’ retirement on to society. Workers with no super have to rely on government pensions and welfare. Sham contracting also gives an unfair advantage to companies doing the wrong thing. By evading tax, not contributing super and not paying industry standard wages and entitlements, companies that engage sham contractors are able to undercut honest employers who are doing the right thing by their workers and the community.

Things won’t change or get better unless you take action and join the Alliance’s campaign.

STOP the scam at source:
The Alliance demands that:

  • Organisations who fund productions establish governance practices that discourages Sham Contracting.
  • Production companies must engage contractors legitimately with workers on collective agreements that ensure Sham Contracting is weeded out.
  • Production Companies must ban Sham Contracting arrangements on their productions.
  • Producers must check their subcontractors that workers have been paid 100% of wages, entitlements, Superannuation contributions, covered by workers compensation and tax paid before they receive payments.
  • Production companies or Contractors who are forcing workers on to sham contracts should be banned from the industry.

What can I do about it?
If you believe you are involved in a Sham contracting arrangement or can see that conditions in the industry are sliding because of bogus employment contracts in the industry. Contact the Alliance now.