This one mistake could cost your business $82,5000+
- 2 days ago
- 1 min read
What is SHAM Contracting?
It's when a business:
Treats a worker like an employee
But pays them like a contract (ABN)
Even if they agreed to it. Even if they asked for it.
If it looks like employment, it probably is.
Red flags of SHAM Contracting:
🚫Set hours/rosters
🚫Told how, when & where to work
🚫Can't work for others
🚫Paid hourly (not per project)
🚫No real business of their own
🚫Using company tools, vehicles, uniforms
If you're ticking these...🚩
This impacts BOTH sides:
WORKERS
No leave entitlements
No super (or underpaid)
No job security
EMPLOYERS
Backpay claims (super, leave, penalties)
Fines & legal action
ATO + Fair Work audits
Penalties are no joke:
💥Up to $82,500+ per breach (companies)
💥Backpay years of entitlements
💥Super + interest + penalties
💥Reputation damage
"But they wanted to be on ABN" is NOT a defence.
We see this ALL the time in:
🚜Civil & construction
💄Beauty & salons (rent-a-chair setups)
👩🏼💻Admin/VAs
🚚Transport & logistics
🧹Cleaning & NDIS services
Just because it's "common" doesn't make it compliant.
Ask yourself:
"If Fair Work investigated tomorrow... would this arrangement hold up?"
OR "Is this person running a business... or working in mine?"
To stay compliant:
✔️Use proper contractor agreements
✔️Ensure genuine independence
✔️Pay for outcomes/results, not hours
✔️Get advice BEFORE setting it up
✔️Review existing arrangements regularly
Comments