My personal brush with sham contracting


And you’re wondering – what in the world is this sham contracting thing?

Sham contracting is when an employer pays you like a freelancer (called subcontractor here) but in actual fact, you work like an employee. This is the employer’s way of avoiding to pay tax and pay you benefits such as annual leave, supperanuation and give you insurance to protect you.

Sham contracting, as I personally discover, is rife in Australia.

I first heard about it from my colleague at the restaurants months ago.

“If they ask you to use an ABN to pay you, it’s illegal. It’s not worth it. No matter how much you want the money, just walk away or else you’ll get into trouble,” she said sternly.

That made my hair stand on an end. Because that’s what my employer asked me to do – to apply for an ABN so that he could pay me. When I asked my colleague about why he would do that, she said that he most probably wanted to hire me under a sham contract.

My fears were assuaged when my employer later emailed me saying that I will be coming on full-time when he returns from his jaunt in Europe. It’s just that he’s not in Australia for the moment and couldn’t sign the papers.

My relief was short lived.

One month became two. Then, three. And he kept ignored my requests to know when I’ll be put on a proper full-time contract. After a third month, I accepted the fact that this full-time thing was a carrot he’s dangling in front of all of us. (My co-workers were employed the same way.) Remembering what my waitressing colleague said, I googled sham contracting and found a list of characteristics of an employee vs contractor. Looking at the list, I am definitely an employee. But I wanted to be sure.

The tax man speaks

Frustrated, and perhaps a little afraid, I visited the Australia Taxation Office.

When I told the tax officer – who, by the way, looked more like a member of a rock band dressed as he was in a T-shirt and ripped jeans than a starched-up tax man – he shook his head and made tutting sounds.

“Hmph, I don’t like that,” he said, as if the idea of sham contracting is a personal affront to him.

“So, do you think I’m being employed under this sham contracting thing?” I asked.

He asked me several questions, and when he found out that my employer emailed me an offer saying that I’ll be a full-time employee in what month and that the job ad on advertised a full-time position, he immediately said: “Yep, you’re being treated as an employee.”

“So it’s a sham contract then.”

“Yup. See, it’s really cheap to employ people this way.”

I gulped. “Will I get into trouble then?”

He shook his head. “No, but your employer will. If you report him,” he said pointedly. “It’s really up to you now – do you want to stay or walk away?”

I looked at him. There wasn’t really much of a choice for me then. I needed the money and the local experience.

I chose to stay.

But I knew that my time was short in this company.

Eventually my employer became more and more difficult, demanding things that he shouldn’t demand of a subcontractor. When he sent me e-mails filled with F words, it was the last straw for me. No one should tolerate abusive language from an employer! Especially if you’re clearly being exploited…

Last week, we both came to a mutual understanding that we should part ways.

So, yes, I’m jobless again, but I’m curiously calm. Maybe cos I feel so happy to be free of the vicious office politics, liberated by the tyrannical rule of my boss and putting up with my frankly annoying and exasperating colleagues.

One door closes so that another can open…

Should you accept a sham contract?

Sadly, this practise is distressingly common and migrants will be exploited like I was. I guess I’m less idealistic than my waitressing colleague who had walked away from many offers like that. I had to fulfil my darn 475 conditions, save money to last a few more months in Oz and I needed to get local experience to get better jobs.

In the end, I didn’t quite regret my decision to stay. I got the money I needed to buy a much-needed car, I learned to work with Aussies (challenging!!), I worked on a few prominent projects (which stressed me out to no end) and met good people.

So, what if you end up in the same situation?

I think, sadly, migrants will be left with very little choice in these situations – especially if money is tight and they are in need of the ever-important local experience. You may have to end up gritting your teeth and tolerate it for a while … but don’t stay in this job for too long. Not being paid super, have tax taken out etc is just not on. It can also be dangerous because since you’re not covered by work insurance, if you get sued or injured at work, you won’t be protected. You’d have to pay it all yourself! And it totally sucks not to be paid when you’re sick!

Have you had a brush with sham contracting? What would you do if you were offered a job under a sham contract?

Tell others about this illegal and unfair practise! Share it on Facebook, RT on Twitter. And if you like, Like Malaysia To Adelaide on Facebook.


4 thoughts on “My personal brush with sham contracting

  1. Pingback: What if I fail? | Malaysia to Adelaide

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