Courier firm and linked company in sham contracting fine

Contraventions costs Z Transport and Boxbay $35,000 each

Courier firm and linked company in sham contracting fine
Sham-contracting a bicycle courier has proven costly


The Fair Work Ombudsman’s (FWO) lengthy pursuit of courier firm Z Transport and a linked firm, Boxbay, has resulted in $72,000 in penalties for deliberate sham contracting.

The case began in 2012 with a bicycle courier’s complaint at being misclassified as an independent contractor – Queensland-registered Boxbay being in a labour-supply and services agreement with Victorian firm Z Transport.

Employee entitlements under the Road Transport and Distribution Award, including minimum wages and leave entitlements meant the courier was underpaid $7641 between February and November 2013.

However, in what has been a fraught year for the Australian Taxation Office in the transport space, Judge Grant Riethmuller in the Federal Circuit Court of Australia noted that its online automated assessment tool for employers may not have been up to scratch.

"It appears from the printout that was annexed to the affidavit that the tool provided by the ATO is particularly simplistic and fails to provide sufficient queries as to the nature of the work and the practical realities that may restrict a particular worker with respect to choosing a system of work or subcontracting," Riethmuller’s findings state.

He also notes that the contraventions were by way of allowing a marginal business to survive.

"In this case, the circumstances involve a relatively small business.

"The turnover of the business is a little over half a million dollars per annum. The business does not generate significant profits.

"The payments to the second respondent have been very modest." 

Despite that, the guilty plea and repayments, the companies were fined $35,000 each, though no contraventions were found against the owners.

Riethmuller found that the contraventions were deliberate because in 2012, the Fair Work Ombudsman had provided Z Transport and Boxbay with "significant material" explaining that the correct classification for their bicycle couriers was as employees, not contractors.

Acting Fair Work ombudsman Kristen Hannah says her agency has a low tolerance for employers who engage in sham contracting arrangements.

"Disguising an employment relationship by unlawfully classifying workers as independent contractors is a devious way to avoid providing employees with their correct entitlements," Hannah says.

"Employers ought to be warned that they cannot simply ignore our advice.

"We have a range of materials available in multiple languages and a dedicated small business helpline."

"There has never been more information freely available than there is today – the time for excuses is over."


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