An Accessory that you do not want for Christmas

As the end of the calendar year beckons and Christmas approaches it is helpful to stop and re-assess.

For some businesses this may be a realistic assessment of the New Year and making projections on what 2015 may bring. For others, it may be reducing or increasing staffing ratios. This may include engaging independent contractors to assist with projects in the New Year.

If you are considering appointing independent contractors, then businesses need to be aware that the appointment of independent contractors to undertake work on your behalf may not necessarily eliminate liability in the event that the contractor fails to meet his/her legal obligations under Federal workplace laws.

Surprised? Well, most businesses are surprised because they take the view that once they have entered into a contract, any requirements for compliance with the Fair Work Act 2009 (Cth) (“FWA”) rests with the contractor and any of their sub-contractors and not with themselves.

The number of employers prosecuted by the Fair Work Ombudsman recently suggests that this is not the case at all. Indeed, the FWA has provisions that allow the Ombudsman to nail accessories to breaches of the Act, which they have now started using with gusto.

The FWA provides a mechanism where someone other than the employer can be considered an accessory to a contravention of workplace laws. So where a contractor breaches the FWA, such as underpaying wages, leave entitlements or failing to provide pay slips, both the contractor and the original business operator (employer) can be held liable because they are deemed to be involved in the contravention and will be subject to penalties and compensation.

A business considered to be an accessory in contravention of the workplace laws, is a business that aids, abets, counsels or procures the contravention including inducing the contravention, being knowingly concerned in or party to the contravention, or conspiring with others to bring about the contravention. Namely, where a business actively works with a contractor to breach award conditions, then both the contractor and employer will be liable.

So how can you protect yourself against this risk?

1. Take reasonable steps to ensure that your contractors have knowledge of the relevant workplace laws.
2. Take reasonable steps to ensure that your contractors comply with all relevant workplace laws.
3. If you are unsatisfied that your contractors do not have the requisite knowledge, then you may wish to undertake training and education in workplace law compliance.
4. Require that contractors are audited for compliance with workplace laws.
5. Require a warranty or undertaking from the contractor and its sub-contractors that they comply with relevant workplace laws.
6. Limit the ability of the contractor to subcontract work without your knowledge to another party.
7. Fully investigate complaints from employees of your contractor concerning compliance with workplace laws.
8. Include a termination clause of any contractual arrangements for breaches of the workplace laws by the contractor.

While these steps are not foolproof, they will go a long way in minimising your risk and ensuring that you do not end up as an accessory this Christmas.

If you would like further information about meeting your obligations under workplace legislation or like assistance in ensuring your contracts adequately protect you from liability, please contact Chris Morey (Director, Business Law) or Adam Foster (Lawyer, Business Law) on (03) 9629 9629 or on chrism@lewisholdway.com.au and adamf@lewisholdway.com.au.