Sham Contracting a threat to our industry

One of the biggest threats to cleaning companies who ‘do the right thing’ is companies who take advantage of their worker by employing them as ‘Sham Contractors’.

A sham contract is when an employer deliberately disguises an employment relationship as an independent contracting arrangement, instead of engaging the worker as an employee they tell these employees to get their own ABN number. This is usually done to avoid paying employee entitlements such as superannuation, workers' compensation, leave, and certain taxes and offering employee’s wages under the current award.

Not only are workers being deprived of “thousands and thousands of dollars” each year by this employment sham, but customers who utilize these cleaning companies are opening themselves up for negative publicity and potential claims of exploitation of workers’ rights.

Sham contracting is illegal and there is significant legal risks for those employers participating in this, unscrupulous cleaning companies do this to cut costs, forcing their workers to pretend to be contractors, allowing them to undercut other companies who do play by the rules, and in turn these companies win cleaning tenders.

Yes the customer gets a cheap price for their cleaning, but at what cost? The old saying ‘you get what you pay for’ is very relevant in sham contracting, in our experience these companies might start off ok but soon the quality of the work reduces, the agreed hours start to reduce, staff turn up when they like and there is no management to speak to about concerns.   

An allegation recently aired on ABC 7.30 was about cleaners contracted to work at Myers, the cleaners claimed they were paid below the award rate, did not get penalty rates and were forced to pay their own tax, superannuation and insurance. Myer currently has a contractual arrangement with Spotless, one of the largest cleaning companies in Australia.

Under the sham contracting provisions of the Fair Work Act 2009, an employer cannot: misrepresent an employment relationship or a proposed employment arrangement as an independent contracting arrangement, dismiss or threaten to dismiss an employee for the purpose of engaging them as an independent contractor.

Etheridge Cleaning & Maintenance Services has built a reputation by always doing the right thing by our employees and our customers, but we are competing for business with these sham contracting cleaning companies, we would encourage any potential client to ensure you ask the question before employing the services of any company, do you employ your own staff to complete the work, or do you subcontract? You might be surprised with the answer.