Common Law And The Individual Employment Relationship Essay


Discuss about the Common Law and the Individual Employment Relationship.



Sham Contract is a way of disguising unemployment relationship to make it look like an independent contractor in relationship. It can be defined as a deliberate misrepresentation an already existing employment relationship between the employer and employee It is a way to avoid payment by the employer to the employee. It is considered an unlawful act and the Australian law does not permit contracting. More often than not sham contacting is done against the will of the employees. The employees are bullied into signing an agreement which is a contracting agreement. The bullying done against a worker in a workplace is also called workplace bullying. Therefore instead of respecting the position of the employee as a worker in the company he is treated as an independent contractor and as a result of that the employer is freed from his duties to pay entitlements to the employee. The national employment standards entails that a worker has to be paid in accordance with the statutory and the legislative regulations. These entitlements include compensating the worker paying his superannuation and also recognizing his legal rights under the Australian law.

Issue 1

It is the duty of the employer to pay the above mentioned entitlements to the employee but if he is made to work as an independent contractor the employee will not have to pay any extra amount of money or pay the entitlements of the employee. This is called a contracting agreement because it is a fa?ade whereby the employer escapes is liability to pay to the employee the special entitlements that he is obligated to pay to the employee. The Fair Work Act 2009 is an Australian legislation that acts as a shield for the employees and prevents them from sham contracting and ensures that they get proper entitlements that they are deemed to get under the Australian law. Under the Fair Work Act 2009 it is clearly stated that sham contracting will be treated as an unlawful agreement between the employer and the employee. Under the provisions of the legislation the main this contract in arrangement is illegal it is imperative for the employees to keep in mind that he cannot tell the employee that he is an independent contractor. If the employee does not want to add an independent contractor the employee cannot force his opinions on him and cannot use force on exertion to make him act like an independent contractor. The employee cannot threaten the employee if you does not wish to become an independent contractor and also cannot make him do the works of an independent contractor which she had already performed as an employee. It is found that the works of the independent contractor and the employee at the same and the employer cannot in anyway mislead the employee into believing that he can walk like an independent contractor and cannot also force him to perform the functions of an independent contractor even though he is in the position of an employee. In Australia there are strict legislations that punish and employee who indulges in such unlawful activities and makes an employee walk like an independent contractor even though he doesn't wish to. The fair work ombudsman is obligated under the Australian lost to take strict actions against an employee who makes an employee work under such compelling situations and makes them worked as an independent contractor to make sure that the employees does not have to pay then that payments. Under the Fair Work Act, 2009 if an employee misrepresents to a person about the employment contract then it is an unlawful activity and the employee shall be held liable.

Issue 2

Section 357 does not give much emphasis on the intention of the employer and how he wanted to make the contract with the employee. In cases of misrepresentation it is not important to consider whether the employer while making the representation was not sure about the facts or he made the agreement recklessly. Therefore if under section 357 the employer makes a contract for service and ensures that the employee is engaged does an independent contractor instead of an employee the employee shall be held to be violating the provisions of the fair work act. The employee shall not be given shield where we can clean that they can escape liability because they have involved third party. 357(1) clearly states that an employee cannot make any representation to the employee and he cannot make the arrangement look like an agreement for services. This provision isn't for the rest of the basic principle of the fair work act which is enacted to uphold the rights of a worker (Flamingh and Bell 2017). The high court in this case held that it was the duty of the legislation and the judiciary to protect workplace rights. The rights under the fair work act also extend to protect an employee from being misled by the employer. After the claims of the applicant was dismissed in the federal court and also the court of first instance the fair work officer made an appeal to the high court (Webster 2015). The court in this case held that the misrepresentations made by the employer was a clear violation of section 357 and the misrepresentation also took into consideration the agreement between the worker and the third party. In the upper limit to the high court the judge of the high court clearly disagreed with the orders of the federal court observing that if the news of the federal court are made to be allowed then there will be no liability fixed on counterparty. The court therefore held that section 357 involved in its orbit triangular contracting agreements. That is not important that there was a third party involvement the most important thing to consider in such cases is that there shall be no denial of workplace right to an employee who is working in an organisation. The high court also made a reference to the independent contractors act 2006. Therefore for the employers to escape from pecuniary penalties and for breach of section 357 it is important that they do not misrepresent any information to the employee (Wills and Mills 2017).

Issue 3

Section 358 talks about workplace bullying which says that if an employee is dismissed from his original position and is made to work as an independent contractor where they working as an employee that will lead to workplace bullying. In such cases it is important to prove that the employee had used force and exertion and course the employee to leave his original position and work as an independent contractor. Taking the example of the recent case that happened in Australia a person was employed as an employee initially and lifter through the agreement he was made to work as an independent contractor and therefore the employer did not have to pay the extra entitlements that he has to regularly pay and employee because an employee is not obligated to pay special in sentence and employments to an independent contractor. The biggest issue in cases of sham contracting is vet it is a deliberate act and the employees of the intention to deceive and on unlawfully by making them work in positions they are not willing to. In cases of a human resources professional he might not be getting the same entitlements that a registered employee of the company would have got even though he is putting extra hours in the office as an independent contractor he shall not be allowed to take a sick leave or an annual leave and all the other special benefits that an employee in a company gets. Well such cases of brought to light it is not the company only who is health life but also the directors who take the decisions and miss represent facts. Firing in already established employee and then again he admitting him to the same of visan the position of an independent contractor is on love full and against the loss of fair works act in australia. The fair work act 2009 came into the picture to protect the rights of thee independent contractor and make sure that they get the entitlements that’s the company used to them by virtue of holding the position in the present scenario. In Australia going by the recent judgments it is clear to see that the courts have come down very heavily on sham contracting and has also held that sham contracting is a way of violating an employee is legal rights and his rights to act freely in an organisation.

Issue 4

Section 359 talks about the influences that the employer can exercise on the employee and make a false claim to persuade the employee to act like an independent contractor and not make him act in according to his wishes. There are no strict rules to differentiate between an employee and an independent contractor and it is the complete discretion of the courts to decide whether there was a relationship between the parties and whether the employee could be given the status of being an employee in the company and whether he is holding the rights of employment. There are many differences between an employee and an independent contractor because in the latter he has a higher responsibility towards the work he is doing and he has to exercise control over his work. Independent contractor is notified at the time for which she has to work and has to also take rest to make sure that the company is making profits. There is a big difference between the benefits that an employee gets and the benefits that the independent contractor does not get. The Fair Work act 2009 has their work inspectors who worked for the welfare of the employees and to impose strict penalties in cases of sham contacting agreements. There are also limitations on the rights that the employee exercises and the rights that are not given to an independent contractor. The fair work inspector has the power to impose penalty is in cases then clat contravenes the provisions of fair work act. The inspector can apply for injunction or dismiss the employer from further taking such actions because injunction will prove as a deterrent. The court also has the power to compensate an employee in faces when he has been mystery presented by the employer and has been made to work as an independent contractor. Fair work ombudsman v quest south perth holdings pty ltd [2015] HCA 45 talks about sham contracting to extends to triangular arrangements where the employees are made to work as independent contractor with the help of a third party. The high court in this case held that the involvement of the third party was not important in understanding the liability of the employer and in such cases when the employee was made to act as an independent contractor there was a violation of section 357 of the fair work act 2009


The aim of the fair work act is to make sure that there is no violation of workplace rights in an organization and that the workers are not made to suffer due to the malafide intentions of the employers (Anderson, Brodie and Riley 2017). The employers owe a duty towards the employees and if they start putting their interest ahead of the employees, there shall be a complete breach of their duties. In cases of breach, the employer shall be held liable and pecuniary penalties shall be attracted to him (Mathews and Roufeil 2017). It is the duty of the workplace to keep in mind that the employers do not exercise their supremacy and coerce the employee to enter into agreements. Therefore, the employer is not permitted to make any misrepresentations regarding the employment of the employee. This is a landmark case dealing with the liabilities of the employer. Sham contractor is a propaganda of the Australian employees to misrepresent facts and give different colour to the agreement that is existing between him and the employee.This is done to make sure that the employees working in the corporate sector do not get properly remunerated and they are made to part with their working entitlements.


Anderson, G.J., Brodie, D. and Riley, J., 2017. The Common Law and the Individual Employment Relationship: A Three Jurisdictional Perspective.

de Flamingh, J. and Bell, C., 2017. Employment law:'Corporate avoidance'of the'Fair work Act'. LSJ: Law Society of NSW Journal, (39), p.74.

Mathews, R. and Roufeil, L., 2017. If it quacks like a duck: Independent contractor or employee?. InPsych: The Bulletin of the Australian Psychological Society Ltd, 39(2), p.30.

Webster, J., 2015. Whose trolley now?: Workplace liability moves up the supply chain. Proctor, The, 35(4), p.16.

Willis, E. and Mills, A., 2017. Lessons for employers in landmark sham contracting case. Governance Directions, 69(7), p.419.

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