TTIA News

TTIA News

Crack down on employees being classified as contractors.

The Fair Work Ombudsman (FWO) recently launched legal action against a transport company where it claimed the company had incorrectly classified employees as contractors. “If employers misclassify employees as independent contractors and pay flat rates that undercut entitlements, they face serious consequences such as court action, hefty back-payment bills and penalties,” Ombudsman Sandra Parker said in a statement released on 6 January.

“Businesses who need information on whether an employment relationship exists should contact us.”

Ms Parker’s comments came as the Fair Work Ombudsman (FWO) announced that it had begun legal action against Brisbane-based Boske Road Transport, alleging the company had underpaid four of its drivers a total of $63,803, by classifying them as independent contractors instead of as award-governed employees.

The regulator said that the four drivers worked for Boske for various periods between March 2016 and August 2018 and were engaged as independent contractors.

However, it has alleged that the drivers should have been classified as employees, as they drove company-owned vans, wore company uniforms and worked hours as stipulated by the company.

As a result, the drivers were paid between $7,460 and $32,486 less than they would have been under the relevant industry awards, including through the omission of annual and sick leave entitlements as well as penalty rates.

One of the individuals was engaged as a long-distance driver, who the FWO alleged was also underpaid by not receiving a cents- per-kilometre entitlement.

The anomalies came to light during an investigation sparked by requests for assistance from workers.

The FWO is seeking full backpay, with interest and superannuation, on the amounts it claims were underpaid, in addition to penalties being applied against Boske. An initial hearing has been scheduled in the Federal Circuit Court for 22 May 2020.

No one is pretending this is not a complicated area. However, any such arrangement needs to be documented at the very least to give it the best possible chance should the arrangement by tested from a legal perspective.

Employers seeking assistance in clarifying this issue on contractor arrangements need to contact TTIA on (02) 9264 0011.

When overtime applies under the Timber Industry Award 2010 The overtime provision in the Timber Industry Award 2010 provides that employees are entitled to overtime if they work outside the award’s span of hours (being 6:30am to 6:00pm) or if the employee works in excess of their ordinary daily number of hours. Overtime is paid at the rate of time and a half for the first two hours and double time thereafter.

When calculating overtime, a general principle in most modern awards is that each day’s work will stand alone. This means that if an employee regularly performs overtime everyday each week for two hours, the total weekly overtime will be 10 hours paid at the rate of time and a half (or 150 per cent times the employee’s hourly rate). If the same employee worked three hours a day of overtime every day during the week, the employee would be entitled to 10 hours at the rate of time and a half and five hours at the rate of double time (or 200 per cent times the employee’s hourly rate).

As indicated above, the award’s span of hours are from 6:30 am to 6:00 pm and the overtime provision provides that if an employee works outside the award’s span of hours they will be entitled to overtime. For example, if an employee is asked to start work earlier at 6:00 am instead of 6:30 am, the employee would be entitled to half an hour of overtime at the rate of time and a half.

Whilst this article is focused on the Timber Industry Award 2010, each modern award will determine when overtime applies and the span of hours in each award is different, so employers need to check the overtime provision within their employee’s applicable award when calculating overtime because of these variations between the modern awards. For example, in some awards, such as the Silviculture Award, the span of hours in this award differs from the Timber Industry Award 2010. The hours of work are between 5 am and 5 pm Monday to Friday, although the provision for overtime is the same.

The TTIA employers’ Hotline can be reached on (02) 9264 0011.

Brian Beecroft, Chief Executive Officer

May 13, 2020 / by / in ,
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