Paying employees as contractors is a quick way to find yourself in legal trouble, as the head of the Roy Morgan Group has discovered.
The Roy Morgan Group is embroiled in a bitter legal stoush with the Fair Work Building Industry Inspectorate following a Federal Court judgement finding the group engaged in sham contracting. But high-profile pollster Gary Morgan, chairman of Roy Morgan, has told Crikey he’ll appeal the decision, which he declares “a sham”.
The Federal Circuit Court found Morgan’s family trust, Linkhill, underpaid 10 employees who it had maintained were contractors. The court ordered Linkhill pay its workers $178,941 in unpaid wages and entitlements.
In his evidence to the court, Morgan was highly critical of the Fair Work Building Inspectorate and the government. He told the court:
“I mean, you’ve got a very vicious government who wants to stitch people up, like me. And, they want to basically try and control independent contractors and small business. That’s what it’s about this case, nothing to do with a few bricklayers who were independent contractors …”
Morgan described Fair Work as “the most outrageous misnaming of an organisation in the country. It’s not fair.” Morgan claimed the workers were contractors and wanted to be contractors:
“So long as they are, in my opinion, remunerated above what the award is and fairly and have a job to do, I think that is what they’re doing …
“What the government’s trying to do is rope them all into large corporations or large building businesses and kill the small businesses, small entrepreneur who’s trying to start up his brick business.”
But the court found the evidence showed the 10 workers, engaged between June 2007 and August 2010, were employees, not contractors. Federal Circuit Court judge Justice John O’Sullivan ruled:
“An examination of the totality of the relationships between each of the individual workers and Linkhill, the system and arrangements pursuant to which they worked and the work practices which regulated that work, clearly establishes by reference to the established indicia that each of those relationships were in the nature of employment and not independent contractor relationships.”
O’Sullivan found the “relationships” between Linkhill and the workers were “contracts quintessentially in the nature of contracts of employment for the personal provision of each workers labour to Linkhill”. The court found Linkhill reserved control over where, when and to what ends the workers’ labour was to be directed and it directed and supervised the performance of the work of each worker on a daily basis.
O’Sullivan found the requirement for workers to supply an ABN, the lack of taxation deducted from the payments they received from Linkhill and payment pursuant to invoicing arrangements imposed by Linkhill did not alter these “fundamental features” of their engagement.
But Gary Morgan told Crikey sister publication SmartCompany Linkhill did not engage in sham contracting. He says he’ll appeal the decision to the Federal Court and High Court if necessary.
“The only sham here is that engaged in by the Australian Building and Construction Commissioner and the Fair Work Inspectorate,” he said. “Intimidation, threats and blackmail of workers and companies appear to be standard operating procedures for these organisations.
“A royal commission is needed into the unions and the Fair Work Building Industry Inspectorate.”