30 July 2024

The Fair Work Ombudsman has secured $197,000 in court-ordered penalties against a Sydney health and wellness research company for contraventions including sham contracting involving workers with disability.

The Federal Court imposed the penalties against Doll House Training Pty Ltd, which operated a business conducting research into robotics, coding and artificial intelligence and their application to the health and wellness industry.

Doll House Training breached the Fair Work Act after it terminated or threatened to terminate three workers’ employment in order to re-engage them as independent contractors to perform substantially the same work.

The company also misrepresented to the workers that they were or would be engaged as independent contractors, when in fact they continued to be employees.

The FWO investigated the company after receiving requests for assistance from the three workers, who had been engaged – through an employment services provider for people with disabilities – by Doll House Training as employees between August and October 2020.

In October 2020, Doll House Training emailed each worker a “new contract” titled “Independent Contractor Agreement” (ICA) which included a number of terms indicative of it being a contract of employment. Doll House also represented to the workers that they had to provide Australian Business Numbers and submit invoices to be paid.

In his judgement, Justice Scott Goodman considered the terms of the ICA and found them to be “contracts of employment” for a number of reasons, including that the “rights and obligations” suggested that the workers “were contracted to work for Doll House’s business rather than any business of their own.”

Justice Goodman found that there was a “clear power imbalance” for two of the workers who each signed the contract because they felt that they had “no alternative”.

Doll House Training also failed to pay the workers in full at least monthly during their employment and failed to comply with a Notice to Produce issued by a Fair Work Inspector that required it to provide specified records or documents, including documents relating to terms of engagement and duties performed by the workers.

Justice Goodman considered the situation the workers were in, being “persons with disabilities, who had been searching for work and who were owed payments equivalent to the minimum wage”, and one worker’s evidence that “the non-payment caused her financial and other stress and that, as a result, she needed to borrow money from a short-term lender.”

His Honour found the company’s “disregard” of the Notice to Produce hindered the FWO’s investigations, and that there was no evidence of any contrition, which further warranted penalties that would ensure both general and specific deterrence.

Fair Work Ombudsman Anna Booth said the substantial penalties send a clear message that sham contracting is serious conduct that will not be tolerated in Australian workplaces.

“We treat sham contracting particularly seriously. We will pursue any employer who thinks they can take advantage of the power imbalance they have over workers, including those with disabilities as in this matter, some of whom felt that they had no alternative but to accept a sham contract or be jobless,” Ms Booth said.

“Enforcing the Fair Work Act’s prohibitions on sham contracting helps to protect the fundamental rights of employees. If businesses unlawfully misclassify workers, it can lead to them not being paid the wages and entitlements the law provides to them as employees,” Ms Booth said.

“Any employees or employers with concerns about their obligations or rights, including if they suspect sham contracting, should do what the workers in this matter did and contact the Fair Work Ombudsman for free advice and assistance.”

The workers performed duties including research and preparing presentations in relation to how technology, such as robotics, could be employed in the health and wellness industry.

The underpayments were rectified in full after the FWO commenced its investigation.

Employers and employees can visit www.fairwork.gov.au or call the Fair Work Infoline on 13 13 94 for free advice and assistance. An interpreter service is available on 13 14 50. Employees can also seek information from their employer and their union, if they are a union member.

There are a number of factors that contribute to establishing the difference between an employee and an independent contractor. The Fair Work Ombudsman has guidance on its website to help businesses understand when each classification is appropriate.

Information is available at our employees with disability webpage. Workplace participants can also use the FWO’s pay calculator.