Queensland business owner fined $17,000 as sham contracting crackdown continues

A Queensland businessman has been fined $17,000 by the Brisbane Magistrates’ Court for his involvement in sham contracting and the underpayment of seven different employees.

The Fair Work Ombudsman took action against Brisbane entrepreneur Bryan Charles Bedington earlier this year in a case involving his photography business, New Image Beauty Solutions.

That action came just a year after he had been warned by the FWO about misclassifying employees as contractors – a movement that caused the court to describe Bedington as “reckless”.

The FWO said Bedington breached sham contracting laws by classifying seven employees as independent contractors – they weren’t paid a total of $8,288 in annual leave entitlements as a result.

In his written judgment, Federal Magistrate Michael Jarett said it’s important that businesses continue to impose penalties on businesses in order to demonstrate the importance of paying workers their full rates:

“There is a need to send a message to the community at large, and small employers particularly, that the correct entitlements for employers must be paid and that steps must be taken by employers of all sizes to properly ascertain and comply with the Fair Work Act and its provisions relating to sham contracting and minimum entitlements.”

The seven workers should have been classified as employees, the court found, due to the high degree of control Bedington had over their work, and the fact that they weren’t allowed to work for any other business.

At the very least, Jarrett said, the behavior was “reckless”.

The FWO also has another case against Bedington, a separate charge of underpaying one worker $19,000, although that case isn’t set to be heard until March next year. Bedington’s company has been placed in liquidation.

Bedington was targeted as part of a crackdown into sham contracting that occurred in 2011. Not only has the FWO been leading investigations, but the Government  has expressed concern that businesses are falsely lowering labour costs.

SMEs have been warned several times to be sure of what title they can use to classify their employees, with experts pointing to several characteristics entrepreneurs can use to differentiate between the two.