Fair Work launches "sham contracting" case

Stacey Moseley

The Fair Work Ombudsman is seeking to prosecute a Queensland-based real estate agency for allegedly paying a sales agent just $100 for five months work.

Fair Work Ombudsman Nicholas Wilson said a decision to prosecute the Burpengary-based agency Property Lovers, and company directors and part-owners William Nicholas Fraser and Diana Sylvia Cartwright, was made because of the significant amount of money involved and the seriousness of the alleged breaches.

“Where we suspect sham contracting is occurring, we look behind the often carefully drafted legal documents to determine what the correct classification for workers is under workplace laws,” Mr Wilson said.

Fair Work is also seeking to prosecute ICS Real Estate Pty Ltd, a national company involved in contracting sales and marketing workers on behalf of real estate agencies. According to Fair Work, Lovers of Property allegedly used the services of ICS Real Estate in 2010 to engage the salesman.

The prosecution centres around how the sales agent was classified for employment purposes.

Fair Work alleged the salesman was classed as an independent contractor and paid him on a commission-only basis. The salesman, who was in his late 50s and had no prior experience in the real estate industry, performed five months work for just $100, which he received in recognition of his assistance in concluding a sale.

In a release by Fair Work, it was alleged the salesman’s correct classification was as an employee and was assigned tasks included letterbox drops, door knocking, answering phone calls and offering free property appraisals and that his usual rostered hours were 8.30 am to 5 pm, Monday to Saturday. It was also alleged that he wasn't required to supply an Australian Business Number or register his own business, and was unable to work for any other company.

Additionally, the salesman was allegedly required to provide his own work laptop, mobile phone and a car of a make and model approved by Lovers of Property as projecting an acceptable image and standard of professionalism.

If he was considered an employee, Fair Work said his wages and annual entitlements would equate to $12,440 for the five months of work he performed.

Barry Gannon, the federal secretary for the Property Sales Association of Queensland, a registered industrial organisation, said this type of alleged scam was common in Queensland.

“We have been pushing the Fair Work Ombudsman to do more to prosecute these sorts of [alleged] shams for a long time,” Mr Gannon told Real Estate Business.

Mr Gannon stressed the importance of principals having a thorough understanding of industrial relations laws.

The Fair Work Ombudsman alleges ICS Real Estate, Mr Fraser and Ms Cartwright were involved in three breaches of workplace laws committed by Lovers of Property. The maximum potential penalty per breach is $33,000 each for the companies and $6600 each for Mr Fraser and Ms Cartwright.

The Fair Work Ombudsman is also seeking a Court Order for Lovers of Property to rectify the alleged underpayment of the salesman.

Real Estate Business contacted Property Lovers about the case, although the company declined to comment.