{"id":14792,"date":"2019-07-08T17:46:15","date_gmt":"2019-07-08T07:46:15","guid":{"rendered":"https:\/\/www.bitemagazine.com.au\/?p=14792"},"modified":"2019-07-09T16:30:41","modified_gmt":"2019-07-09T06:30:41","slug":"sham-contracts","status":"publish","type":"post","link":"https:\/\/www.bitemagazine.com.au\/sham-contracts\/","title":{"rendered":"Sham contracts"},"content":{"rendered":"\n<figure class=\"wp-block-image\"><img decoding=\"async\" width=\"1024\" height=\"1024\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-1024x1024.jpg\" alt=\"sham contracts\" class=\"wp-image-14793 lazyload\" data-srcset=\"https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-1024x1024.jpg 1024w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-300x300.jpg 300w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-150x150.jpg 150w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-768x768.jpg 768w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-696x696.jpg 696w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-1068x1068.jpg 1068w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-420x420.jpg 420w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-840x840.jpg 840w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-75x75.jpg 75w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-190x190.jpg 190w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-105x105.jpg 105w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts.jpg 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><noscript><img decoding=\"async\" width=\"1024\" height=\"1024\" src=\"https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-1024x1024.jpg\" alt=\"sham contracts\" class=\"wp-image-14793 lazyload\" srcset=\"https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-1024x1024.jpg 1024w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-300x300.jpg 300w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-150x150.jpg 150w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-768x768.jpg 768w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-696x696.jpg 696w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-1068x1068.jpg 1068w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-420x420.jpg 420w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-840x840.jpg 840w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-75x75.jpg 75w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-190x190.jpg 190w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts-105x105.jpg 105w, https:\/\/www.bitemagazine.com.au\/wp-content\/uploads\/2019\/07\/sham_contracts.jpg 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/noscript><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">What\u2019s the difference between a contractor and an employee? Understanding this will prevent you from setting up a sham contract. By Kerryn Ramsey<\/h2>\n\n\n\n<p>While work flexibility continues to expand in the dental profession, it\u2019s important for practice owners to understand the different contracts and engagements. Without a little due diligence, an employer may set up a sham contracting arrangement without realising. Both practice owner and employee need to understand this issue, particularly when a graduate is taking up a first paid position.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Understanding a sham contract<\/h3>\n\n\n\n<p>A sham contracting arrangement takes place when an employee is told they are an independent contractor when they\u2019re not. This is usually done to avoid certain taxes and responsibility for employee entitlements, which includes financial benefits and employment protections.<\/p>\n\n\n\n<p>The Fair Work Ombudsman outlines that under the sham contracting provisions of the Fair Work Act, an employer cannot:&nbsp;<\/p><div class=\"bitem-article-desktop-720x300-in-text\" id=\"bitem-2970488747\"><!-- Bite 720x300 [async] -->\r\n<script type=\"text\/javascript\">if (!window.AdButler){(function(){var s = document.createElement(\"script\"); s.async = true; s.type = \"text\/javascript\";s.src = 'https:\/\/servedby.engagemedia.com.au\/app.js';var n = document.getElementsByTagName(\"script\")[0]; n.parentNode.insertBefore(s, n);}());}<\/script>\r\n<script type=\"text\/javascript\">\r\nvar AdButler = AdButler || {}; AdButler.ads = AdButler.ads || [];\r\nvar abkw = window.abkw || '';\r\nvar plc705185 = window.plc705185 || 0;\r\ndocument.write('<'+'div id=\"placement_705185_'+plc705185+'\"><\\\/'+'div>');\r\nAdButler.ads.push({handler: function(opt){ AdButler.register(165450, 705185, [720,300], 'placement_705185_'+opt.place, opt); }, opt: { place: plc705185++, keywords: abkw, domain: 'servedby.engagemedia.com.au', click:'CLICK_MACRO_PLACEHOLDER' }});\r\n<\/script><\/div>\n\n\n\n<ul class=\"wp-block-list\"><li>misrepresent an employment relationship or a proposed employment arrangement as an independent contracting arrangement;<\/li><li>dismiss or threaten to dismiss an employee for the purpose of engaging them as an independent contractor;<\/li><li>l make a knowingly false statement to persuade or influence an employee to become an independent contractor.<\/li><\/ul>\n\n\n\n<p>\u201cWhether a worker is an employee or contractor,\u201d says an Australian Taxation Office spokesperson, \u201cis not a matter of choice, but depends entirely on the working arrangement and the specific terms and conditions.\u201d<\/p>\n\n\n\n<p>According to Adele Granata, senior workplace relations consultant of the Australian Dental Association (ADA), in many cases, the practice owner is not attempting to avoid employee entitlements or legal obligations. \u201cIn a lot of cases, it\u2019s just a misunderstanding of the law,\u201d she explains.<\/p>\n\n\n\n<p>Recently, sham contract schemes have incurred penalties for large companies in Australia. This includes Easttrac Pty Ltd and Klemtrac Pty Ltd, a labour-hire company in Adelaide that was penalised more than $200,000 last January. The Fair Work Ombudsman referred to this case as an example of a tough stance on sham contracting with serious consequences of underpayment of workers.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Get the contract right<\/h3>\n\n\n\n<p>To prevent setting up a sham contract, practice owners now employing or engaging graduate or associate dentists for two or three days a week need to put together contractual arrangements that comply with the full measure of the law. Another problem area is when a practice engages a specialist to consult and operate. The key, says ADA\u2019s Granata, is that the practice owner needs to be aware of the difference between a casual employee and a contractor. \u201cA casual employee doesn\u2019t have the same kind of leave entitlements or paid annual leave as a full-time employee,\u201d she says, \u201cbut since they are still an employee, they have an employment relationship which attracts other kinds of rights and&nbsp;protections.\u201d&nbsp;<\/p>\n\n\n\n<p>Unlike a casual position, an independent contracting model doesn\u2019t have an employment relationship. It\u2019s here that sham contracting can apply if \u201can employer attempts to disguise an employment relationship as an independent contracting arrangement\u201d, says the Fair Work ombudsman.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p>\u201cYou can call something an independent contractor agreement but if it\u2019s actually an employment engagement, the courts treat it as such.\u201d <\/p><p><strong>Adele Granata, senior workplace relations consultant, ADA<\/strong><br><\/p><\/blockquote>\n\n\n\n<p>Granata explains: \u201cIt means there are no leave entitlements and there are no protections from unfair dismissal. It\u2019s a more flexible model; there\u2019s no structure in terms of remuneration or how the services are paid. An independent contractor has more flexibility, autonomy and control over their own services.\u201d<\/p>\n\n\n\n<p>An example is a dentist who has the ability to set their own hours and methods of work. \u201cThis contractor also has the ability to say, \u2018Well, I\u2019m going on a holiday now and will not provide my services for a couple of weeks.\u2019 Whereas, a graduate dentist, who needs a greater level of supervision and control, aligns with an employment relationship.\u201d<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Service facility agreement&nbsp;<\/h3>\n\n\n\n<p>A Victorian dentist, who has specialists visiting the practice, says that rather than setting up regular contracts, these dentists work under a service facility agreement. Here, the practice owner collects the fees on behalf of the clinician and charges them to use the facility. \u201cThe fee they pay is based on a percentage of the total fees collected less any particular specific costs of sales, such as laboratory,\u201d he says.<\/p>\n\n\n\n<p>\u201cThese practitioners do sessions at different clinics, at different times, on different days. They pay to use the facility to see patients who need their particular skills.\u201d<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Terms of agreement<\/h3>\n\n\n\n<p>When hiring an employee or engaging with a contractor, it\u2019s essential to have written terms of agreement explaining the relationship. In addition, the contract needs to be worded correctly. \u201cYou can call something an independent contractor agreement but if it\u2019s actually an employment engagement, the courts treat it as such,\u201d says Granata.<\/p>\n\n\n\n<p>The ATO works with both industry associations and businesses to clarify whether a worker should be classified as an employee or contractor for tax and superannuation purposes based on the working arrangements that are in place.<\/p>\n\n\n\n<p>According to the ATO spokesperson: \u201cWhen we find a business has incorrectly engaged a worker as a contractor rather than an employee, we work with the business to make sure they understand their employer obligations and transition to the correct arrangement as easily as possible.\u201d<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Dealing with a dispute<\/h3>\n\n\n\n<p>When assessing any contract, be conscious of all elements an employer should provide under the Fair Work Act 2009. If it is found they have knowingly engaged in a sham contract, there are civil penalties and fines that apply.&nbsp;<\/p>\n\n\n\n<p>According to the Melbourne dentist, it\u2019s important to talk to an accountant in the early stages. \u201cI have the security of using a type of facility which has been used as a precedent by the Independent Dentist Network (IDN),\u201d he says. \u201cI know of several IDN dentists who use this service\u2014they\u2019ve done all the precedent checkings\u2014and I can rely on them.\u201d<\/p>\n\n\n\n<p>Overall, there are various opportunities for genuine contracting arrangements and service facility agreement\u2014just make sure it\u2019s right for all concerned parties. &nbsp;<\/p>\n\n\n\n<p><br><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What\u2019s the difference between a contractor and an employee? Understanding this will prevent you from setting up a sham contract. By Kerryn Ramsey While work flexibility continues to expand in the dental profession, it\u2019s important for practice owners to understand the different contracts and engagements. Without a little due diligence, an employer may set up [&hellip;]<\/p>\n","protected":false},"author":7,"featured_media":14793,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[7170,691],"tags":[10953,9283,684],"class_list":{"0":"post-14792","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-featured","8":"category-your-business","9":"tag-contracts","10":"tag-employment","11":"tag-featured"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v25.9 (Yoast SEO v25.9) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Sham contracts - Bite Magazine<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bitemagazine.com.au\/sham-contracts\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Sham contracts\" \/>\n<meta property=\"og:description\" content=\"What\u2019s the difference between a contractor and an employee? 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