Two companies that provided workers to an Adelaide home care company have been fined a total of more than $200,000 over a sham contracting scheme that resulted in the underpayment of four care workers.
The scheme resulted in “significant hardship” for the workers, who performed cleaning and domestic duties, and left them “struggling to afford basic living expenses”, the Fair Work Ombudsman said.
The two companies, Easttrac and Klemtrac, which provided labour to ESAR home care, were penalised $125,874 and $77,112 in the Federal Circuit Court following legal action by ombudsman.
Klemtrac’s then director, and a consultant responsible for engaging and managing the affected workers were also fined.
ESAR provides in-home personal care and domestic assistance services for elderly and disabled people in Adelaide under contracts with local councils, government agencies and non-government organisations.
Warning about sham contracting
Judge Timothy Heffernen found Easttrac and Klemtrac had engaged in a “strategic” effort to save money in which the four affected workers were underpaid allowances including superannuation, leave entitlements and penalty rates.
The judge said the underpayment caused the workers significant stress and hardship. One worker didn’t eat so she could feed her children, and another didn’t take time off when she was sick because she believed she wasn’t entitled to sick leave.
In total, the four workers were ripped off to the tune of $8,354.
All workers have been backpaid.
“Sham contracting often has an acute financial and personal impact on workers who are already in low-paid positions,” Fair Work Ombudsman Sandra Parker said.
“Employers should be on notice that the Fair Work Ombudsman will take the strongest possible enforcement action when we find instances of sham contracting”.
You can read the full judgment here.