ABCC audit campaign

The Australian Building and Construction Commissioner (ABCC) has advised HIA that over the next 12 months they will be carrying out workplace audits across Australia with a specific focus on finishing trades. “Finishing trades” include trades such as painters, tilers and plasterers. The ABCC has also indicated that concreters will also be targeted.

As part of the campaign, the ABCC will investigate “sham contracting” and also look at wages and conditions for employees.

Who is the ABCC and what type of work do they regulate?

The ABCC regulates industrial relations in the commercial building industry. The ABCC’s scope does not extend to domestic or residential construction sites unless it is a multi-dwelling development involving the construction of five single-dwelling homes or more (eg townhouses, apartments, medium density projects).

What is the audit process?

1. You will receive a letter that will:

   a)	advise you that your business has been selected for an audit;
   b)	request that you complete an audit form to be returned to the ABCC;
   c)	advise you that ABCC or Fair Work inspectors will visit your business premises (or your accountant’s office) to examine a range of documents that will be identified in the letter. The inspectors will also seek to confirm your business entity name and the industrial instruments you have in place.

2. An inspector will contact you by telephone around 10 days after you have received the notification of audit letter to arrange a suitable time to examine your documents.
3. Inspectors will visit your business premises and examine your documents.
4. The inspectors will usually want to interview you and ask you a series of questions after they have seen your documents.
5. The inspectors will interview some of your employees to ensure that the information in the documents and provided by you is correct. The inspector will advise you of their intention to interview some of your employees but will not necessarily provide details of which employees they intend to interview.

If you are contacted by the ABCC and unsure of what to do or your rights and obligations then you should immediately speak to an HIA workplace adviser on 1300 650 620

What can happen after I am audited?

• No breach identified - if you are found to have complied with the law and the relevant instrument, you will receive a letter indicating that this is the outcome of the audit.
• A “technical” breach is identified – if the audit uncovers a minor or technical breach of your obligations, the ABCC will issue you with a “Compliance Commitment form” with the audit findings letter. This will require you to rectify the breach and provide evidence that you have done so within 14 days. If the ABCC is satisfied that the breach has been rectified it will send a “Finalisation of Audit” letter to you advising that the audit will be closed. No further action will be taken.
• A significant breach is identified – if the audit uncovers a significant breach of your obligations the ABCC will issue a “Payments made to Employees form” with the audit findings letter. You will then need to conduct a self-audit for a specified period and rectify all underpayments to employees. You will need to provide evidence of rectification and the ABCC will confirm that you have made payment with your employees. If the ABCC is satisfied that all underpayments have been rectified it will advise you by letter. If you do not comply with the request for audit and rectification, the matter may be escalated and be subject to a full investigation by the ABCC.

Sham Contracting

If the audit identifies a possibility of sham contracting, the information will be forwarded to the ABCC’s Field Operations team for investigation. You will be notified of this.

What do the laws against sham contracting say?

It is unlawful to:

• recklessly or knowingly represent a relationship that a person is or will be working under as an independent contractor arrangement when the relationship is really an employment relationship;
• dismiss or threaten to dismiss an employee in order to engage them as an independent contractor to perform the same, or substantially the same work carried out as an employee;
• make a statement that you know is false in order to persuade or influence a person to enter into an independent contractor arrangement when they will be performing the same or substantially same work carried out as an employee.

If you are accused of doing one of these things, you will bear the onus of proving that you have not broken the law.

If you are found to breach these laws a court may:

• make an order stop an employee from being dismissed or reinstate someone who has been dismissed;
• order you to pay compensation;
• impose penalties of up to $6,600 for an individual or $33,000 for a corporation.

Further information:

For residential builders the Fair Work Ombudsman can also conduct audits to investigate sham contracting and determine whether your employees have been paid correctly.

It is important to make sure that you have correctly determined the status of your workers because if you engage someone as a contractor when they are really an employee and that person has not received employee entitlements, you could be liable for significant penalties and back pay (including superannuation).

The courts have set out a range of factors that can be applied to help determine whether a person is an employee or a contractor.

HIA can provide you with further guidance and can also provide information to assist you in determining whether your workers are contractors or employees.

You can speak to an HIA Workplace Adviser on 1300 650 620.

_{DISCLAIMER – the above is intended to provide general information in summary form. The contents do not constitute specific advice and should not be relied upon as such. Formal specific advice should be sought by members with respect to particular matters before taking action.}