Construction Union Calls for Sham Contracting Probe 3

Wednesday, July 8th, 2015
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Sham contracting, tax evasion and phoenixing within the formwork industry in the Australian Capital Territory should all be the subject of major government body investigations, a union leader says.

In a letter to the Fair Work Ombudsman, the Australian Taxation Office and the Australian Securities and Investments Commission written on July 3, Construction, Forestry, Mining and Energy Union ACT branch secretary Dean Hall urged all three organisations to intervene and to adopt a whole-of-government approach toward sham contracting, under-reporting of wages and phoenixing across the formwork sector within the Territory, according to Fairfax Media reports.

The call follows an injury sustained by an employee of a formwork company contracted to provide labour for an ACT company. The union says the employee was admitted to hospital after being struck by an unfastened shutter which fell over in the wind.

According to the union, a subsequent investigation revealed that the man had been underpaid and not provided entitlements such as penalty rates or allowance, and that the effect of this was that his workers compensation entitlements were being paid on the basis of what had been declared on the payslips as opposed to either the cash amount or the amount that was due under the agreement.

“Unfortunately the case … is not rare. It is all too common,” Hall’s letter stated, according to Fairfax Media reports. “It is for this reason that we are now writing to you so as to ask you to co-ordinate a whole-of-government approach to the issues raised in the formwork sector within the ACT.”

Hall also encouraged FWO and ASIC to probe a number of companies he said had collapsed only to resurface with the same directors under a new name soon thereafter, citing possible phoenix company activity which may have robbed workers of superannuation entitlements and creditors, including the tax office, money and entitlements.

Recognised as a significant problem for many years, the subject of how to stop phoenix companies in Australia, especially within the construction sector, has been the subject of considerable levels of debate through the Senate Inquiry into construction sector insolvencies.

These developments come as more than 50 construction workers, including eight formwork companies and their workers, protested outside the ACT CMFEU’s offices against what they claim are union efforts to force them out of work.

“Our members reported that union officials had been on sites over the past two weeks telling these small businesses that they were no longer allowed to work in the ACT and that their workers had to apply for jobs with larger formwork operators with union EBA’s,” said Kirk Conningham, executive director of the MBA ACT.

Conningham said all law-abiding businesses should be allowed to fail or succeed based upon the value they being to clients as opposed to ‘the whims or an outside entity with its own commercial interests.’

“Even more importantly, these workers should be allowed to choose who they want to work for, not be told who they must work for,” he said. “The union is removing this fundamental choice from the very people they are supposed to support.”

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  1. Glen Garry

    Hall is absolutely right – this kind of problem is sadly all too common in Australian's construction sector.

  2. Kim

    Speak for yourself glen as it ain't an issue in WA! We are still part of the nation as i recall.

  3. David Chandler

    Sadly its becoming increasingly clear that there is no place in Australian construction for the traditional union business model. Unions lack any understanding of the change in culture needed across the industry if it is to prosper in future. In the US unions in many places see them selves as business agents when representing their members. They are interested in feedback on member skills and performance in the workplace in parallel with negotiating employment conditions and ensuring the benefits promised are delivered. These transactions attract a professional and lawful approach.
    The intransigence of unions and often employers is denying Australia constructors opportunities in the new world of modern construction.
    At this weeks RICS Cobra conference delegated were shown new digitally enabled construction working PPEs that not only help reduce on-site injuries, they provide workers with insight into their personal wellness and how this may impact their quality of life. Unfortunately these innovations cannot be tested in Australia because Unions would see taking safety off the table as "their" issue too big a threat. So much for worker interests?