Many Australian businesses are allegedly registering employees as contractors to avoid paying legally required benefits, including superannuation, leave entitlements and insurance. Members of the Punjabi community have also been caught up in this illegal practice, known as ‘sham contracting’. A major new national report has found that young and newly arrived migrants, often unaware of the legal and financial differences between a TFN and an ABN, are among the most vulnerable. The ATO and Fair Work Ombudsman are now stepping up enforcement and warning employers of tougher penalties.
"I joined the job, thinking a member of my community would be a safer, more comfortable employer", said Sanjeev (name changed for protection).
After working with an employer for 18 months on an ABN without superannuation or other entitlements, Sanjeev lost his job after suffering a workplace injury. Only to find out he was not covered by any work-related insurance.
"As a new migrant, you search for familiarity; you join someone from the community based on trust," he told SBS Punjabi. "I did not know much about ABN or TFN; when I was told this is a better way for me, I did not question it."
Sanjeev is not alone in facing this.
Australia’s largest survey of migrant working conditions, published by the Migrant Justice Initiative, revealed that misuse of ABNs has become a core strategy for paying migrants off the books and avoiding legal obligations.
More than one-third of migrant workers in the survey (35%) were engaged on an ABN, which is more than four times the rate across the general Australian workforce.
The report states that many of these workers were likely misclassified employees engaged as contractors to avoid paying minimum wages, superannuation and other entitlements, while also bypassing oversight from the Fair Work Ombudsman.
This illegal practice of disguising an employee as an independent contractor is known as ‘sham contracting’.
Community leader and Member of the Legislative Council Dr Parwinder Kaur shared that the issue is more prevalent among young migrants, many of whom end up with no benefits, low pay, excessive workloads and no workplace protections. She also urged affected workers to come forward and seek help.
The Australian Taxation Office (ATO) and the Fair Work Ombudsman have also joined hands to crack down on sham contracting arrangements, warning that businesses found breaching workplace laws could face significant penalties.
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