Laws and Regulations Every HR Professional Should Know

Running head: HUMAN RESOURCE MANAGEMENT LAW
HUMAN RESOURCE MANAGEMENT LAW
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HUMAN RESOURCE MANAGEMENT LAW
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Introduction
Sham Contracting is identified as an unlawful method of employment under section
357 of the Fair Work Act 2009. Under such an act, the employer is likely to establish a fake
representation of the worker as an autonomous contractor. Moreover, any employer which
tends to make such falsification of the employment association is liable for penalties as per
the Act (Van der Waarden, 2014). As per reports, fines for sham contracting takes into
account agreements made against the company and monetary fines which can rise up to
around $54,000.00 for each violation. In the view of Morgeson et al., (2019), sham or fake
contracting is usually established by the business organization to generate their individual
benefit as it permits an employer in evading any type of accountability for an employee. Such
fake contracting also helps companies to avoid payment of any entitlements of an employee
associated with retirement, departure or monthly remuneration. Furthermore, any kind of
sham contracting performed by employers chiefly with an aim of circumventing their
employer obligations or due to an employer’s irresponsibility of considering whether or not
the individual served as an employee of the organisation (Berman et al., 2019). The following
paper will analyse the relevant issues related to sham or fake contracting by the Fair Work
Act 2009. In addition to this, it will focus on the recent developments witnessed in this area.
Discussion
Sham contracting fortifications tend to extend towards the triangular measures in
which employees are supposedly e involved as part of independent workers through a third
party such as labour recruitment provider. The High court in fair work Ombudsman versus
Quest South Perth holdings Pty Ltd (2015) has made clear claims that the proscription in

HUMAN RESOURCE MANAGEMENT LAW
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s357(1) of the Fair Act 2009 is applicable to irrespective of who is the other party to the
agreement (Kelly, 2015).
General Employee Entitlements and Redundancy Scheme (GEERS) has been replaced
with the Fair Entitlements Guarantee scheme (FEG). It is important to note that the major
issue with GEERS was the lack of legislative basis for the scheme. GEERS functioned only
as an administrative planning functioned by the Department of Education, Employment and
Workplace (Willis & Mills, 2017). As a result, inevitability and confidence in the system
was never accessible as there always remained the opportunity of independent amendment or
elimination of the scheme at the notion of the administration in control. Nevertheless, this
issue was settled on the enactment of the Fair Entitlement Guarantee Act 2012 (Cth) (Act),
which recognized the FEG system. According to this Act, organisations cannot depend on
third-party enterprises in order to circumvent accountability for making deceptive images
regarding the actual nature of agreements made with the workforce. Reports have revealed a
recent example of probable fake or Sham contracting which has been performed by the
renowned online food delivery business named Foodora, which has its wide ranging business
operations in countries like Australia and Singapore (Webster, 2017). The online food
delivery businesses in recent times are increasingly expanding across the world. Such an
expansion has been providing customers with not only racket but highly efficient food
experiences. However the idea of constituting all types of food items delivered to people as
per their convenience and location is definitely seen as an innovative and exceptional
concept, thus resulting in great success and attainment of high revenues (Anderson, 2015).
On the other hand, the non-traditional method of employment has led this type of
rapidly growing organisations violate legal policies and regulations. As a result, they are
engaged into sham contracting. In the opinion of Ananian-Welsh and Gover (2015), if any
company shows lack of diligence, they can be answerable as well as responsible for severe