Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd (No 2)
Citation: [2013] FCA 582
At a glance
- Employees affected
- 3
What happened
In October 2009, Quest South Perth Holdings (QSP) engaged Contracting Solutions to 'convert' certain employees at a serviced apartment facility in South Perth into independent contractors. Employees including the Applicant and another employee were told they needed to resign their employment and enter into contractor agreements with Contracting Solutions if they wanted to continue working at the facility. They would perform the same work in the same manner, with the same supervision by QSP, but as purported independent contractors. Another employee was exempted because she was leaving anyway. The conversion involved representations that employees would be better off financially.
What was decided
The Fair Work Ombudsman succeeded against QSP and the third respondent for threatening one employee (another employee) with dismissal if she did not become an independent contractor. The court found this violated section 358 of the Fair Work Act. For other employees (the Applicant and another employee), the court found they made a conscious choice to convert status, though they were misled about consequences. The scheme involved genuine conversion to contractor status but without proper explanation of lost statutory benefits. No order for penalties was made as the matter proceeded on jurisdiction only.
What it means for employers
Employers cannot dismiss or threaten to dismiss employees to force them to become independent contractors. If converting existing employees to contractor status, employers must ensure transparent disclosure of consequences and obtain genuine consent. Falsely representing arrangements to workers violates sham contracting rules.
What it means for employees
Employees should be cautious about 'conversion' to independent contractor status. Such conversions must be genuinely voluntary and require clear, honest disclosure of lost employment benefits. Threats of dismissal to force conversion are illegal.
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2013/2013fca0582Want more cases like this?
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This summary was drafted from the published decision and reviewed before publishing. It is general information, not legal advice. For your specific situation, speak to the Fair Work Ombudsman (13 13 94) or a qualified lawyer. About these summaries & corrections →