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A misclassification of drivers as contractors, rather than employees, has landed a Sydney transport company close to a $90,000 penalty from the Fair Work Ombudsman.
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Employee misclassification sees company penalised close to $90k
08 August 2019
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8 minute read
The Fair Work Ombudsman has secured a penalty of $89,250 in the Federal Circuit Court against Sydney transport company Eagle Tours Pty Ltd after it misclassified bus drivers as independent contractors.
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Fair Work Inspectors found that three of the drivers had been misclassified as contractors, rather than employees, and that four bus drivers were paid flat rates of $22 an hour, despite working 12-hour shifts and weekends.
Under the Passenger Vehicle Transportation Award, the Eagle Tours drivers were entitled to receive as much as $38.94 an hour on weekends and $48.68 on public holidays.
The flat rates resulted in underpayment of their casual loadings, overtime rates, and penalty rates for weekend, public holiday, night and early morning work.
Between November 2012 and February 2014, the four drivers were underpaid a total of $46,012, with individual amounts ranging from $7,982 to $15,960.
The four drivers have now been back-paid in full.
Fair Work Ombudsman Sandra Parker said that the regulator is cracking down on companies that misclassify employees as independent contractors.
“If employers misclassify employees as independent contractors to avoid their lawful obligations or to pay employees low flat rates that undercut the minimum wage, they face serious consequences such as court action, hefty back-payment bills and penalties,” Ms Parker said.
Judge Robert Cameron rejected Eagle Tours’ submission that the breaches were due to a lack of awareness of its obligations under workplace laws.
“All the relevant actions were intentional and not accidental. They were, for present purposes, deliberate,” Judge Cameron said.
Judge Cameron said there was a need to impose a penalty to “discourage other businesses from believing that all bus drivers may be hired as contractors regardless of the true nature of their engagement”.
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