Security of Payment
Each year millions of dollars are recovered for sub-contract
members by our Wage Claims Department. Often principal
contractors and builders rip off sub-contractors and refuse to
pay them.
If
you are a financial member we will seek to assist you in
negotiations or if we can't succeed refer you to our Solicitors
Taylor & Scott.
It
was the CFMEU in NSW that successfully campaigned for
legislation that better protects sub-contractors. The Building &
Construction Industry Security of Payment Act (1999) gives
certain protection to sub-contractors to secure their payments.
Long Service
A number of years ago the CFMEU campaigned to win long service
for sub-contract building workers. Prior to 1986 sub-contractors
in the building and construction industry had to pay their own
long service into the government scheme. However, the Building
Workers Industrial Union (now CFMEU) successfully persuaded the
government to introduce a levy paid by the big developers. The
long service for all building workers including sub-contractors
is now funded by this levy.
Workers Compensation
Many sub-contractors are told that they are not covered by
workers compensation when in fact they have this entitlement. If
you are working for a boss under their direction and control and
you are not incorporated i.e. a Pty Ltd company, in most cases
you are entitled to workers compensation if you are unable to
work due to injury or a work related disease.
The
union solicitors Taylor & Scott specialise in claims for
sub-contract members who are injured.
Workers compensation legislation in NSW ‘deems’ (recognises)
many small sub-contractors to be employees so as to entitle them
to the same level of workers compensation protection as wage
workers. Where this is the case, the employers who engage these
subbies are required to pay the applicable workers’ compensation
premiums.
For years, employers have tried to avoid covering subbies for
workers compensation. They tell their subbies to insure
themselves with personal accident insurance. However, often the
union has been able to sue employers when subbies have been
injured.
Now the bosses have decided the best way to avoid all
responsibility and cost is to force subbies to incorporate, i.e.
form a Pty Ltd company. If you incorporate you lose your right
to workers compensation protection from your employer.
If you are a subbie who is incorporated and employ a casual worker
to help out, there is a high likelihood you will be held
responsible (as the employer) for workers compensation
insurance.
Stiff penalties apply to subbies who have not got proper workers
compensation insurance. If you do not have workers compensation
cover for a casual and he / she has an accident, you could lose
everything.
Superannuation
Most subbies working as individuals or in partnerships are
legally entitled to receive superannuation contributions from
the principal contractor engaging them. If you are not
incorporated and are working for a boss even if you are working
with an ABN that boss has to pay your superannuation.
However if you incorporate, the responsibility shifts from the
principal contractor which you work for to your own company
i.e.: you will be considered an employee of your own company and
you be required to make superannuation contributions for
yourself and anyone else who works for you.
Avoiding Industrial Laws
Subbies who are not incorporated are able to apply to the
Court for a review of any contract which they consider ‘harsh
and / or unfair’ under federal industrial laws.
In considering whether the contract is harsh or unfair the Court
can examine:
-
the relative strength of the bargaining position of the parties
to the contract
-
whether there was any undue influence, unfair tactics or
pressure exerted on a party
-
whether income received under the contract is less, or likely to
be less, than an employee would receive for the same work.
This legal protection, which can also be used to recover amounts
withheld by companies for various unjustified reasons, is
immediately lost once you become incorporated.
Unlike employer organisations, the CFMEU pursues these claims for
subbie members. Favourable decisions can help establish
reasonable minimum standards for subbies.
Safety
Working under a ‘payment by results’ system in competition
with tens of thousands of others creates enormous pressure to
win the job then get it done as quickly as possible so as to
survive. In other words you join the ‘cut-throat’ world of
‘anything goes’.
The construction industry is a high risk industry for injuries and
fatalities. Evidence suggests self-employed workers are killed
and injured at more than twice the rate of employees.
While occupational health and safety legislation imposes an
overriding responsibility on the principal contractor to provide
a safe workplace and system of work, on some jobs with large
numbers of subbies, those further up the chain are quick to try
to pass the buck, particularly when there has been an accident.
Incorporation makes it easier for principal contractors to push
occupational health and safety responsibility onto subbies.
Costs and Responsibilities
There are significant costs and responsibilities in setting up
a company.
Companies must keep accurate books and records and must lodge an
annual return and a separate tax return. Failure to comply with
these obligations can result in penalties against directors and
other officers. Large fines are not uncommon.
Directors who allow companies to trade when they are unable to pay
debts, as they fall due, can be personally liable to creditors.
They can also face criminal penalties where companies trade
while they are insolvent.
You will not find many of the builders who force subbies to
incorporate, but who will also volunteer to pay the costs
attached to incorporation. The kindest offer we have seen is a
company who said subbies could buy shelf companies from their
accountant and they would assist by deducting the costs in
instalments!
What can you do?
Sub-contracting is a fact of life in our industry. The needs
and interests of those working as subbies cannot be ignored.
What happens in the sub-contract sector affects workers on wages
and vice-versa.
It is often difficult for small sub-contractors in the industry
to achieve decent rates for their work. They often have to
negotiate with large corporations. The CFMEU can work with
subbie members to help them achieve fair and reasonable rates
for their work where this is permitted by legislation. The CFMEU
can help subbies when they are negotiating with builders, where
there are problems with unfair contracts or where there is a
dispute over payment, particularly if this affects the payment
of wages to employees.
The CFMEU is serious about subbies. It is the only industry
organisation with the strength and the will to do anything about
improving the position of subbie members. An example of our
success is portable long service for subbies.
We
recover tens of thousands of dollars for subbies each year
ripped off by builders. The union has also achieved minimum
rates agreements in various trades to improve standards for
subbies.
-
discuss the issue, and the points covered with other subbies
-
arrange a confidential, no obligation discussion with the union
-
support our efforts to take cases to overturn unfair contracts
and obtain better rates for
subbies
-
join the union
