Case study · Underpayment

Told to get an ABN to clean bricks, he was an employee all along

$7,480.70 in wages and super, plus interestFederal Circuit Court of Australia · 19 August 2020
A worker scrubs mortar off a new brick wall on a dusty building site while another man watches from the shade of a ute.

Mr Gutierrez came from Colombia and was working in Australia on a visa. Through a mutual friend he approached Mr Nguyen for work, and in July 2015 he started as a brick cleaner. He was told he needed an ABN and had to send invoices to get paid. He was paid $16 an hour.

He had no business of his own. The equipment he used belonged to Mr Nguyen, and he had no previous skills or experience in the work. He gave evidence that in about July 2016 he was told to add GST to his invoices, but they did not go up: his hourly amount was cut by 10 per cent and GST added to the reduced figure, so the total cost to Mr Nguyen stayed the same. He also said that from about 7 November to 30 November 2016 he kept working full time and was not paid at all.

With JobWatch acting for him, he took Mr Nguyen to the Federal Circuit Court. Mr Nguyen knew about the case but did not appear. Judge McNab found that, objectively, Mr Gutierrez was not conducting a business, and that having him invoice as if he were was "a sham arrangement" under s 357 of the Fair Work Act. He was an employee, and the Cleaning Services Award 2010 applied to his work.

The court ordered Mr Nguyen to pay $7,480.70, made up of $4,109.59 in unpaid wages and $3,371.11 in unpaid superannuation, plus $1,484.62 in interest.

What it means for you

Having an ABN does not make you a contractor. If you use the boss's equipment, are paid by the hour and run no business of your own, you may be an employee with award wages and superannuation.

Since 26 August 2024 the Fair Work Act decides whether someone is an employee by the real substance and practical reality of the relationship (s 15AA), and since 27 February 2024 an employer defending a sham-contracting claim must show it reasonably believed the worker was a contractor (s 357(2)). Both changes favour workers in Mr Gutierrez's position.

A published decision of the Federal Circuit Court of Australia, retold in plain English. Lawcaptain did not act in this case. Every outcome depends on its own facts. General information, not legal advice about your situation.

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