Contractors $197k back-pay case due to wrong classification
A business in Archerfield was recently audited by Fair Work Inspectors and ordered to issue $197,500 in back-payments to employees that the Ombudsman said were incorrectly classified as “independent contractors”.
They ordered 11 employees receive between $6,401 and $50,525 in back-payments.
Fair Work inspectors did determine that the mistake was not deliberate. The employer even co-operated to voluntarily rectify the issue which demonstrated this was a case of compliance oversight.
The business has put a repayment plan in place to ensure the workers are reimbursed all outstanding entitlements, and has reclassified all eleven as employees. The Fair Work Ombudsman also sent a letter of caution to the employer.
The Fair Work Ombudsman says that when they find mistakes, they are there to help and give practical advice to employers on how to voluntarily fix them.
So does your organisation employ contractors? You should make sure they are correctly classified, or you could find yourself incurring significant costs at the hand of the Fair Work Ombudsman (FWO).