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Sham Contracting and Visa-Compliance

The Sham Contracting and Visa-Compliance Code of Conduct is a voluntary, industry-led initiative developed by the Building Industry Consultative Council.

The Sham Contracting and Visa-Compliance Code of Conduct (Code) is a voluntary, industry-led initiative developed by the Building Industry Consultative Council (BICC).

BICC is a high-level advisory council to the Minister for Industrial Relations. It is made up of employers, industry associations, unions and government. BICC advises the minister on economic and industrial relations issues affecting the building and construction industry.

BICC has identified sham contracting and visa-compliance as significant industry issues.

The Code has been developed to help Principal Contractors and Subcontractors understand their legal obligations under immigration and workplace laws concerning these matters. A failure to comply with visa requirements or allowing sham contracting to occur are unlawful practices and punishable by law with significant penalties.

It is expected that Principal Contractors and Subcontractors, Employer Associations and Unions will formally sign on to the Code and agree to have such commitment published. By signing up to the Code the signatory undertakes to act in accordance with its requirements.

It is noted that by signing the Code it does not in any way affect the obligations that any party has under the law and to regulatory bodies such as the Fair Work Commission, Fair Work Ombudsman, Australian Tax Office, WorkSafe and State Revenue Office.

Objectives

The objectives of the Code are to ensure:

  • principal contractors and subcontractors understand their legal obligations under immigration and workplace laws
  • employees’ terms and conditions of employment comply with immigration and workplace laws
  • principal contractors and subcontractors, employer associations and unions promote compliance across the building and construction industry.

Application

The Code applies to:

  • principal contractors
  • employer associations and unions
  • all subcontractors whether they are engaged
    • directly by the principal contractor; or
    • indirectly through one or more subcontractors

Principal contractors will include a contractual obligation requiring compliance with the Code through the sub-contracting supply chain to ensure employees receive their lawful entitlements under workplace and immigration laws.

BICC checklists

In 2020, BICC developed sham contracting and visa-compliance self-assessment checklists (Checklists) to help Principal Contractors and Subcontractors make a preliminary self-assessment about their compliance with immigration and workplace laws.

The Checklists were developed to provide Principal Contractors and Subcontractors with tools they can use to be confident they are complying with their legal obligations under immigration and workplace laws.

Read the sham contracting compliance checklist for contractors.

Code requirements

Principal Contractors commit to the following practices:

  • Requiring Subcontractors to complete the Checklist and sign the Declaration of Compliance each time they submit a tender/request for quotation to supply services to ensure compliance with immigration and workplace laws.
  • Using the Checklist information to evaluate the Subcontractors’ compliance with immigration and workplace laws.
  • Within 3 months after a subcontractor commences work on site the principal contractor will have undertaken a formal review of that subcontractor’s performance to ensure compliance with immigration and workplace laws, and thereafter regularly review the performance for continuing compliance.
  • Obtaining independent legal advice if there is any doubt about compliance with any immigration or workplace laws.

Subcontractors commit to the following practices:

  • Completing the Checklist and signing the Declaration of Compliance each time they submit a tender/request for quotation to supply services to Principal Contractors to ensure compliance with immigration and workplace laws.
  • Using the Checklist to undertake an audit, at least every 12 months to evaluate continuing compliance with legal obligations under immigration and workplace laws.
  • Obtaining independent legal advice if there is any doubt about compliance with any immigration or workplace laws.

Employer Associations and Unions commit to the following practices:

  • Educating their members about compliance with this Code and relevant laws, including promoting awareness through inductions, webinars and information sessions for members about the consequences of breaching the relevant laws.
  • Taking appropriate action to assist members should concerns about their observance of immigration and workplace laws be identified.
  • Assisting the processes of the Victorian Building Industry Disputes Panel in dealing with any relevant alleged breaches referred to it under its Charter.

Immigration and workplace laws

Migration Act

If your projects involve engaging overseas workers, you must understand their visa requirements. There are a range of visa options to engage overseas workers and strict penalties for non-compliance.

Employers must comply with their legal obligations under the Migration Act 1958 and its subordinate legislation. This may include obligations relating to the lawful engagement of persons or conditions on the sponsorship, engagement and employment of persons who hold visas granted under the Migration Act 1958.

Fair Work Act

Under the sham contracting provisions of the Fair Work Act 2009, an employer cannot:

  • knowingly or recklessly misrepresent an employment relationship or a proposed employment arrangement as an independent contracting arrangement
  • dismiss or threaten to dismiss an employee for the purpose of engaging them as an independent contractor
  • make a knowingly false statement to persuade or influence an employee to become an independent contractor.

The Fair Work Act 2009 provides serious penalties for contravening these provisions.

Sham Contracting – Building Code

The Code for the Tendering and Performance of Building Work 2016 (Building Code) sets out the standards the Australian Government expects contractors to comply with in undertaking building work.

The Building Code requirements are stricter the sham contracting provisions in the Fair Work Act 2009. Under the Building Code, a code covered entity must not enter into a contract with another person under which services in the nature of building work are to be provided to the employer, if:

  • the services are to be performed by an individual (who is not the contractor), and the individual has any ownership in, or is an officer or trustee of, the contractor
  • if the contract were entered into with the individual, the contract would be a contract of employment.

Further information

For more information on visas and immigration matters contacted the Commonwealth Department of Home Affairs on 131 881 or visit their website.External Link

For more information on sham contracting arrangement under the Fair Work Act 2009 contact the Fair Work Ombudsman on 13 13 94 or visit their website.External Link

For further information on the sham contracting requirement under the Building Code contact the Australian Building and Construction Commission on 1800 003 338 or visit their website.External Link

For information or referral of disputes concerning sham contracting and visa compliance contact the Victorian Building Industry Disputes Panel on (03) 9348 2613 or visit their website.External Link

Reviewed 28 November 2022

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