Real Estate Fined for Sham Contracting

A Sydney real estate company and its director have been fined almost $30,000 for underpaying a salesperson more than $20,000 as a result of sham contracting.

The penalty was handed down in the Federal Magistrates Court.

Federal Magistrate Shenagh Barnes found the company had treated the female salesperson “recklessly” by appointing her as an independent contractor instead of an employee.

The woman had recently moved from Singapore and subsequently had no experience in the Australian real estate industry.

The Court heard that the woman received just one payment of $1414.20 for working an average of 40 hours per week from 23 March 2007 until her employment was terminated on 27 September 2007.

She was underpaid more than $20,000 of which the company had only backpaid $5000 in October 2009.

Federal Magistrate Barnes ordered the employer to repay the outstanding $15,119 plus interest of $3104.

In handing down her 44-page decision, Federal Magistrate Barnes said it had been submitted that the real estate industry in New South Wales often paid individuals on a commission basis, but accepted that a message should be sent to the community that employees should be correctly identified and appropriately remunerated. Real estate salespeople should not be paid on a commission-only basis if not licensed.