Wage Theft and Sham Contracting


Sham Contracting is the most prevalent method of wage theft in the Construction Industry. The Property Development Industry in general claim to be ethical practitioners in the market, many being signatories to the Principles of Ethical Risk Investment. That is a global vehicle. Additionally, there is the Federal Government ABCC with its charter inclusive of pursuing Sham Contracting arrangements. The ABCC budget is in the hundreds of millions and while successfully prosecuting the main industry union for right of entry breaches of the Act, do not seem to pay any attention to sham arrangements in the Construction Industry. There are some successes in wage recovery by the ABCC, however if the same zeal for prosecution of the CFMEU was applied to this blight on the Industry, things would improve rapidly.The Finishing Trades are the most prolific, especially Plastering, Tiling and Partitions Installations. It works like this; Principal contractor wins Project based on Industry EBA rates for the various work packages. Structure and Services proceed on the Industry EBA rates. Prior to finishing trades being appointed there are conversations which are bidding wars aimed at undercutting the standards of pay on the Project.” You want the job reduce your price.”In turn, the successful subcontractor puts their employees on an ABN arrangement which increases the employer profit margin on the job and the Principal enjoys an increased margin also. The employees who should be enjoying the benefits of Industry standards are instead victims of a race to the bottom.In addition to this, the State Governments Infrastructure Works Program is not delivering the benefits across the workforce, particularly in rural areas which have been hard hit by COVID-19. The situation appears that there is no Audit and Monitoring by the Government to ensure compliance with the Terms and Conditions of the Contract.Solution: Establish Pre-Qualification Criteria and Pre-Selection for all Contractors.Once selected the Principal Contractor is required to check the Factual Basis of Progress Claims by all Sub Contractors (Condition of Contract).The Client/Developer Audits and Monitors the Principals approval of claims. Now, most Principals accept Statutory Declarations affirming compliance which as any Administrator salvaging the wreckage of failed companies will advise;“They are not Worth the Paper they are written on.”Bills of Quantities and Quality Assurance Programs are correctly examined,so why are Wages and Entitlements not equally examined?Finally, let’s be brutally honest and demand of everyone in the Management Sector of the Construction Industry “DO YOUR JOB”!

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