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Safeguarding Your Company & People: Sham Contracting in Australia
Connecting Talent.
Protect your business, protect your people.
Sham contracting is one of the fastest ways an otherwise good business ends up with Fair Work claims, back-pay liabilities, and reputational damage. It usually happens when a worker is labelled a contractor, but the reality of the relationship looks like employment. Under Australian law, it’s the real relationship that matters — not the label on the agreement.
At The Recruitment Org, we help employers structure engagements correctly from day one — protecting both the business and the worker.
The Recruitment Org's Pledge
We help employers and workers avoid sham contracting by structuring engagements correctly from day one. Our focus is simple: clear classification, compliant contracts, and working arrangements that match reality — so everyone is protected under Australian law.
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We assess each role against the Fair Work “whole-of-relationship” test and confirm whether it should be employment, fixed-term, labour-hire, or genuine contracting. We don’t force a contractor model where the role can’t support it.
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We ensure written contracts, scopes of work, and service terms match the intended operating model — so there’s no gap between what’s signed and how the work actually runs.
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Most sham contracting risk appears over time. We set clear boundaries at onboarding so businesses don’t accidentally manage contractors like staff (fixed hours, direct supervision, internal embedding).
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Where engagements run long-term (including VAs sourced via platforms), we review the setup periodically to confirm it remains compliant and recommend changes early if risk surfaces.
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We make sure workers understand their engagement type, pay structure, and expectations. This protects them from being misclassified and protects employers from disputes based on misunderstanding.
Understanding Sham Contracting Activities
Sham contracting is when a worker is labelled a contractor, but the real relationship operates like employment. Australian regulators assess the practical reality, not just the contract. Use the guides below to understand risk and structure engagements correctly.
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Sham contracting is when a worker is labelled a contractor, but the relationship operates like employment. Using a platform (Upwork, Fiverr, Freelancer, OnlineJobs.ph, Toptal, etc.) doesn’t automatically make someone a genuine contractor. If the day-to-day feels like a staff role, Fair Work may treat it that way.
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Many employers assume: “They’re on Upwork, so they’re a contractor.”
Fair Work doesn’t see it that way. Platforms allocate payment and profiles — they don’t decide legal status. What matters is how you run the engagement after the hire. -
Your platform engagement is drifting into employment if most of these apply:
You set fixed daily/weekly AU hours or roster shifts.
You direct how work is done, not just outcomes.
They’re embedded in BAU: Slack, internal meetings, shared inboxes.
They work mainly/exclusively for you over a long period.
You performance-manage them like staff.
They can’t delegate, subcontract, or operate independently.
These signals outweigh any “independent contractor” label on the platform.
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A genuine platform contractor typically:
delivers to a scope/deliverables, not attendance hours,
controls method, schedule, and resourcing,
services multiple clients,
can delegate/subcontract,
invoices for results.
If your Upwork VA looks more like “our admin person who works 9–5,” that’s employment in substance.
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To keep it genuinely contract-based:
use SOW/outcome-based tasks,
avoid fixed rosters (set SLAs instead),
keep direction limited to priorities and outputs,
allow multi-client work,
don’t embed them as internal staff.
If those conditions aren’t realistic for your role, use employment or an EOR model.
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Ask yourself:
If they stopped tomorrow, would I replace them as a staff role?
Do they rely on me for most of their income?
Do I manage them like an employee day-to-day?
If “yes” to 2+, the safer model is employment or compliant labour-hire — not “platform contractor.”
How The Recruitment Org protects employers (and workers)
We take a practical compliance-first approach:
1) Correct classification before placement
We review the role against the whole-of-relationship factors and recommend the right engagement model — employee, fixed-term, labour-hire, or genuine contractor.
2) Contracts that match reality
We don’t just issue templates. We ensure your written terms align to the actual operating model, reducing “look-through” risk.
3) Clean onboarding that avoids employee-like drift
We set boundaries early so contractor relationships don’t accidentally slide into employment through BAU behaviours.
4) Ongoing compliance check-ins
For long-running engagements, we help you audit the relationship to confirm it’s still compliant under Fair Work’s practical test.
If you want true contractors, here’s the safe way
A genuine contractor setup should look like this:
Outcome/SOW based, not “hours worked.”
Autonomy over method, timing, and resourcing.
Ability to work for multiple clients.
Clear right to delegate or subcontract.
Contractor supplies key tools/equipment where practical. Fair Work Ombudsman+2Fair Work Ombudsman+2
If that’s not realistic for your role, the safer route is employment or a compliant labour-hire structure.
Talk to The Recruitment Org
We help Australian employers scale quickly without stepping on Fair Work landmines — while ensuring workers are treated fairly and legally.