Telstra outsourcers face court over 'sham contracting'

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Telstra outsourcers face court over 'sham contracting'

Ombudsman sues after surprise call centre inspections.

Two of Telstra’s marketing and sales partners will face Melbourne’s Federal Court in June, accused of incorrectly classifying almost 10,000 salespeople as independent contractors.

Australia’s Fair Work Ombudsman launched prosecution actions against Telco Services Australia and Trimatic Contract Services, which provided Telstra with outsourced marketing services.

The Ombudsman alleged that the companies had incorrectly classified thousands of call centre workers and door-to-door salespeople as independent contractors, although their working conditions indicated otherwise.

That classification could have allowed the companies to avoid minimum rates of pay and leave entitlements between 2006 and 2009, Fair Work Ombudsman executive director Michael Campbell said.

“Sham contracting occurs when an employer disguises or misrepresents an employment relationship as an independent contracting arrangement,” Campbell stated. 

“It is vital we ensure workers are classified correctly because if they are incorrectly classified as independent contractors they can miss out on employee entitlements.”

The Ombudsman's prosecution followed what it described as an “extensive investigation” that included simultaneous, unannounced inspections of call centres in Perth, Melbourne, Brisbane, Sydney and Adelaide.

It claimed that the workers should have been classified as employees, not independent contractors, as they were found to follow managers’ directions with little or no freedom over work hours and how they performed their duties.

The Ombudsman accused both companies of committing “numerous contraventions of workplace laws”. The maximum penalty for each breach is $33,000.

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