Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd: triangular contracting

The High Court has yesterday handed down its decision in Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] HCA 45. This case concerned the effectiveness and legality of triangular contracting arrangements in the context of the sham contracting provisions of the Fair Work Act 2009 (Cth) (the Act). The decision resolved an appeal, by special leave, from a 2013 decision of the Full Federal Court of Australia.

Quest South Perth Holdings Pty Ltd (QSP) had engaged Contracting Solutions Pty Ltd (Contracting Solutions) to convert two of its housekeeper employees into independent contractors. Under the arrangement, independent contractors were be supplied back to QSP by Contracting Solutions. The housekeepers carried on the same work as before with the exception that they would be paid by Contracting Solutions rather than QSP. The FWO claimed this conduct constituted a breach of the Act's sham contracting provisions.

Sham contracting provisions and the Act

Sham contracting refers to attempts to disguise an employment relationship as an independent contracting arrangement. The concern with such behaviour is that it seeks to avoid responsibility for employee entitlements. Section 357 focuses on this conduct and provides that:

'A person that employs, or proposes to employ, an individual must not represent to...