Court action over alleged sham contracting

The Fair Work Ombudsman has launched a prosecution against the operator of a Brisbane beauty and photography business, alleging he was involved in sham contracting activity and the underpayment of more than $8000 to seven employees.

Facing court is Bryan Charles Bedington, the majority owner and sole director of Woolloongabba-based company New Image Beauty Salons, which was engaged in portrait photography and associated makeover services. The company went into liquidation last year, which prevents the Fair Work Ombudsman from taking legal action against it.

Bedington was said to be involved in breaching the sham contracting provisions of workplace laws by knowingly misclassifying seven employees as independent contractors. It is claimed that the employees - five photographers and two make-up artists, including three aged 19, 20 and 21 - were not paid a total of $8288 in annual leave entitlements in 2011 as a result of the sham contracting.

Bedington allegedly knew the correct classification for the workers was as employees because the Fair Work Ombudsman formally cautioned him in 2010 about misclassifying employees as contractors. It is said that the workers should have been classified as employees for reasons including the high degree of control their employer had over their work and that they were not able to work for any other business.

The alleged breaches were discovered last year during the Fair Work Ombudsman’s national auditing campaign focusing on sham contracting. Fair Work Ombudsman Nicholas Wilson says sham contracting is a serious matter because it can lead to workers being denied their rightful workplace rights and entitlements.

Bedington has been accused of committing three breaches of workplace laws and he faces maximum penalties of $6600 per breach. The Fair Work Ombudsman is also seeking a Court Order that any fine imposed on Bedington go towards rectifying the alleged underpayments of the workers. The case is being heard in the Federal Magistrates Court in Brisbane.

This is the Fair Work Ombudsman’s second prosecution case against Bedington. In April this year, the Fair Work Ombudsman launched a prosecution alleging Bendington was involved in underpaying an employee who performed telemarketing and administrative duties for the company $19,009 between April 2006 and September 2009.

Fair Work inspectors discovered the alleged underpayment when they investigated a complaint from the employee, then aged in her 60s. The employee passed away in 2010, but the Fair Work Ombudsman is continuing to pursue the matter at the request of her husband.

The deceased employee was allegedly underpaid the minimum hourly rate she was entitled to as a casual worker. It is claimed that she was paid $13.95 to $15 an hour during her employment but was entitled to receive $16.74 to $18.65 an hour. It is alleged the employee was back-paid $3000 in 2009 but that $16,009 remains outstanding. New Image Photographics allegedly also failed to keep proper employment records.

Fair Work Ombudsman Nicholas Wilson says a decision to prosecute was made because of the significant amount involved and the employer’s failure to fully rectify the matter. Bedington and the company face maximum penalties per breach of up to $6600 and $33,000 respectively. The Fair Work Ombudsman is also seeking for the company to pay the allegedly outstanding entitlements to the deceased woman’s estate.

A directions hearing is listed for 12 July.