The number of workers on sham or “dependent” contracting is at record highs, and now outnumbers genuinely independent contractors for the first time, new research by the ACTU shows.

More than 565,000 contractors are unable to subcontract out their work, a key indicator of whether a contractor is truly independent. By contrast, only 550,000 contractors can subcontract their work.  

This surge in sham arrangements has been aided by the rapid growth in gig and platform work throughout the pandemic, and two High Court decisions in 2022 that overturned the definition of employee, making it easier for big business to mislabel employees as contractors – a loophole enabling them to cut pay and conditions.

The ACTU research also shows that new “sole trader” ABNs have rapidly outpaced employment growth since 2019, and have boomed since the pandemic began.  

Workers on sham or dependent contracting arrangements earn $242.80 less per week than genuine independent contractors, measured on a median basis. Over a year, this is a pay gap of $12,644.

This research comes on top of a wide range of evidence about corporate tactics to deny workers’ pay and conditions. For example, gig workers lose up to $400 million per year in super because they are not classified as employees, according to Industry Super Australia. And 45% of transport workers in the gig economy report being paid less than the minimum wage, according to the Transport Workers Union. 

The ACTU is calling for the Albanese Government to make common sense reforms that protect workers’ rights.  

 Quotes attributable to ACTU Secretary Sally McManus:

 “Employers are exploiting legal loopholes by calling a worker a ‘contractor’ to deny them all of the protections, pay and conditions that otherwise come with being an employee.

“These loopholes are being used by big business, particularly via the gig economy and platform work, to drive down wages and health and safety.

“We need protections for all workers, and to stop some employers picking and choosing categories and labels to cut people’s pay.

“If these changes are not made to keep up with corporate tactics, many more workers will be at risk of losing all their rights. Governments need to move with the times and protect their citizens from legal schemes that are designed to cut wages and take away rights.

“It cannot be left to big business to choose whether workers get rights or not simply by telling them to ‘go get an ABN’.”