New South Wales Fair Work officials hope a recent ruling will dissuade companies hiring workers on sham contracts.

A homewares company has been fined $161,700 for hiring four workers as independent contractors rather than employees. The company was fined late last week for breaching contracting laws which led to the underpaying of each worker by more than $10,000.

The four workers, aged in the 20s and 30s, were hired to promote home products in the Illawarra region in early 2010. They were paid on a commission-only basis, though management required them to attend work at set times and perform duties designated to them.

Being classified as contractors when they were clearly full employees meant the four were underpaid minimum wage rates, overtime, a vehicle allowance and annual leave pay; totalling $10,327.

Fair Work Ombudsperson Natalie James says companies have to get the classification right: “Successful legal actions such as this also help other employers who are complying with workplace laws by ensuring a level playing field... there are serious consequences for business operators who recklessly or carelessly misclassify employees as contractors, leading to employees being denied basic workplace rights and entitlements.”