Universities accused of ‘sham contracting’ as wage scandal in Australia’s higher education sector deepens

The wage theft scandal that has engulfed the tertiary sector this year is now moving to the Federal Court, with the National Tertiary Education Union and four former staff members pursuing private university JMC Academy.

The Sydney-based university, which specialises in creative fields, is facing back pay and penalty requests for what lawyers say are “serious contraventions” of the Fair Work Act.

In one case, the lawsuit seeks unpaid superannuation going back 18 years.

All employees involved in the lawsuit were hired as independent contractors, an employment arrangement where employees are engaged as contractors and treated as an independent business.

NTEU National Assistant Secretary Gabe Gooding likened it to “sham contracting”.

“It’s where an employer disguises a genuine employment relationship as a relationship between two businesses, where one contracts the other for a service,” she said.

“We say sham contracting is the most egregious form of wage theft.”

The union alleges workers were left with no superannuation, no sickness insurance, workers compensation or leave.

“We do think it’s increasing [in the sector],” Ms Gooding said.

JMC Academy is yet to file a defence and declined to comment, citing the court case.

Stephen Baker received an Order of Australia Medal for his service as a music teacher after a successful career that saw him tour with US legends The Supremes.

He worked at JMC Academy teaching singing for 18 years and loved passing on the experience he gained in his high-profile career.

“I’ve always loved working with young students,” he said.

“They’re so full of hope and aspiration, it’s a wonderful thing to be instrumental in them discovering themselves, I suppose.”

But in November last year, everything changed.

Mr Baker was diagnosed with thyroid cancer and his precarious employment situation – which the union alleges is common across the university sector – left him without sick leave.

“I’ve really got nothing to show for [almost] 20 years,” he said. “There was no net for me.”

After successful surgery, things did not improve in 2020, when Mr Baker’s South Coast home was damaged by bushfires and floods.

Then came a second cancer diagnosis, this time a rare stomach cancer.

More bad news loomed when he sought sickness benefits from Centrelink.

He said it took three requests for JMC Academy to even respond to Centrelink, which said it needed confirmation from his employer he had a job.

When JMC finally did reply, Mr Baker’s request was declined.

“There were so many redactions in the Centrelink form,” he said. “They [Centrelink] said we can’t proceed with this because every word where it says employee or employer, they’ve redacted it.”

JMC declined to comment on why the form was incomplete.

Through the lawsuit, Mr Baker is seeking 18 years of unpaid superannuation with interest plus compensation for being paid significantly below the award rate while a contractor.

As well as improving his own situation, he hopes it will lead to a new industry standard.

“I think there needs to be legislation, I think that companies that do this sort of thing will just continue to do it until legislation is changed so that they have to change their business model.”

Eureka Lawyers practice director and employment law expert David Scaife said sham contracting was more prevalent in sectors such as cleaning and construction but was “growing problem” in other industries, particularly as more and more people looked to the gig economy.

He said there was an urgent need for legislative change to clearly define the difference between employee and contractor.

Universities not paying staff: union

It comes as three investigations into underpayment of staff at public universities continue, with plans for public Senate hearings next year.

Following the ABC’s investigation, the NTEU carried out a survey of 2,174 professional and academic staff at every university except Charles Darwin University.

Of the academic staff, 78.4 per cent of respondents said they were not paid for all hours of marking outside of class time.

Most said this was because of unrealistic marking rates, while 39.1 per cent also alleged underpayment through tutorials being described as “information sessions, seminars, practice classes or workshops” which attract a lower rate of pay.

“The survey confirms what everybody’s known and long suspected – that wage theft is rampant across Australian universities,” NTEU President Dr Alison Barnes said.

“We’re looking at really high numbers of casual staff that are being exploited and this has a detrimental impact on both staff and students.”

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