FWA decides employee/contractor status using control test
Fair Work Australia's Commissioner Anne Gooley has used the control test to decide employee/contractor status. Commissioner Gooley ruled that John Barrett, who provided training services to Create, was not conducting his own business, in spite of invoicing the client for payment, not being subject to PAYG taxation and not receiving any employment entitlements. She ordered that Barrett could proceed with his unfair dismissal application on the basis that he and the training he provided were an integral part of the Create business, and that he was subject to control by being allocated work and supervised while he undertook it.
Case reference: John Barrett v Create (Geelong) Inc T/A Create [2010] FWA 5576 (28 July 2010)
Link: http://www.fwa.gov.au/decisionssigned/html/2010fwa5576.htm
Full Court rejects Roy Morgan's claim workers weren't employees
Further to the AAT decision reported in the December 2009 Connect newsletter, a Full Court of the Federal Court has upheld the finding that Roy Moran interviewers were employees for the purpose of the Superannuation Guarantee Act and the Superannuation Guarantee Charge Act. Chief Justice Patrick Keane and Justices Ross Sundberg and Susan Kenny found there was no error in law in the AAT's finding that the interviewers were "employees" on the basis that Roy Morgan interviewers were required to wear Roy Morgan ID cards, were integral to the Roy Morgan business and not engaged in business on their own account
[Case reference: Roy Morgan Research Pty Ltd v Commissioner of Taxation, http://www.austlii.edu.au/au/cases/cth/FCAFC/2010/52.html, 26/5/10]
Yalos case provides clarification on unusual circumstances in relation to the unrelated clients test, and what consistutes making offers to the public
On the grounds that the AAT had not considered whether Yalos’s services were provided as a direct result of making offers or invitations to the public, the ATO appealed to the Federal Court the AAT’s finding that Yalos Engineering would have satisfied the unrelated clients test but for unusual circumstances. The AAT has now finalised the matter ordering the Commissioner to issue a Personal Services Business Determination under the PSI rules on the basis that Yalos did offer their services to a section of the public, and, as found previously, they would have satisfied the unrelated clients test but for the unusual circumstance that delayed the project to which Yalos Engineering were contracted. The decision now provides clarification in two areas: firstly, that an unexpected delay beyond the control of the contractor in a construction project constitutes an unusual circumstance, and secondly, that in spite of the taxpayer’s expertise being relevant only to a small number of potential clients, the companies constituted a section of the public, and that word of mouth and personal recommendations consituted making offers to the public.
[Case reference: Yalos Engineering Pty Ltd and FCT (AAT, Ref No: 2007/3018-3019, Pascoe SM, 3 June 2010]
Full Bench overturns contractors clause ruling
A Fair Work Australia full bench has upheld an appeal against a decision by SDP Hamberger that would have permitted workers to take protected action in support of an agreement's requirement that contractors have a union enterprise deal. The Transport Workers Union in bargaining with Airport Fuel Services, a venture operated by Caltex, sought clauses requiring it to ensure that any labour-hire provider or contractor it engaged had an agreement with the union. The AiG, argued that the clauses were not permitted content, and imposed tighter limitations on the use of contractors than those the tribunal in AWU v Alcoa (http://www.fwa.gov.au/decisionssigned/html/2010fwa884.htm) had rejected as too restrictive.
Airport Fuel Services Pty Limited_v_Transport Workers' Union of Australia PR997607, 1 June 2010
Contractor rates set to rise
As projects which were put on hold last year are restarted and permanent hiring increases, demand is increasing for contractors with hourly rates increasing by as much as 15 per cent since the beginning of 2010. Randstad operations director Jason Cartwright says that while rates for temporary and contract workers are on the rise, they are still well below 2007 levels (AFR, 24.5.2010).
APESMA provides comment on draft ACCC determination giving freelancers right to bargain collectively
Freelance journalists will be able to collectively bargain with publishers Fairfax Media Limited, ACP Magazines Ltd, News Limited and Pacific Magazines through the MEAA, under a
draft ruling by the ACCC.
» read more
APESMA provides comment on draft ACCC determination giving freelancers right to bargain collectively
Freelance journalists will be able to collectively bargain with publishers Fairfax Media Limited, ACP Magazines Ltd, News Limited and Pacific Magazines through the MEAA, under a
draft ruling by the ACCC. If the Determination is approved, it
eliminates the risk of prosecution under the competition provisions of the Trade Practices Act 1974. Connect has supported the Draft Determination on the basis that collective
bargaining in this area will provide individuals the opportunity to negotiate away from the standard provisions thereby bringing about fairer contract terms, a major issue for
APESMA members, in particular information technology professionals who are often offered standard contracts for service on a take-it-or-leave-it basis.
View a copy of the letter.
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Sherry reaffirms his commitment to fair taxation for small business and self-employed
Following concerns expressed by stakeholders including Independent Contractors Australia and the United Retailers Federation (URF), Assistant Treasurer Nick Sherry has appealed for
the debate about contractor tax laws to be conducted on sensible terms, rejecting assertions that he is conducting a war on the self employed or that he is anti-business.
» read more
Sherry reaffirms his commitment to fair taxation for small business and self-employed
Following concerns expressed by stakeholders including Independent Contractors Australia and the United Retailers Federation (URF), Assistant Treasurer Nick Sherry has appealed for
the debate about contractor tax laws to be conducted on sensible terms, rejecting assertions that he is conducting a war on the self employed or that he is anti-business. "What I
would most like the reform options to do", he said "is to provide greater certainty for the vast majority of genuine contractors, make it easier for them to comply with the law,
cut back red tape to allow their businesses to keep on growing strong, and crack down on the illegitimate groups at the margins." Whilst National Executive Director of the URF
accused Sherry of "wreak(ing) havoc on the business community following his absolutely insane decision to blindly accept a series of destructive recommendations from the Board
of Taxation", Sherry says that he is "not wedded to any of the particular reform options set out in the independent report" but is committed to dialogue and "back(ing) business
to the hilt" as the "engine room of our economy". (AFR, 6.4.2010) « hide
Case law update – challenge to superannuation guarantee legislation obligations for contractors
In a matter before the Federal Court, the On-Call Interpreters and Translators Agency Pty Ltd (OCITA) are challenging their superannuation obligations
on the basis that the interpreters they engage are independent contractors and not common law nor deemed employees under s 12 of the SGAA. OCITA claim
they are not liable to pay the superannuation guarantee charge in respect of persons contracted by it to provide interpreting services.
Roy Morgan is currently challenging its superannuation liability for interviewers (reported in the
December 2009 issue of the Connect newsletter)
on similar grounds.
National Independent Retailers Association spearheads SME marginal seats campaign
The National Independent Retailers Association plans to campaign on policies affecting SMEs and the self-employed in the leadup to the federal election. A comparison
of the policies of the major parties on IR, competition and the power of big shopping centre landlords will be compiled and mailed out to business owners in key
marginal seats including Bennelong, McEwen and Bass. In the last election, small business owners swung away from the coalition but are a long way from being committed
Labor voters so Rudd's proposed changes to the PSI tax measures and commitments in other key policy areas will be critical in securing the support of swinging SME
voters (AFR, 10.3.2010).
Connect Newsletter – February/March 2010
Cautious optimism for professional and technical recruitment; Partnership 2010 scholarship; Board of Taxation's report on Post-Implementation Review of the Alienation
of PSI Rules; Manpower report details strategies for engaging contingent workers; APESMA lobbies for contractor entitlements to form part of GEERS program; Case law
update; In the news: Australia and International; Fair Work User Guide; APESMA Insurance Services PI quotation service.
Read this edition (PDF 376KB, members only).
FWA rejects Alcoa contractor clause
On 10th February 2010, FWA Deputy President Brendan McCarthy found that a clause requiring Aloca to pay a "supplementary shift rate" regardless of the hours
worked inappropriately restricted the company's use of contractors. » read more
FWA rejects Alcoa contractor clause
On 10th February 2010, FWA Deputy President Brendan McCarthy found that a clause requiring Aloca to pay a "supplementary shift rate" regardless of the hours worked inappropriately
restricted the company's use of contractors. On the basis that the clause sought to regulate the way contractors performed work and that the prohibitive cost of paying the shift
rate would be a barrier to engaging contractors, he found that the clause was not permitted content and refused the AWU's application for a protected action ballot. Read the
decision in full on the Fair Work Australia website.
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First phase of economic recovery impacting permanent and contractor hires
The AFR reports businesses nationwide are moving temporary staff into permanent positions, while Pengana Capital portfolio manager Ed Prendergast predicts increasing demand
for contractors following a major drop in contracting revenue in the second half of 2009 largely due to general exposure to mining, oil and gas (AFR, 22/1/2010)
Business response to union consultation on contractors and labour hire
Business groups are voicing concern at possible increase in project costs as a result of the protections afforded contractors and labour hire workers by the
Fair Work Act. » read more
Business response to union consultation on contractors and labour hire
Business groups are voicing concern at possible increase in project costs as a result of the protections afforded contractors and labour hire workers by the Fair Work Act.
Recent decisions have allowed unions to be consulted on issues such as the number of contractors to be used, their qualifications and for how long they would be engaged, and
for contractors to be engaged under pay and conditions no less favourable than staff employed directly (AFR, 25/1/2010)
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Henry tax review submitted to Government
The Government has formally received the Henry tax review. Treasurer Wayne Swan has indicated that the Government will release the report and an initial response to the report's content in early 2010.
Modest increase in Government's use of IT contractors after cutbacks
Intermedium research forecasts an increase in demand for IT contractors in the April 2010 quarter with IT projects to be undertaken by Centrelink, Medicare, Human Services and
the Child Support Agency. » read more
Modest increase in Government's use of IT contractors after cutbacks
Intermedium research forecasts an increase in demand for IT contractors in the April 2010 quarter with IT projects to be undertaken by Centrelink, Medicare, Human Services and
the Child Support Agency. In looking at the Government's commitment to IT contractors in July – a leading indicator for hiring intentions in the year ahead –
Intermedium reports an increase from $170 million to $198 million suggesting a steadying of the market after the fall in contractor hires from around 16 per cent to $539
million in the year to 30 June 2009 in response to the Gershon Review.
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Federal Court upholds ATO's appeal on AAT's unusual circumstances PSI decision
The long-running PSI saga continues for Yalos Engineering whose PSB status is being assessed against the unrelated clients test.
» read more
Federal Court upholds ATO's appeal on AAT's unusual circumstances PSI decision
The long-running PSI saga continues for Yalos Engineering whose PSB status is being assessed against the unrelated clients test. The Federal Court has found that the AAT in
its May 2009 decision erred by not considering whether or not the taxpayer would have satisifed the unrelated clients test but for the unusual circumstances, and whether
or not the services provided by the taxpayer were a direct result of the taxpayer having made offers or invitations to the public at large or would have been but for
unusual circumstances. The Court indicated that whether it was insufficient for the services to have been provided as a result of personal contacts or referral as
submitted by the ATO was a matter to be considered by the AAT. When the final decision will assist taxpayers understand how the unusual circumstances provisions of the PSI
rules are to be determined. Members should note that if relying on the unusual circumstances provisions in relation to the unrelated clients test, you should ensure that
you can demonstrate that you (i) obtained work as a result of offers made to the public, or sections of the public at large, or would have but for unusual circumstances,
and (ii) can demonstrate multiple clients in previous income years, and the likelihood of multiple clients in future years. The Yalos case has been referred back to the
AAT for determination in line with this latest judgement.
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Decision handed down in first FWA sham contracting prosecution
The Federal Magistrates Court has fined real estate firm Land Choice almost $30,000 for underpaying an employee in the first sham prosecuting case launched by
the Fair Work Ombudsman (reported in the Connect September/October 2009 newsletter – PDF 529KB).
» read more
Decision handed down in first FWA sham contracting prosecution
The Federal Magistrates Court has fined real estate firm Land Choice almost $30,000 for underpaying an employee in the first sham prosecuting case launched by
the Fair Work Ombudsman (reported in the Connect September/October 2009 newsletter – PDF 529KB).
Federal Magistrate Shenagh Barnes found that Land Choice had treated the salesperson recklessly by appointing her as a contractor rather than an employee and that the breaches
represented "a significant failure to provide basic and important wage and condition entitlements". The need for an employer to have been reckless in order to have a penalty imposed
against them is a requirement of section 357(2)(b) which Magistrate Frank Turner found was not the case in the Nubrick prosecution potentially leaving open a gaping loophole for
employers. Fair Work Ombudsman Executive Director Michael Campbell welcomed the outcome saying "ignorance of the law is no excuse for employers underpaying entitlements" and that
it is the responsibility of all employers, large and small, to understand their lawful obligations to their staff.
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Board of Taxation releases Report on PSI
The Board of Taxation has released its report on the Post-Implementation Review of the Alienation of Personal Services Income Rules. The report found that the
PSI rules in their current form "do not provide adequate levels of integrity and equity" and evidence of low levels of compliance.
» read more
Australia Post contractor underpaid $63,450
The Industrial Court of NSW has ordered Australia Post to pay $72,450 plus $9,100 in superannuation payments to contractor Gregory Cartaar after finding
the contract under which he was engaged was unfair. » read more
Australia Post contractor underpaid $63,450
The Industrial Court of NSW has ordered Australia Post to pay $72,450 plus $9,100 in superannuation payments to contractor Gregory Cartaar after finding
the contract under which he was engaged was unfair. The Industrial Court of NSW has ordered Australia Post to pay $72,450 plus $9,100 in superannuation
payments to contractor Gregory Cartaar after finding the contract under which he was engaged was unfair. Justice Kavanagh found that had Mr. Cartaar been
engaged as an employee, he would have earned $130,240 over three years rather than the $66,790 he was paid. The implications of Justice Kavanagh's finding
may be far-reaching with all Australia Post’s parcels delivered by contractors, and Australia Post seeking to contract out additional functions. The
judgement is significant for the union who has been pursuing terms in their enterprise agreement to ensure that contractors were engaged under terms no
less favourable overall than those covering employees doing the same work within Australia Post.
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ATO highlights increase in bogus contracting arrangements
In a recent address to the Tax Institute of Australia, ATO Second Commissioner Bruce Quigley spelled out the ATO’s approach to compliance in
cases where businesses adopt the practice of engaging contractors under disguised employment arrangements as a way of remaining viable in the current
difficult economic climate. » read more
ATO highlights increase in bogus contracting arrangements
In a recent address to the Tax Institute of Australia, ATO Second Commissioner Bruce Quigley spelled out the ATO’s approach to compliance in
cases where businesses adopt the practice of engaging contractors under disguised employment arrangements as a way of remaining viable in the current
difficult economic climate. Quigley said that the ATO would target businesses which failed to withhold appropriate tax and make superannuation guarantee
contributions on behalf of workers who should be treated as an employees for the purposes of tax and superannuation; he also stated that the response
would not be enforced retrospectively.
Addressing non-compliance in this way, alongside negotiating legitimate assistance arrangements with those businesses trying to do the right thing, was,
he said, the best way to ensure a level playing field in the current challenging economic environment.
To read the address in full, visit the ATO website.
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Australia Post decision confirms clauses restricting or qualifying the use of contractors not considered matters pertaining to employment
A Full Bench of Fair Work Australia has found that the CEPU was not genuinely trying to reach agreement with Australia Post on the grounds that was pursuing
restrictions on the use of contract labour in their proposed agreement. » read more
Australia Post decision confirms clauses restricting or qualifying the use of contractors not considered matters pertaining to employment
A Full Bench of Fair Work Australia has found that the CEPU was not genuinely trying to reach agreement with Australia Post on the grounds that was pursuing
restrictions on the use of contract labour in their proposed agreement. The Full Bench cancelled a proposed national strike ballot of Australia Post employees
on the basis that the union had sought to restrict Australia Post's right to use independent contractors including requiring the company to contract out a
position only if it could not be filled by an Australia Post employee. Fair Work Australia found that restricting or qualifying the employer's right to use independent
contractors were not matters pertaining to the employment relationship (view the decision).
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Latest sham contracting decision
The Federal Magistrates Court has ruled against the CFMEU in the latest case testing the sham contracting provisions of the Fair Work Act.
» read more
Latest sham contracting decision
The Federal Magistrates Court has ruled against the CFMEU in the latest case testing the sham contracting provisions of the Fair Work Act. Magistrate Frank Turner
found that the manager at Nubrik did not know that the contracts were employment contracts in spite of conceding that he had considered their entitlements to
superannuation and other conditions. Secretary of the CFMEU's Brik, Tile and Pottery Division Steve Roach said it was hard to believe that Nubrik was unable to
tell the difference between an employee and contractor. The CFMEU is considering an appeal. The Centennial and Land Choice applications – the two other sham
contracting matters being currently tested (prosecutions launched by the Fair Work Ombudsman) have not yet been decided.
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Superannuation Guarantee - AAT determines employee/contractor status of Roy Morgan interviewers
AAT Case [2009] AATA 702, Re Roy Morgan Research Pty Ltd and FCT (Ref No: 2008/4387, Forgie DP) 11 September 2009.
In the latest of a series of decisions on the status of Roy Morgan interviewers, the AAT has upheld the superannuation guarantee default assessments issued by DP Forgie
and her decision to disallow Roy Morgan's objection to find that the interviewers were employees for the purposes of the SGAA. December 2009 update: Roy Morgan is
appealing the AAT's decision. » read more
Superannuation Guarantee - AAT determines employee/contractor status of Roy Morgan interviewers
AAT Case [2009] AATA 702, Re Roy Morgan Research Pty Ltd and FCT (Ref No: 2008/4387, Forgie DP) 11 September 2009.
In the latest of a series of decisions on the status of Roy Morgan interviewers, the AAT has upheld the superannuation guarantee default assessments issued by DP Forgie
and her decision to disallow Roy Morgan's objection to find that the interviewers were employees for the purposes of the SGAA. December 2009 update: Roy Morgan is
appealing the AAT's decision.
The AAT found that the interviewers were employees rather than contractors in spite of the fact that:
- Roy Morgan did not guarantee work and interviewees did not guarantee availability;
- Roy Morgan claimed they didn't exercise control over how the interviewers performed their task;
- only paid interviewers when they made a claim for each assignment;
- did not deduct tax on a PAYE basis; and
- offered no sick or annual leave.
By referring to the established authorities including Hollis v Vabu (2001), the AAT referred to a range of indicia around control and integration in the business. They found
that Roy Morgan interviewees controlled the way the interviewers administered the questionnaire and required them to wear Roy Morgan ID cards, while interviewees had no
control over the content of the questionnaire, and were not permitted to delegate the task of interviewing. The AAT held that the interviewers were integral to the Roy
Morgan business and were not engaged in business on their own account.
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Research shows contracting professionals are largely satisfied with their careers
Research undertaken by Monash University's Social and Economic Interface Research Network in conjunction with Entity Solutions has found that contracting professionals are largely satisfied with their
careers and with the work they do, and would prefer to remain contracting than become employees. » read more
Research shows contracting professionals are largely satisfied with their careers
Research undertaken by Monash University's Social and Economic Interface Research Network in conjunction with Entity Solutions has found that contracting professionals are largely satisfied with their
careers and with the work they do, and would prefer to remain contracting than become employees.
Reflecting the changes in the market as the GFC extends into the real economy, contractors did however report increased competition for roles over the last 12 months, and pressure to undertake
work outside the specific areas for which they were engaged. A significant proportion indicated that finding better work would be difficult in the current climate, and some were being forced
to work through an agency to locate clients.
Only one in four contractors reported a cut in rates over the previous year but a more disturbing 46 per cent reported having to be "more flexible in their earnings expectations". One in five
contractors were considering leaving contracting arrangements – a fairly small proportion but possibly attributable to the lack of permanent employment options currently available.
Request a copy of the full report from the Entity Solutions website.
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Restraint of trade judgement for sub-contractor
The NSW Supreme Court has ordered that a contractor be forced to observe the restraint of trade terms of his sub-contract where he set up his business in the same area and in direct competition
with a company which engaged him first as an employee and then a sub-contractor. » read more
Restraint of trade judgement for sub-contractor
The NSW Supreme Court has ordered that a contractor be forced to observe the restraint of trade terms of his sub-contract where he set up his business in the same area and in direct competition
with a company which engaged him first as an employee and then a sub-contractor. The defendant, Sitthichai Laksanabencharong was engaged as a sub-contractor to deliver Fairfax publications
but also submitted tenders for the delivery of parcels for Australia Post in the same district. Fairfax argued that Mr. Laksanabencharong had breached the terms of his contract by tendering
for the delivery of parcels in the same district in which Fairfax was the incumbent operator. Justice Slattery found in favour of and allowed the enforcement of a restraint clause preventing
the driver from operating in the district for a period of three months. Read the judgment on the
Lawlink NSW website.
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Fair Work Principles and new procurement policy to apply to Government suppliers
On 31 July, the Government announced that all contractors to the Commonwealth would be required to comply with a set of Fair Work Principles. The Principles apply in all industries
including manufacturing, IT companies and transport. » read more
Fair Work Principles and new procurement policy to apply to Government suppliers
On 31 July, the Government announced that all contractors to the Commonwealth would be required to comply with a set of Fair Work Principles. The Principles apply in all industries
including manufacturing, IT companies and transport.
The Rudd Government will require all suppliers when submitting tenders to provide information about how they comply with the Fair Work Principles. Under the Principles:
- Contractors will be required to comply with industrial, OHS and workers' compensation laws;
- A breach of any industrial, OHS or workers' compensation law will be deemed to be a breach of the supplier's contract with the Australian Government;
- Contractors will be required to provide undertakings that they have not been subject to any adverse judgments for a breach of industrial, OHS or workers' compensation
laws during the past two years (not including decisions under appeal);
- Contractors will need to provide information about how they promote fair, cooperate and productive workplaces including providing information about their commitment to
supporting apprenticeships, education and training (where appropriate);
- As far as practicable, contractors must apply the above requirements to sub-contractors.
The Fair Work Principles are available at the Ministers' Media Centre website.
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Sydney real estate company accused of sham contracting
The Fair Work Ombudsman has launched a prosecution against a Sydney real estate company and its director, alleging a property salesperson was underpaid more than $20,000
as a result of sham contracting. The Fair Work Ombudsman is prosecuting Land Choice Pty Ltd – which traded as Kingsford First National Real Estate – and the company's sole
director, Sugiharto Sugiharto [correct], of Maroubra. » read more
Sydney real estate company accused of sham contracting
The Fair Work Ombudsman has launched a prosecution against a Sydney real estate company and its director, alleging a property salesperson was underpaid more than $20,000 as
a result of sham contracting. The Fair Work Ombudsman is prosecuting Land Choice Pty Ltd – which traded as Kingsford First National Real Estate – and the company’s sole director,
Sugiharto Sugiharto [correct], of Maroubra.
Documents lodged in the Federal Magistrates Court in Sydney allege the salesperson signed an agreement with Land Choice titled “Independent Contractor Agreement” under which she
was to receive only commission payments.
It is alleged the woman then worked an average of 40 hours a week from March to September 2007, but Land Choice paid her a total of only $1,414.
The Fair Work Ombudsman claims the salesperson was wrongly classified as an independent contractor. It says the woman should have classified as a full-time employee and been
paid wages and various entitlements totalling about $22,000.
Court papers allege Land Choice should have paid the salesperson at least $14.38 an hour plus annual leave entitlements, locomotion allowance and payment in lieu of notice on
termination of her employment. The Fair Work Ombudsman will also tell the Court that Land Choice failed to maintain proper employment records.
Executive Director Michael Campbell says the decision to prosecute was made because of the seriousness of the alleged breaches of workplace law and the failure to rectify the
alleged underpayment.
Source: Fair Work Ombudsman media release, 22 July 2009
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