Subcontractors, EBAs and Site Disputes — Construction Employment Law Done Right

Sham contracting is treating a genuine employee as an independent contractor to avoid employment entitlements. The classification depends on the substance of the working relationship — control, integration into the business and financial risk — not just the label in the agreement. Getting this wrong exposes you to back-pay, superannuation and civil penalties.

Yes, once approved by the Fair Work Commission, an enterprise agreement generally replaces the award for covered employees — but it must pass the “better off overall” test compared to the award. Misapplying EBA terms, or applying an expired agreement, is a common compliance gap.

Serious safety breaches can justify summary dismissal, but the bar is high and the process still matters — the worker should generally be given a chance to explain their actions unless the breach was extremely serious. Skipping process here is a common reason safety-related dismissals are successfully challenged.

Liability depends on the contractual relationships and level of control on site, but principal contractors can face reputational and, in some cases, legal exposure for subcontractor non-compliance. Clear contracts and due diligence on subcontractors reduce this risk.

Ending employment because a specific project or task has concluded can be a genuine reason, but it still needs to meet the relevant tests — for employees this may be a genuine redundancy, and correct notice and final pay obligations still apply.

Contractor misclassification is the highest-stakes risk in the sector — it can trigger significant back-pay, superannuation shortfalls and penalties across an entire workforce, sometimes going back years.

No. Fair Work Centre is an independent private advisory service for employers. We are not associated with or authorised by the Fair Work Ombudsman, the Fair Work Commission, or any government authority.