🇦🇺Australia

Sham Contracting Risks in Subcontractor Qualification

2 verified sources

Definition

Pre-qualification questionnaires assess ER/IR but manual processes fail to detect sham arrangements, triggering Fair Work investigations.

Key Findings

  • Financial Impact: AUD 20,000 - 200,000+ backpay, super and penalties per misclassified worker
  • Frequency: Per audit or employee claim
  • Root Cause: Inadequate due diligence in subcontractor qualification

Why This Matters

The Pitch: Services for renewable energy in Australia 🇦🇺 incur AUD 50,000+ backpay per case from sham contracting. Automated qualification verifies true contractor status.

Affected Stakeholders

Procurement, Legal/Compliance

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Financial Impact

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Current Workarounds

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Fair Work Act Penalties for Subcontractor Payments

AUD 10,000 - 100,000+ per breach (Fair Work penalties); 11.5% Superannuation Guarantee shortfalls accrue interest and SG Charge.

Superannuation Guarantee Shortfalls in Subcontractor Payments

11.5% SG rate + SG Charge (200% of shortfall + interest); typical AUD 1,000-5,000 recovery per subcontractor

Delayed Subcontractor Payments Impacting Cash Flow

15-30 days extra AR; 1-2% finance cost on delayed payments (AUD 5,000+/month for mid-size projects)

Hidden Asset Failure Costs from Incomplete EPC Lifecycle Coverage

Estimated 2-8% of annual asset operating expenditure per asset; typical 5 MW solar farm with $15-20M capex would lose AUD $90,000-160,000 annually to uncontracted maintenance and failed warranty claims

Lifecycle Cost Visibility Failures in Asset Business Case Development

Estimated 3-5% of project Net Present Value (NPV) lost through suboptimal component selection; for a AUD $50M solar project with 35-year lifespan discounted at 7%, typical NPV loss = AUD $1.5M-2.5M

Emergency Response Coordination Overruns

AUD 20,000-100,000 per major event in overtime and rush orders (industry logic: 40-80 hours overtime at AUD 100-150/hr plus 20-50% rush premiums)

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