Federal Court penalises Ace Insurance for sham contracting

The Federal Court has imposed a $10,000 penalty on Ace Insurance, after it found the insurance company wrongfully engaged five former insurance sales representatives as independent contractors rather than as employees.

Ace Insurance has also been ordered to pay significant compensation to the former insurance sales representatives for accrued leave entitlements and interest, even though the Court found the company relied on the advice of Queen's Counsel that the insurance sales representatives were not employees.

The case is the latest in a string of cases before the courts considering the distinction between employees and contractors, as employers have different responsibilities for superannuation, tax and payroll tax depending on whether staff are employees or contractors.

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