The Fair Work Ombudsman has won a court case against a Tasmanian resort owner.
THE Fair Work Ombudsman has won a court case against a Tasmanian resort owner, just months after warning it would crack down on sham contracts.
The owners of Diamond Island resort have been ordered to pay $37,500 compensation to six casual employees after abruptly sacking them for refusing to become independent contractors doing the same work.
The Federal Court has heard that the resort's owner, Wendy Wells, wanted staff to become contractors because ''I don't want to have to pay superannuation ? I want it all on contracts so that I don't have these other extra worries, I just have one payment.''
However, a judge has ruled that some contracts were ''sham arrangements'' where contractors followed a roster and managerial instructions, wore resort uniforms, were not employed elsewhere, were given all their equipment by the resort, and had invoices provided by their manager.
The Ombudsman declined to comment until a penalty is issued to the resort company, Maclean Bay, in a hearing set for February 2.
The staff were casual employees at Diamond Island resort - near Bicheno on Tasmania's north-east coast - when Mrs Wells and her husband, Jamie Wells, became sole directors of Maclean Bay in October 2007.
Justice Shane Marshall of the Victorian district of the Federal Court yesterday found Maclean Bay breached the Workplace Relations Act when it sacked staff without notice and refused to rehire them unless they became independent contractors.
Staff were offered contracts at award rates plus 9 per cent in lieu of superannuation.
The Workplace Relations Act applied in this case because the contraventions occurred before the new Fair Work Act was introduced in July 2009.
The gardener at Diamond Island was told he had to register as an independent contractor and fund his own liability insurance, which he found would have cost more than his weekly income.
Mrs Wells claimed a receptionist was sacked for not being ''gregarious'' enough and having the wrong personality, but the judge found the real reason was that she had refused to become a contractor.
Four casual housekeepers were abruptly sacked in December 2008 and Justice Marshall ordered compensation be paid for loss of wages following the unexpected termination.
Justice Marshall also noted that Mrs Wells' evidence and refusal to appear as a witness in the case ''did nothing ? to enhance her standing to be readmitted as a legal practitioner in Queensland''.
Mrs Wells (nee Wright) was stuck off the roll of solicitors in Queensland in 1999 for professional misconduct. She is still a director of 11 Queensland-registered companies, according to documents lodged with the corporate regulator.
Frequently Asked Questions about this Article…
What was the Fair Work Ombudsman’s court victory against Diamond Island resort about?
The Fair Work Ombudsman won a Federal Court case against the owners of Diamond Island resort (operated by company Maclean Bay) after the resort sacked casual staff who refused to become independent contractors. The court found the dismissals and refusal to rehire unless staff signed contractor agreements breached workplace laws.
How much compensation was ordered and who received it?
The court ordered Maclean Bay to pay $37,500 in compensation to six casual employees for loss of wages after they were abruptly sacked for refusing to convert to independent contractors.
Why did the judge call some contracts 'sham arrangements' in this case?
Justice Shane Marshall found the contracts were sham arrangements because the so-called contractors followed a roster and managerial instructions, wore resort uniforms, weren’t employed elsewhere, were given all their equipment by the resort, and had invoices provided by their manager—factors showing they were effectively employees, not genuine independent contractors.
Which law applied to this dispute — the Workplace Relations Act or the Fair Work Act — and why?
The Workplace Relations Act applied because the contraventions occurred before the Fair Work Act came into force in July 2009. The judge therefore assessed the resort’s conduct under the earlier Workplace Relations Act.
What practices did the resort use to try to shift staff from employees to contractors?
The resort offered contracts at award rates plus 9% in lieu of superannuation, required staff to register as independent contractors, and in one case told the gardener to obtain liability insurance (which would have cost more than his weekly income). Staff who refused were sacked or not rehired unless they accepted contractor status.
Are there any further penalties or hearings pending for the resort company Maclean Bay?
At the time of the report, the Fair Work Ombudsman had declined to comment until a penalty was issued to Maclean Bay. A hearing to consider penalties was set for February 2.
What does this case signal to everyday investors about governance and legal risk in small hospitality businesses?
The case highlights that poor employment practices and attempts to misclassify workers can trigger regulatory action, court orders and compensation liabilities. Investors should watch for director conduct and regulatory history—here the owner, Wendy Wells, was noted as a director of multiple companies and had prior professional conduct issues—which can increase operational and reputational risk.
Who were the key people and entities named in the court case?
Key parties included the Fair Work Ombudsman, resort owners Wendy and Jamie Wells, the resort operator Maclean Bay, the Diamond Island resort near Bicheno in Tasmania, and Justice Shane Marshall of the Federal Court, who ruled the contracts were sham and ordered compensation.
Call 1300 880 160
Start a chat
Schedule a call
