Sham contracting is when the new instructor is told "Get an ABN, I will pay you x per hour and you invoice me at the end of the month" There are still some businesses that do this. Because they know they probably won't get caught and it allows them to compete with the business next door, they know that wide eyed brand new pilots will agree to just about anything to get that first JOB.

It is risky as the penalties are very high, and employers now should realise that the same "contractor" can take them to the cleaners through the Fair Work Commission if/when they realise they are being ripped off.

The definitions are here: Sham arrangements – Division 6 | General protections benchbook (fwc.gov.au)

That's just Fair Work, there is also the Australian Tax Office that can come after you. Myths and facts | Australian Taxation Office (ato.gov.au)

I understand the fines are hefty and precedent has been set where these employers (for that is what they are) have had to back pay the correct rates, the tax, super, leave entitlements etc. This is the sort of thing that CPL students should be made aware of during their training.

In this case skydiving is a private operation and the pilot has more autonomy that a pilot working under an AOC or Part 141/142 organisation does, so a contracting arrangement is feasible.
Also someone mentioned that super kicks in after the employee has earned more than $450 in a calendar month, this is no longer the case, it is now 10% of every dollar.

This isn’t some skydive club on the weekend - this is an ASX company that at one point had a bigger market cap than Rex.

The award doesn’t care whether or not your flight is private, aerial work or charter. The award cares about the nature of your relationship. Are you employed? There are clear tests for this that other posts have identified. If the answer is yes, then you need to be paid the award.

There have been a bunch of pilots that have attempted to recover underpayments from the company in question through the legal system, including with union help. The fact that you haven’t heard about it in the media alludes to a common outcome: confidential settlements. If this was a genuine contract relationship you’d think the company would let at least one case play out in the courts as a test case so they could put it to bed.

Unfortunately employment law is a non-costs area - so if a pilot spends $20k in legal fees to recover a $20k underpayment, they don’t get awarded $40k at the end - they get $20k. Makes settlement very enticing for the pilots as well. Not their fault.

The company knows this. They know it’s difficult for pilots to enforce their rights. Particularly when those pilots are young, inexperienced and un-unionised. The union knows this too - I’d say they have an obligation to not send the lambs to the slaughter by advertising the job.

^^^THIS^^^

^^^ Yes ^^^

What are the rates for contractors? Someone must know!

How long might it take for an applicant to earn back the $7k they have probably shelled out to get 10 hours C208 and JPA with Australian Jump Pilot Academy, of course owned by Skydive Australia...

The 'rates' for genuine independent contractors are whatever the parties negotiate. If I want my car serviced, I can call as many mechanics I want and they can propose whatever price they want. If one of them offers to service my car for $1 and I accept that offer and promise to pay $1 in return for the service, that's the contract and it's perfectly 'legal'.

You are totally completely correct.

You, me and Aussie Bob could together form an International Consortium, Head Office in the Cayman Islands, subsidised by the EU, bid and win the contract at $1 Zimbabwean dollar per parachute …

But this advert instead looks and smells exactly like Hip, Cool Air Pirate Inc Pty Ltd is offering a “contract” to Instruct/Drop Meatbombs/Spread Superphosphate/whatever, but will be informing our prospective doe-eyed 500 hr pilot that they can have the job IF they get an ABN, send an email to Accounts (who pay 30 days in arrears), “oh” and “what we pay is $1 per student/drop/acre”.

All so they can wiggle out of the Minimum salary, Super, Workers Comp, liability etc.

Our international business case might be legal even if unethical.

Air Pirates are using illegal and unethical Sham Contracting just cos shafting pilots is a core part of their business model.

Regards.

Indeed. I agree entirely with a point made by an earlier poster: One of the 'core subjects' in any CPL course delivered by any commercial service-provider should be employment law.

All part of the scam. If the "contractor" instructor agrees to be paid $10 an hour for flying then obviously the unscrupulous operator will accept that. The instructor white-ants their colleagues and the EMPLOYER gives them the work and white-ants the competition.

Thanks Clare, I must be a bit slow, the lights are coming on, so the competitiveness is among the Instructors/Staff not the Clientele.
How widespread is this practice and how would we the customer recognise it.

I'm the guy that stands in the queue at the supermarket checkout, for as long as I need too in order to support the need for checkout operators, our grandchildren's first job.

No, Clare said both.

An instructor who's willing to pretend to be an independent contractor at e.g. $10 per hour is overwhelmingly competitive with a candidate who says s/he would insist, at least, on casual employee entitlements.

The operator who has numerous 'independent contractor' instructors at $10 per hour is able to offer flying training at lower rates than a competitor who pays instructors their entitlements, because the former has a lower cost-base than the latter.

You're obviously a good person who cannot conceive of this kind of behaviour. Sadly, it's widespread.

Young, freshly minted CPL pilots are desperate for hours to get a career started. They are the bottom of the food chain and the climb up can seem insurmountable.

Some would be willing to not just fly for next to nothing, but to even pay the operator to get some experience.

There are those that will exploit their desperation and naivety. That has sadly been true for decades.


If you are a punter looking for a school to fly at (or recommend for a friend), ask if they pay instructors award rates, not just what the hire costs are.

If they have long term instructors on staff with a low staff turnover, if the staff seem passionate and if the school has been around for years and has a good rep, these are all good signs.

my 2c

Hear! Hear! jonkster.

Yep Jonkster, I have had fuglies come in and offer to pay me for the chance of getting some work instructing. They are shown the door sharpish.

Quite apart from anything else, if they are so woefully unprepared for the real world that they beg to be exploited then they are also woefully unprepared to be a professional pilot.

And yes, instructors white ant each other and operators white ant each other. If they all paid decent wages (and the award is a lot less than a decent wage) then we could all make a decent living. Often these schools are running other tax scams as well "Sign here and pretend that you want to do a CPL and I won't charge you GST!" Sadly, they keep getting away with it, cheating their staff, cheating on super, compo, tax, and unleashing a fugly with zero public liability cover.

Well that sort of explains some things that didn't go unnoticed in my last years as an Airline Pilot. When there's a few hundred of them on the bottom of the list that will create a whole new order of scabs.

I 've received quite few CV's of young fresh instructors in the last 18 months accepting to fly for free... Contracting in aviation is a sham, but certainly pilots are their worst enemies .

I worked for a skydiving operator 10 years ago as a contractor with an ABN. The daily rate I got paid was actually substantially higher than the award. I paid into my own super and did my own tax.

I don't know the background of the company this thread is centred around but they may not be as bad as some people make out.

I do know the background of the company, they are as bad as some people make out.

How much is "substantial"? By my calculations, fair contract rates should be at least 50-60% higher than the equivalent for a salaried employee - assuming the same responsibilities. More, if the contractor is taking on some of the risk e.g. consequences of bad weather.

Companies don't usually do this type of arrangement for the benefit of the employee/contractor...

From someone who interviewed for a similar role - $130 per day including 4 flights. $20 for each flight after that.

A lot of 'reputable' operators and flying schools are doing this sadly as it seems to be accepted as the norm.
The whole contracting dilemma won't end unless there is a large push by AFAP or another body to sort out the industry. It's probably in the too hard basket, and it's unrealistic to think that individual pilots would risk taking on their 'employers' in such a small industry by themselves.