Fundraising Company Fined $100,000 for Underpaying Charity Collector

A fundraising company and its director were penalised a total of $124,000 for underpaying a backpacker working as a charity collector in Sydney.

Australian Sales and Promotions Pty Ltd (ASAP), which fundraises on behalf of charity and not-for-profit organisations, was penalised $100,000 in the Federal Circuit Court, following legal action by the Fair Work Ombudsman.

The company’s sole director and part owner, Paul Ainsworth, was penalised a further $24,000.

ASAP and Ainsworth were found to have breached sham contracting laws by treating a 26-year-old British backpacker on a working holiday visa as an independent contractor, despite knowing the Fair Work Act required the company to classify and pay him as an employee.

The collector was told he had to operate his own business and obtain an ABN to receive payment, despite ASAP exercising a high degree of control over his duties.

He was paid on a commission, earning a daily rate as low as $50, rather than the minimum hourly rate he was entitled to. Over four months of work in 2013 he was underpaid $7,853.

After lodging a complaint, the Fair Work Ombudsman investigated and ASAP back paid the worker in full.

However, the ombudsman took legal action because the company had previously breached sham contracting laws.

Judge Robert Cameron found the company and Ainsworth had deliberately contravened the Fair Work Act, with the intention “to enjoy the financial benefit of paying [the charity collector] as an independent contractor while also enjoying the power and authority of an employer in the control it exercised over him in the course of his work”.

“Persons should understand that attempting to evade the minimum employment conditions provided by the Fair Work Act by contriving to make employees independent contractors can have serious financial consequences of an adverse kind,” Cameron said.

He said the collector’s unfamiliarity with Australia and its employment laws “placed him in a position of particular vulnerability”.

The Fair Work Ombudsman also submitted evidence that ASAP, as recently as this year, continued to place job advertisements targeting transient and potentially vulnerable workers.

Cameron said the company and Ainsworth had failed to “demonstrate contrition or willingness to not repeat the contravening conduct”.

Fair Work Ombudsman Natalie James said the court’s decision sent a message about the serious consequences of sham contracting.

“Employers should be aware that simply calling a worker a ‘contractor’ and requiring them to obtain an ABN does not automatically make them so under workplace laws,” James said.

“Where there is evidence of sham contracting occurring, the Fair Work Ombudsman and the courts will look behind the often carefully crafted legal documents and structures to determine the true state of affairs for affected workers.”

James said it was another warning for not for profits and charities to look closely at the practices of third-party agencies.

“We are currently looking at the way the charity sector engages workers, in particular for their fundraising activities as part of a national inquiry,” she said.

“This follows concerns about the exploitation of young charity collectors and misclassification of employees as independent contractors by companies engaged to carry out fundraising on behalf of charities.”

The workplace watchdog announced last month it would scrutinise charity labour procurement and supply chain practices, emphasising that charities were responsible for any workplace laws flouted by third-party fundraisers.

According to Fairfax, the collector underpaid by ASAP was raising money for high-profile charities including Amnesty International and Wesley Mission.

Both organisations said they were unaware that fundraisers working for ASAP were being underpaid.

The regulatory body for face-to-face fundraising, the Public Fundraising Regulatory Association (PFRA), said charities should exercise proper due diligence before entering into a relationship with third-party agencies.

“With any arrangement where a charity outsources part of their work to a third party, there’s always a certain level of risk that the charity takes in entrusting their reputation to another organisation,” PFRA CEO Paul Tavatgis told Pro Bono Australia News.

“What they should be aware of, and carrying out very effectively these days, is proper due diligence on these processes.

“Third-party agencies are incredibly valuable, they can do things for a charity that the charity doesn’t have the capacity to do themselves, but the charity really needs to make sure they’re taking all measures they need to take to ensure they’ve done their due diligence before they enter into that sort of relationship.”

He said “absolute bottom line” was for charities to ensure third-party agencies were compliant with the law.

“That’s an absolute given,” he said.

“But above and beyond that they should really be making sure that anyone who’s representing them is capable of representing them in a way that they would represent themselves.

“That comes to the quality of the work that’s been done, the way that a business is managed. It’s a very detailed process and charities should be investing resources in making sure they’re getting this right.”

Pro Bono Australia News attempted to contact ASAP.

Editor’s note: The Paul Ainsworth referred to in this story is no relation to Paul Ainsworth, the son of poker machine billionaire Len Ainsworth, nor his foundation, the Paul Ainsworth Family Foundation.