Sham contracting is rife in sex industry

June 13, 2014
The Scarlet Alliance in the Australian sex workers' association.

Sham contracting — when a company lists employees as contractors to avoid having to pay tax and benefits — and charging workers illegal fines are widespread practices in the sex industry.

The first time I entered into a sham contract I was 18, living in Queensland, and stripping. I assumed it was legally binding and had no idea of how to challenge it. I was paid as a contractor and received half my earnings from private dances, but was expected to work 40 hours a week and adhere to a roster, which is something I later learned that can only be required of an employee receiving benefits such as an hourly wage and superannuation.

The clubs also enforced fines if workers were late or missed a shift, a practice that is illegal.

Several years on, I am working in a brothel in NSW. I am now aware of sham contracts and chose my place of work based on it not enforcing fines or requiring workers to sign anything.

But a couple of months ago the establishment was sold. There were many issues with the way the new management ran things, leading to the business losing both staff and clients at a rapid rate.

In what appeared to be a last ditch effort to tie the remaining staff to a sinking ship, management introduced a contract. Among a long list of unfair clauses, the contract redefined workers as independent contractors but required us to adhere to a roster, facing fines of $50-$100 (a significant amount at a small, regional brothel) for missing shifts, and threatened workers with dismissal if we missed two shifts without a doctor’s certificate in any one month.

It also contained a restraint of trade agreement preventing workers from working anywhere else.

The worst clause was a blanket agreement to what sex acts we would perform. This should be something that is agreed upon between worker and client on a case-by-case basis. None of us were comfortable with the contract but some decided it would be preferable to just sign it, rather than get offside with management. I offered to seek legal advice on behalf of all of us — those who were refusing to sign it and those who had already signed.

After speaking with the Sex Worker Outreach Project, solicitors and doing my own research, I told the manager I would not sign the contract and explained the reasons why. I also told them the workers who had signed it could go to Fair Work Australia and sue if the brothel enforced the sham and illegal clauses.

The manager responded by offering existing staff the option to stay on without signing a contract, but maintained that all new staff would be required to agree to it. It was at this point that I was faced with a choice. We no longer had to sign the contract but was it really a win if other workers still had to work under those conditions?

I decided I was not comfortable working in an establishment where any of my co-workers were subject to this contract (and was lucky enough that I could find work elsewhere) and told the manager as much. Their response was that it was never intended to be a legally binding document anyway, and so it didn’t really matter if the fines were legal or not, and that lots of other sex industry establishments enforce similar contracts so it wasn’t a big deal.

The former argument was just laughable — they had every intention of leading staff to believe they were signing a legally binding contract. The latter is even more reason to do what we can to challenge sham contracts.

I was also told it didn’t matter that the contract breached contract law because none of us could do anything about it without outing ourselves as sex workers and risking tax or Centrelink problems of our own (many people in the sex industry do not declare their income).

This is typical of the attitude of a lot of owners and managers I have had dealings with.

The shift manager eventually said she would get rid of the contract but threatened that if she could not enforce a roster she would not take bookings in advance for us (even though this would hurt the business too) and would tell all clients who rang that she didn’t know when we were on next.

She made clear it was my fault that she was doing this, something that would lose all of us money. It was at this point that I decided that even if she scrapped the contract I couldn’t stay there, I would struggle to get bookings while the manager had it in for me and I worried that my actions may inadvertently hurt my co-workers if she really went through with her threats about bookings.

The next day I did my last shift there and no mention of the contract was made.

I remain in touch with workers there and have given them all the information I have on sham contracts and where they can get advice. I also let them know that they can anonymously report the business to Fair Work Australia, if they are afraid of repercussions.

In all likelihood this particular establishment will soon either close down or be sold. I am not the only worker who has quit in the last couple of months and they are struggling to attract new staff. If they do enforce this contract, they will find attracting and keeping staff even more difficult. Unfortunately they were not the first and will not be the last sex industry establishment to pressure workers into signing a sham contract or to enforce illegal fines.

It is vital for us to educate ourselves on the options we have in these situations and to share our knowledge with other workers. My experience shows that by working together we gain power over our bosses. It was when the majority of us refused to sign the contract that they conceded to allowing existing workers to stay on without signing.

I would not call this a win. I lost my job, but at least management was not able to bully us into signing the contract without a fight and I hope this makes them reconsider requiring any worker to sign such a contract.

Organisations that give advice or support when dealing with an employment problem in the sex industry in NSW are the Sex Worker Outreach Project and the Inner City Legal Centre.

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