Race to the Bottom, a report commissioned by the Construction, Forestry, Mining and Energy Union, reveals the extent to which some construction companies are ripping off taxpayers and workers through sham contracts.

“Our research shows there are up to 168,000 people employed on sham contracts in construction in Australia, anecdotal evidence and industry experience sets this figure much higher,” CFMEU Construction national secretary Dave Noonan said.

“ABS data and calculations by independent tax consultants show the practice is costing $2.45 billion in lost revenue.”

The report outlines 21 recommendations to combat sham contracting, including several changes to the Fair Work Act to make it an offence for employers to engage workers under the practice.

Sham contracting occurs when employers engage workers and classify them as contractors and not employees, avoiding taxes and employee entitlements such as superannuation, annual and sick leave.

“Many workers are forced into these arrangements to get a job, and find themselves without superannuation or support if they get injured,” Noonan said.

“The only winners are those employers who flout the law knowing they won’t be punished under the current system.”