Presumably the issue is that working for the company, the award stipulates that industrial award/agreement must pay penalty. However, as a contractor, the person can either contract through an agency or a directly to the company, industrial laws do not apply and so neither do penalty rates unless included in the contract.
head2641, I think what you are referring to is the ATO's assessment of employee/contractor in payment of taxes not the industrial law consideration of who is an employee regarding terms and conditions of employment. They are different things so that a personal could be considered a contractor under industrial law but an employee under taxation law.
