This website provides tangible value for users and demonstrates an understanding of priority topics contractors need to learn about. The website also engages the user in a learning framework by offering access to a mentoring program. All I can say is thank God I'm a member of APESMA ... What can I say but, ... Wow! Thank you so much! Cheers, requested information on Connect services). Wow. This is fantastic. Give me a while to work through and digest the info you sent me. Thank you very much for the wonderful information which you sent through below and also the hard copies received in the mail. The information is without doubt invaluable for someone starting out like myself. I congratulate APESMA for providing such a service and obviously all the work which you do through Connect. I have started reading through the literature and I feel much better informed on issues such as what type of business to establish myself as. Also it helps greatly with reminder you about all the little issues to remember when setting up. My next move is to organise a meeting with an accountant and get things underway. At this stage, I am planning to start my business in February and looking forward to the challenge ahead. Thanks once again for your assistance and I will stay involved with APESMA and Connect. Here's just a quick note of feedback to thank you for your excellent presentation of PSI issues. PSI has only become pertinent to me this financial year and I have greatly appreciated your emails and newsletters. They are extremely well written and contain expert practical advice. Recently I had thought to question the value of continued membership of APESMA but your articles alone easily justify subscription. This really is an excellent newsletter. Keep up the good work. This is great - exactly what I was after. Thanks, appreciate it. Thanks for your e-mail. I am impressed with the quick and efficient response. I will read through the information you sent and the information you suggested I read on the Connect website. If I need further information after doing so I will ring you direct for help. Thank for your help so far. It is appreciated. The information on contract rates was spot on, and I am looking forward to working my way through all the remaining links. Thank you for your email & for the package of information sent by mail. I have found all the information you have sent me to be extremely valuable as I embark on this new approach to my career. I look forward to receiving future Connect newsletters and to being associated with the group. Thank you for your quick response. This information is like gold to me at the moment! Thank you for calling today - your comments were greatly appreciated. I am sure you know more about how this PSI works than anyone else that I have spoken to. Thanks a lot for this. There are a lot of great stuff in there about 'Connect' services, which I didn't know existed. Fantastic!
CONTRACTOR MARKET MONITOR

Market Update – February 2010

The IMF has revised its growth forecast for the world economy in 2010 up from its October 2009 prediction of 3.1 per cent to 3.9 per cent. They forecast 2 per cent growth in 2010 and 3 per cent growth in 2011 for Australia but have said that due to the instability which characterises the recovery, fiscal policies and planned stimulus measures should remain in place. Hays' Grahame Doyle reports 12-month highs for recruitment, while job ads rose 6 per cent in December 2009. Unemployment fell to 5.5 per cent in December and labour participation increased by 35,200 nationally in January.

2009 – the year in review

2009 came to a close with increasing demand for both permanent hires and contractors as many commentators suggest that Australia has moved into the first phase of economic recovery. Finite IT reports that while contracting is strong in all states, it is not consistent across industry sectors with banking and finance, telecommunications and resources showing positive signs, but contracting to state and federal government variable owing to budget reviews, hiring freezes and restructuring. Global recruitment firm Randstad’s Asia-Pacific CEO Deb Loveridge forecasts increased activity in construction, property and engineering (AFR 16.10.2009) with demand for contractors likely to follow.

Some commentators suggested that the introduction of the Fair Work Act with its unfair dismissal and adverse action provisions would create demand for contractors over permanent hires (Australiawide, July 2009 Market Commentary). There appears to be little evidence to support this with Hudson’s latest Employment Expectations Survey finding that 18.5 per cent of employers surveyed were planning to increase their permanent staff in the 4th quarter of 2009 (Hudson Employment Expectations Survey, October 2009), the sharpest increase on the previous quarter for 10 years. Employers’ hiring intentions were particularly strong in the professional services sector with a net 31.1 per cent of employers expecting to increase permanent hires before the end of 2009.

25.5 per cent of IT employers confirmed their intention to increase their permanent hires according to the Hudson Survey while a Peoplebank study predicted a re-emergence of IT skills shortages by the end of 2010 with an estimated 36,000 IT workers needed to resource new projects by 2012 (AFR, 17.11.2009). Hays concurs with Hudson’s predictions who forecast a general increase in permanent hires in IT (Hays ICT Market Forecast, October 2009).

Australiawide Recruitment suggests that demand for contractors has been less than expected because, unlike in other downturns, business has favoured reducing employees’ hours rather than largescale redundancies to ensure they have the relevant skills available as the economy moves into recovery (Australiawide Recruitment Market Commentary October 2009). Hays suggests that while temporary recruitment is dominating the market at this stage, there is a general increase in permanent hires.

Overall market forecasts suggest that in 2010 consumer confidence will strengthen, business investment will slowly improve as debt financing for new projects becomes more available, and projects funded by government infrastructure spending continue to be rolled out.

Join Connect to receive regular updates on the state of the market for contractors.


CONTRACTOR FAQs

FAQs are members only documents

Do I need to use written agreements when I do contract work for clients?

What’s the difference between an independent contractor and an employee?

Do I really need to take up PI insurance?

What is an independent contractor?

What are the pros and cons of being self-employed?

How much should I charge clients?

What are some common tax deductions for the self-employed?

Is my APESMA membership tax deductible if I’m self-employed?

In the event of non-payment by a client, can I refuse to perform any further work?


CONNECT BLOGS

Blogs are members only documents

APESMA submission to the Board of Taxations Post-Implementation Review into the Alienation of Personal Services Income Rules

IT industry trends and big issues

Going green

ATO`s data matching project

Agencies offering IT professionals unfair contracts


ADDITIONAL INFO

Welcome to the CONNECT Website

Connect is a special interest group established to assist self-employed professionals.

If you are operating as an independent contractor for the first time, Connect can assist you with managing the transition from employee to contractor.

We can also help with information on what to charge and how to find work, assist with writing and managing contracts, and provide advice on business startup, taxation issues, PI insurance and professional development. We will keep you up to date on small business issues, and give you access to a range of member benefits which we hope will directly benefit your business operation. We also host a structured business mentoring program.

Membership of Connect is open to professionals in self-managing work arrangements and is part of APESMA's extensive range of services for professionals. Visit the APESMA Membership page for more information or to join.

Read Connect's policy on the use of contractors and Connect's Charter.

LATEST NEWS

National Independent Retailers Association spearheads SME marginal seats campaign

The National Independent Retailers Association plans to campaign on policies affecting SMEs and the self-employed in the leadup to the federal election. A comparison of the policies of the major parties on IR, competition and the power of big shopping centre landlords will be compiled and mailed out to business owners in key marginal seats including Bennelong, McEwen and Bass. In the last election, small business owners swung away from the coalition but are a long way from being committed Labor voters so Rudd's proposed changes to the PSI tax measures and commitments in other key policy areas will be critical in securing the support of swinging SME voters (AFR, 10.3.2010).

Connect Newsletter – February/March 2010

Cautious optimism for professional and technical recruitment; Partnership 2010 scholarship; Board of Taxation's report on Post-Implementation Review of the Alienation of PSI Rules; Manpower report details strategies for engaging contingent workers; APESMA lobbies for contractor entitlements to form part of GEERS program; Case law update; In the news: Australia and International; Fair Work User Guide; APESMA Insurance Services PI quotation service. Read this edition (PDF 376KB, members only).

FWA rejects Alcoa contractor clause

On 10th February 2010, FWA Deputy President Brendan McCarthy found that a clause requiring Aloca to pay a "supplementary shift rate" regardless of the hours worked inappropriately restricted the company's use of contractors.  » read more

FWA rejects Alcoa contractor clause

On 10th February 2010, FWA Deputy President Brendan McCarthy found that a clause requiring Aloca to pay a "supplementary shift rate" regardless of the hours worked inappropriately restricted the company's use of contractors. On the basis that the clause sought to regulate the way contractors performed work and that the prohibitive cost of paying the shift rate would be a barrier to engaging contractors, he found that the clause was not permitted content and refused the AWU's application for a protected action ballot. Read the decision in full on the Fair Work Australia website.  « hide

First phase of economic recovery impacting permanent and contractor hires

The AFR reports businesses nationwide are moving temporary staff into permanent positions, while Pengana Capital portfolio manager Ed Prendergast predicts increasing demand for contractors following a major drop in contracting revenue in the second half of 2009 largely due to general exposure to mining, oil and gas (AFR, 22/1/2010)

Business response to union consultation on contractors and labour hire

Business groups are voicing concern at possible increase in project costs as a result of the protections afforded contractors and labour hire workers by the Fair Work Act» read more

Business response to union consultation on contractors and labour hire

Business groups are voicing concern at possible increase in project costs as a result of the protections afforded contractors and labour hire workers by the Fair Work Act. Recent decisions have allowed unions to be consulted on issues such as the number of contractors to be used, their qualifications and for how long they would be engaged, and for contractors to be engaged under pay and conditions no less favourable than staff employed directly (AFR, 25/1/2010)  « hide

Henry tax review submitted to Government

The Government has formally received the Henry tax review. Treasurer Wayne Swan has indicated that the Government will release the report and an initial response to the report's content in early 2010.

Modest increase in Government's use of IT contractors after cutbacks

Intermedium research forecasts an increase in demand for IT contractors in the April 2010 quarter with IT projects to be undertaken by Centrelink, Medicare, Human Services and the Child Support Agency.  » read more

Modest increase in Government's use of IT contractors after cutbacks

Intermedium research forecasts an increase in demand for IT contractors in the April 2010 quarter with IT projects to be undertaken by Centrelink, Medicare, Human Services and the Child Support Agency. In looking at the Government's commitment to IT contractors in July – a leading indicator for hiring intentions in the year ahead – Intermedium reports an increase from $170 million to $198 million suggesting a steadying of the market after the fall in contractor hires from around 16 per cent to $539 million in the year to 30 June 2009 in response to the Gershon Review.  « hide

Federal Court upholds ATO's appeal on AAT's unusual circumstances PSI decision

The long-running PSI saga continues for Yalos Engineering whose PSB status is being assessed against the unrelated clients test.  » read more

Federal Court upholds ATO's appeal on AAT's unusual circumstances PSI decision

The long-running PSI saga continues for Yalos Engineering whose PSB status is being assessed against the unrelated clients test. The Federal Court has found that the AAT in its May 2009 decision erred by not considering whether or not the taxpayer would have satisifed the unrelated clients test but for the unusual circumstances, and whether or not the services provided by the taxpayer were a direct result of the taxpayer having made offers or invitations to the public at large or would have been but for unusual circumstances. The Court indicated that whether it was insufficient for the services to have been provided as a result of personal contacts or referral as submitted by the ATO was a matter to be considered by the AAT. When the final decision will assist taxpayers understand how the unusual circumstances provisions of the PSI rules are to be determined. Members should note that if relying on the unusual circumstances provisions in relation to the unrelated clients test, you should ensure that you can demonstrate that you (i) obtained work as a result of offers made to the public, or sections of the public at large, or would have but for unusual circumstances, and (ii) can demonstrate multiple clients in previous income years, and the likelihood of multiple clients in future years. The Yalos case has been referred back to the AAT for determination in line with this latest judgement.  « hide

Decision handed down in first FWA sham contracting prosecution

The Federal Magistrates Court has fined real estate firm Land Choice almost $30,000 for underpaying an employee in the first sham prosecuting case launched by the Fair Work Ombudsman (reported in the Connect September/October 2009 newsletter – PDF 529KB).  » read more

Decision handed down in first FWA sham contracting prosecution

The Federal Magistrates Court has fined real estate firm Land Choice almost $30,000 for underpaying an employee in the first sham prosecuting case launched by the Fair Work Ombudsman (reported in the Connect September/October 2009 newsletter – PDF 529KB). Federal Magistrate Shenagh Barnes found that Land Choice had treated the salesperson recklessly by appointing her as a contractor rather than an employee and that the breaches represented "a significant failure to provide basic and important wage and condition entitlements". The need for an employer to have been reckless in order to have a penalty imposed against them is a requirement of section 357(2)(b) which Magistrate Frank Turner found was not the case in the Nubrick prosecution potentially leaving open a gaping loophole for employers. Fair Work Ombudsman Executive Director Michael Campbell welcomed the outcome saying "ignorance of the law is no excuse for employers underpaying entitlements" and that it is the responsibility of all employers, large and small, to understand their lawful obligations to their staff.  « hide

Board of Taxation releases Report on PSI

The Board of Taxation has released its report on the Post-Implementation Review of the Alienation of Personal Services Income Rules. The report found that the PSI rules in their current form "do not provide adequate levels of integrity and equity" and evidence of low levels of compliance.  » read more

Australia Post contractor underpaid $63,450

The Industrial Court of NSW has ordered Australia Post to pay $72,450 plus $9,100 in superannuation payments to contractor Gregory Cartaar after finding the contract under which he was engaged was unfair.  » read more

Australia Post contractor underpaid $63,450

The Industrial Court of NSW has ordered Australia Post to pay $72,450 plus $9,100 in superannuation payments to contractor Gregory Cartaar after finding the contract under which he was engaged was unfair. The Industrial Court of NSW has ordered Australia Post to pay $72,450 plus $9,100 in superannuation payments to contractor Gregory Cartaar after finding the contract under which he was engaged was unfair. Justice Kavanagh found that had Mr. Cartaar been engaged as an employee, he would have earned $130,240 over three years rather than the $66,790 he was paid. The implications of Justice Kavanagh's finding may be far-reaching with all Australia Post’s parcels delivered by contractors, and Australia Post seeking to contract out additional functions. The judgement is significant for the union who has been pursuing terms in their enterprise agreement to ensure that contractors were engaged under terms no less favourable overall than those covering employees doing the same work within Australia Post.  « hide

ATO highlights increase in bogus contracting arrangements

In a recent address to the Tax Institute of Australia, ATO Second Commissioner Bruce Quigley spelled out the ATO’s approach to compliance in cases where businesses adopt the practice of engaging contractors under disguised employment arrangements as a way of remaining viable in the current difficult economic climate.  » read more

ATO highlights increase in bogus contracting arrangements

In a recent address to the Tax Institute of Australia, ATO Second Commissioner Bruce Quigley spelled out the ATO’s approach to compliance in cases where businesses adopt the practice of engaging contractors under disguised employment arrangements as a way of remaining viable in the current difficult economic climate. Quigley said that the ATO would target businesses which failed to withhold appropriate tax and make superannuation guarantee contributions on behalf of workers who should be treated as an employees for the purposes of tax and superannuation; he also stated that the response would not be enforced retrospectively.

Addressing non-compliance in this way, alongside negotiating legitimate assistance arrangements with those businesses trying to do the right thing, was, he said, the best way to ensure a level playing field in the current challenging economic environment.

To read the address in full, visit the ATO website« hide

Australia Post decision confirms clauses restricting or qualifying the use of contractors not considered matters pertaining to employment

A Full Bench of Fair Work Australia has found that the CEPU was not genuinely trying to reach agreement with Australia Post on the grounds that was pursuing restrictions on the use of contract labour in their proposed agreement.  » read more

Australia Post decision confirms clauses restricting or qualifying the use of contractors not considered matters pertaining to employment

A Full Bench of Fair Work Australia has found that the CEPU was not genuinely trying to reach agreement with Australia Post on the grounds that was pursuing restrictions on the use of contract labour in their proposed agreement. The Full Bench cancelled a proposed national strike ballot of Australia Post employees on the basis that the union had sought to restrict Australia Post's right to use independent contractors including requiring the company to contract out a position only if it could not be filled by an Australia Post employee. Fair Work Australia found that restricting or qualifying the employer's right to use independent contractors were not matters pertaining to the employment relationship (view the decision).  « hide

Latest sham contracting decision

The Federal Magistrates Court has ruled against the CFMEU in the latest case testing the sham contracting provisions of the Fair Work Act.  » read more

Latest sham contracting decision

The Federal Magistrates Court has ruled against the CFMEU in the latest case testing the sham contracting provisions of the Fair Work Act. Magistrate Frank Turner found that the manager at Nubrik did not know that the contracts were employment contracts in spite of conceding that he had considered their entitlements to superannuation and other conditions. Secretary of the CFMEU's Brik, Tile and Pottery Division Steve Roach said it was hard to believe that Nubrik was unable to tell the difference between an employee and contractor. The CFMEU is considering an appeal. The Centennial and Land Choice applications – the two other sham contracting matters being currently tested (prosecutions launched by the Fair Work Ombudsman) have not yet been decided.  « hide

Superannuation Guarantee - AAT determines employee/contractor status of Roy Morgan interviewers

AAT Case [2009] AATA 702, Re Roy Morgan Research Pty Ltd and FCT (Ref No: 2008/4387, Forgie DP) 11 September 2009.

In the latest of a series of decisions on the status of Roy Morgan interviewers, the AAT has upheld the superannuation guarantee default assessments issued by DP Forgie and her decision to disallow Roy Morgan's objection to find that the interviewers were employees for the purposes of the SGAA. December 2009 update: Roy Morgan is appealing the AAT's decision.  » read more

Superannuation Guarantee - AAT determines employee/contractor status of Roy Morgan interviewers

AAT Case [2009] AATA 702, Re Roy Morgan Research Pty Ltd and FCT (Ref No: 2008/4387, Forgie DP) 11 September 2009.

In the latest of a series of decisions on the status of Roy Morgan interviewers, the AAT has upheld the superannuation guarantee default assessments issued by DP Forgie and her decision to disallow Roy Morgan's objection to find that the interviewers were employees for the purposes of the SGAA. December 2009 update: Roy Morgan is appealing the AAT's decision.

The AAT found that the interviewers were employees rather than contractors in spite of the fact that:

  • Roy Morgan did not guarantee work and interviewees did not guarantee availability;
  • Roy Morgan claimed they didn't exercise control over how the interviewers performed their task;
  • only paid interviewers when they made a claim for each assignment;
  • did not deduct tax on a PAYE basis; and
  • offered no sick or annual leave.

By referring to the established authorities including Hollis v Vabu (2001), the AAT referred to a range of indicia around control and integration in the business. They found that Roy Morgan interviewees controlled the way the interviewers administered the questionnaire and required them to wear Roy Morgan ID cards, while interviewees had no control over the content of the questionnaire, and were not permitted to delegate the task of interviewing. The AAT held that the interviewers were integral to the Roy Morgan business and were not engaged in business on their own account.  « hide

Research shows contracting professionals are largely satisfied with their careers

Research undertaken by Monash University's Social and Economic Interface Research Network in conjunction with Entity Solutions has found that contracting professionals are largely satisfied with their careers and with the work they do, and would prefer to remain contracting than become employees.  » read more

Research shows contracting professionals are largely satisfied with their careers

Research undertaken by Monash University's Social and Economic Interface Research Network in conjunction with Entity Solutions has found that contracting professionals are largely satisfied with their careers and with the work they do, and would prefer to remain contracting than become employees.

Reflecting the changes in the market as the GFC extends into the real economy, contractors did however report increased competition for roles over the last 12 months, and pressure to undertake work outside the specific areas for which they were engaged. A significant proportion indicated that finding better work would be difficult in the current climate, and some were being forced to work through an agency to locate clients.

Only one in four contractors reported a cut in rates over the previous year but a more disturbing 46 per cent reported having to be "more flexible in their earnings expectations". One in five contractors were considering leaving contracting arrangements – a fairly small proportion but possibly attributable to the lack of permanent employment options currently available.

Request a copy of the full report from the Entity Solutions website.  « hide

Restraint of trade judgement for sub-contractor

The NSW Supreme Court has ordered that a contractor be forced to observe the restraint of trade terms of his sub-contract where he set up his business in the same area and in direct competition with a company which engaged him first as an employee and then a sub-contractor.  » read more

Restraint of trade judgement for sub-contractor

The NSW Supreme Court has ordered that a contractor be forced to observe the restraint of trade terms of his sub-contract where he set up his business in the same area and in direct competition with a company which engaged him first as an employee and then a sub-contractor. The defendant, Sitthichai Laksanabencharong was engaged as a sub-contractor to deliver Fairfax publications but also submitted tenders for the delivery of parcels for Australia Post in the same district. Fairfax argued that Mr. Laksanabencharong had breached the terms of his contract by tendering for the delivery of parcels in the same district in which Fairfax was the incumbent operator. Justice Slattery found in favour of and allowed the enforcement of a restraint clause preventing the driver from operating in the district for a period of three months. Read the judgment on the Lawlink NSW website« hide

Fair Work Principles and new procurement policy to apply to Government suppliers

On 31 July, the Government announced that all contractors to the Commonwealth would be required to comply with a set of Fair Work Principles. The Principles apply in all industries including manufacturing, IT companies and transport.  » read more

Fair Work Principles and new procurement policy to apply to Government suppliers

On 31 July, the Government announced that all contractors to the Commonwealth would be required to comply with a set of Fair Work Principles. The Principles apply in all industries including manufacturing, IT companies and transport.

The Rudd Government will require all suppliers when submitting tenders to provide information about how they comply with the Fair Work Principles. Under the Principles:

  • Contractors will be required to comply with industrial, OHS and workers' compensation laws;
  • A breach of any industrial, OHS or workers' compensation law will be deemed to be a breach of the supplier's contract with the Australian Government;
  • Contractors will be required to provide undertakings that they have not been subject to any adverse judgments for a breach of industrial, OHS or workers' compensation laws during the past two years (not including decisions under appeal);
  • Contractors will need to provide information about how they promote fair, cooperate and productive workplaces including providing information about their commitment to supporting apprenticeships, education and training (where appropriate);
  • As far as practicable, contractors must apply the above requirements to sub-contractors.

The Fair Work Principles are available at the Ministers' Media Centre website« hide

Sydney real estate company accused of sham contracting

The Fair Work Ombudsman has launched a prosecution against a Sydney real estate company and its director, alleging a property salesperson was underpaid more than $20,000 as a result of sham contracting. The Fair Work Ombudsman is prosecuting Land Choice Pty Ltd – which traded as Kingsford First National Real Estate – and the company's sole director, Sugiharto Sugiharto [correct], of Maroubra.  » read more

Sydney real estate company accused of sham contracting

The Fair Work Ombudsman has launched a prosecution against a Sydney real estate company and its director, alleging a property salesperson was underpaid more than $20,000 as a result of sham contracting. The Fair Work Ombudsman is prosecuting Land Choice Pty Ltd – which traded as Kingsford First National Real Estate – and the company’s sole director, Sugiharto Sugiharto [correct], of Maroubra.

Documents lodged in the Federal Magistrates Court in Sydney allege the salesperson signed an agreement with Land Choice titled “Independent Contractor Agreement” under which she was to receive only commission payments.

It is alleged the woman then worked an average of 40 hours a week from March to September 2007, but Land Choice paid her a total of only $1,414.

The Fair Work Ombudsman claims the salesperson was wrongly classified as an independent contractor. It says the woman should have classified as a full-time employee and been paid wages and various entitlements totalling about $22,000.

Court papers allege Land Choice should have paid the salesperson at least $14.38 an hour plus annual leave entitlements, locomotion allowance and payment in lieu of notice on termination of her employment. The Fair Work Ombudsman will also tell the Court that Land Choice failed to maintain proper employment records.

Executive Director Michael Campbell says the decision to prosecute was made because of the seriousness of the alleged breaches of workplace law and the failure to rectify the alleged underpayment.

Source: Fair Work Ombudsman media release, 22 July 2009  « hide

  » Visit the Latest News archive

WHAT'S NEW

Getting non-paying clients to pay

Client Bankruptcy

Invoicing

Disbursement Guidelines

Appearing as an expert witness

Charging for travelling time

Escalation clauses

Do you need an ABN?

Limiting your liability as a contractor

Contracting and consulting ethically and fairly

Labour hire: how does it work?

Problems with consulting for recent graduates

Employee or Contractor for Super Guarantee?

= Members only document


WORTH READING

AWARD

Mentors Online program
wins Award

APESMA Connect's Mentors Online Program has won the Best Mentoring Program category in the
2008 Top 20 Asia Pacific LearnX
e-Learning and Training Awards
.


CONNECT MEMBER
– Rachel Westcott

Dr. Rachel Westcott is owner/operator of Homecare Vet to Pet. She has been an APESMA member since 1999 and has been nominated for an Australian MicroBusiness Award in 2002 and for a Telstra Business Women's Award in 2004. Read Rachel Westcott's Business Profile.

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