APESMA provides comment on draft ACCC determination giving freelancers right to bargain collectively

Freelance journalists will be able to collectively bargain with publishers Fairfax Media Limited, ACP Magazines Ltd, News Limited and Pacific Magazines through the MEAA, under a draft ruling by the ACCC. If the Determination is approved, it eliminates the risk of prosecution under the competition provisions of the Trade Practices Act 1974. Connect has supported the Draft Determination on the basis that collective bargaining in this area will provide individuals the opportunity to negotiate away from the standard provisions thereby bringing about fairer contract terms, a major issue for APESMA members, in particular information technology professionals who are often offered standard contracts for service on a take-it-or-leave-it basis. View a copy of the letter.  « hide

Sherry reaffirms his commitment to fair taxation for small business and self-employed

Following concerns expressed by stakeholders including Independent Contractors Australia and the United Retailers Federation (URF), Assistant Treasurer Nick Sherry has appealed for the debate about contractor tax laws to be conducted on sensible terms, rejecting assertions that he is conducting a war on the self employed or that he is anti-business. "What I would most like the reform options to do", he said "is to provide greater certainty for the vast majority of genuine contractors, make it easier for them to comply with the law, cut back red tape to allow their businesses to keep on growing strong, and crack down on the illegitimate groups at the margins." Whilst National Executive Director of the URF accused Sherry of "wreak(ing) havoc on the business community following his absolutely insane decision to blindly accept a series of destructive recommendations from the Board of Taxation", Sherry says that he is "not wedded to any of the particular reform options set out in the independent report" but is committed to dialogue and "back(ing) business to the hilt" as the "engine room of our economy". (AFR, 6.4.2010)  « hide

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

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

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. 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). 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

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. 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. 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. 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.

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.

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. 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.

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.

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