Independent contracting and labour hire discussion paper
The then Minister for Employment and Workplace Relations, the Hon Kevin Andrews MP, released a departmental discussion paper entitled:
'Proposals for Legislative Reforms in Independent Contracting and Labour Hire Arrangements' (PDF 252kB)'
Written submissions on the issues and proposals raised in this paper closed on 11 May 2005.
Purpose and scope of the discussion paper
The Government’s 2004 election policies included creating a new Independent Contractors Act to enshrine and protect the status of independent contractors and encourage independent contracting as a wholly legitimate form of work.
These policies reflect the Government’s position that independent contractors should not be regulated by workplace relations law, but by commercial law. This is consistent with the true nature of independent contracting arrangements as commercial contractual arrangements, not employment arrangements.
The Government supports a workplace relations framework that maximises choices for workers and businesses and minimises regulatory constraints and interference by third parties. It also supports the harmonisation of workplace relations laws nationally.
The Government's policy has been to respect the conscious choice of people to be independent contractors. For some time there have been calls for changes to the current arrangements. The "one size fits all" approach which has dominated in the workplace relations arena is no longer appropriate to modern conditions where people increasingly seek flexibility in their working arrangements. The Government believes we need a system which recognises and validates the choices people make to be either employees or independent contractors.
The Government recognises that there may be people who are attracted to some aspects of independent contracting (particularly the freedom to contract about one's own terms and conditions without being restricted by workplace relations regulation) but who would prefer to be employees. This has led some to suggest there should be a third choice of working arrangement: being an employee, but being free to contract without current restrictions imposed by legislation and industrial instruments. While the Government considers that this concept is worthy of further consideration, this proposed third category is beyond the scope of the paper.
The discussion paper canvasses some options for legislative reform to prevent unreasonable workplace regulation of independent contractors, including the removal of constraints and barriers on the freedom to contract and the freedom to engage workers through labour hire arrangements. It is intended to provide a basis for consultation on possible reforms in this area.
The paper will also address labour hire employment arrangements as well as labour hire contracting arrangements. Current laws place constraints on the engagement of labour hire employees, an issue closely related to barriers faced by independent contractors.
The main areas of reform the paper addresses are:
- reviewing definitional issues regarding ‘independent contractor’, ‘employer’ and ‘employee’;
- preventing federal awards and agreements from containing clauses which restrict the use of independent contractors or labour hire workers, or which seek to put conditions on their engagement (for example, prescribing they have the same conditions as employees);
- protecting independent contracting arrangements (including ‘Odco’ arrangements) as commercial arrangements, not employment arrangements, under the law;
- addressing inappropriate State and Territory legislation which ‘deems’ independent contractors to be employees for the purpose of workplace relations regulation, including by overriding that legislation where appropriate;
- ensuring that ‘sham’ arrangements are not legitimised; and
- preventing State and Territory legislation from impacting negatively on labour hire and contracting arrangements.