Anomalies in IR changes: employees on $100k+, contractors

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Anomalies in IR changes: employees on $100k+, contractors

Employees earning over $100,000 per year and not covered by an award are being treated as if their salary alone is enough to guarantee fair treatment at work.

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Employees earning over $100,000 per year and not covered by an award are being treated as if their salary alone is enough to guarantee fair treatment at work. This is not a correct assumption; nor are shortcomings of the federal independent contractors legislation being addressed by the Forward with Fairness proposals, according to a presenter at a major industrial relations conference held recently in Sydney.

Employees on $100k+

The conference was the 16th Annual Labour Law Conference, held by the Workplace Research Centre on 15 August 2008. Ms Joellen Riley, Professor of Law at the University of New South Wales, said that there appeared to be an assumption that anyone earning more than the $100,000 threshold had automatically received a good deal and/or was a good negotiator.

However, cases from the 'unfair contracts' jurisdiction in New South Wales (which the federal legislation was intended to override) had provided a variety of examples of how high income earners could be badly treated by employers. Further, the imposition of a threshold could imply that issues such as reasonable working hours were tradeable for higher salary.

Riley contrasted the actions of the previous Federal Government in introducing WorkChoices with its earlier introduction of legislation to protect franchisees. She recommended the development of a duty of good faith and fair dealing in employment. This would include a duty to act reasonably and honestly and to investigate complaints by an employee diligently, and would consider the interests of both parties. But she added that this would not be a complete answer, because common law cases are so costly to conduct.

Problems with Independent Contractors Act

Although overshadowed by the controversy about WorkChoices, the Independent Contractors Act 2006, also introduced by the previous Government, has its own shortcomings, according to Riley. One of the Act’s aims was to override the 'unfair contract' provisions in states such as New South Wales and Queensland.

However, it appears that the current Federal Government intends to retain the Independent Contractors Act, which suggests there is little likelihood of the state jurisdictions making a comeback in this area. Nor does it appear that the federal definitions of 'employee' or 'contractor' will be updated.

Riley claimed that the following problems exist with the current Act:

  • It is not clear whether the state jurisdictions really are redundant. In some cases, workers have tried to claim that they were covered by a state, not the federal, system:  Rossmick No 1 Pty Ltd v Bank of Queensland Limited [2008] FCA 482 (8 April 2008)

  • Coverage issues. The scope of an 'independent contractor' is not entirely clear, for example in relation to some form of outsourcing arrangements - se also Rossmick case.

  • Duplication issues. It is not clear whether the Act overrides or overlaps with state commercial laws such as Fair Trading Acts. It is often hard to distinguish between work and commercial matters in relation to issues such as restraint of trade.

So far, few cases relating to the Independent Contractors Act have been decided in court, but some decisions are imminent.

Meanwhile, the Federal Government has introduced a Bill to amend the Trade Practices Act 1974 (Trade Practices Legislation amendment Bill 2008, sch 3, item 12) to, among other things, remove the $10 million threshold on contracts covered by s51AC

Challenges for the new legislation

Riley’s presentation covered developments affecting individual agreements and work arrangements in general. She described the current situation as 'a tangled web of ill-defined principles and complex rules'

As employees’ day-to-day lives were affected by this, there was an urgent need for a simpler approach. She added that some of the issues above indicated that people have more rights as consumers than they do as employees. 

In conclusion, she said that any new provisions need to achieve the following:

  • establish fair procedures for individual work arrangements

  • allow for the review of those arrangements on the grounds of substantive fairness - procedural fairness alone is not sufficient

  • provide accessible dispute resolution options for individual grievances, eg so that cases cannot drag on for years

  • ensure that the 'mutual trust' contractual term can be expressed as a set of behaviours that employers must carry out

Further information Further information about the conference is available from the Workplace Research Centre.
 

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