Independent contractors Bill a 'double whammy' for professionals, says union

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Independent contractors Bill a 'double whammy' for professionals, says union

The professional association representing engineers, scientists and managers has attacked the Federal Government's new independent contractors legislation, saying it could be detrimental to both contractors and employees in the long term.

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The professional association representing engineers, scientists and managers has attacked the Federal Government's new independent contractors legislation, saying it could be detrimental to both contractors and employees in the long term.

The Association of Professional Engineers, Scientists and Managers Australia (APESMA), which represents the interests of 25,000 professionals including more than 3,500 contractors, labelled the legislation a 'double whammy' to many professionals.

APESMA Acting CEO, Geoff Fary said while the Association sees the use of contactors to disperse specialised professional skills and expertise, and to cover workflow peaks, said the legislation will mean 'further uncertainty, ambiguity, and greater reliance on litigation to resolve contractor status'.

'For professionals whose expertise is required for a specialised long-term project and who gain multiple or ongoing contracts with a single client, they can be penalised under existing legislation,' Fary said. 'They may be denied legitimate business deductions when the ATO enforces the Alienation of Personal Services Income (PSI) legislation.

No protection

'This Bill offers no protection for APESMA's members for two reasons.

'On the one hand, by moving across to contractor arrangements professionals may lose employment entitlements and on the other hand, the ATO in narrowly interpreting the Federal Government's PSI legislation, denies them the ability to claim legitimate deductions for the business expenses they incur.

'Secondly, this Bill may encourage unscrupulous employers to avoid responsibility for paying superannuation, workers compensation, annual leave and other basic entitlements by pushing employees onto sham contracts, and as a consequence, drive down the pay and conditions of employee professionals.'

Unscrupulous employers

Fary said unscrupulous employers will be able to undermine job security and working conditions by using contractors to meet work demands rather than hiring employees on a permanent basis.

'Time will tell whether the Office of Workplace Services has the independence, resources and powers to effectively investigate and act on sham arrangements and whether the penalties it applies will be adequate,' he said.

Employers back new laws

Meanwhile both the Australian Chamber of Commerce and Industry (ACCI) and the Australian Industry Group (AiG) have backed the legislation.

Peter Hendy, ACCI Chief Executive, said industry strongly supports the principles underpinning the Bill.

'Independent contractors are small businesspeople,' Hendy said. 'They are not employees. Industrial relations laws apply to employees. Contract law applies to contractors.'

Hendy said the new Bill is especially needed to prevent industrial tribunals from 'deeming' an independent contractor to be an employee.

Possible amendments needed

However he said the detail of the Bill will be examined by employer organisations in the coming weeks and it is likely that amendments will need to be made, such as:

  • laws against sham independent contract arrangements must make sure that genuine
    contractors remain certain of their status;
  • new offences should only be created where there is a demonstrated need;
  • laws about unfair contracts should not impose regulation in areas where contract law and trade practices law already operate;
  • retaining NSW and Victorian state industrial regulation of contract owner drivers is not
    consistent with the objectives of the Bill as a whole and is not supported. It is a matter that the proposed Commonwealth review in 2007 should clearly recommend against; and
  • business/contractor relationships should not be subject to the same union rights of entry
    and inspection that apply to employer/employee relations.

Heather Ridout, Chief Executive of Australian Industry Group, said the Bill enhances protection for genuine independent contracting arrangements and deserves the support of all political parties.

'Many people prefer to work as independent contractors because it suits their lifestyle, income and other preferences, and because it gives them the ability to establish and build their own businesses,' she said.

More questions than answers, says Labor

Opposition Industrial Relations spokesman Stephen Smith said that he will scrutinise the detail on the Bill, but an initial analysis 'raises more questions than it provides answers'

'The Government has provided no clear cut information on how many workers it anticipates this legislation will effect,' he said. 'The threats to owner drivers are clearly not resolved by this Bill, and the provisions to prevent sham contract arrangements do not appear to effectively protect employees from unscrupulous employers.

'In relation to unfair contracts it is difficult to ascertain how it is "more accessible" for workers to run their matters to the Federal Magistrates Court rather than the Industrial Relations Commission as in NSW and Queensland.'

The Bill has been referred to the Employment, Workplace Relations and Education Legislation Committee for inquiry and report by 25 August 2006

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