Charter of Contractual Fairness
On 1 July we launched our Charter of Contractual Fairness

We have heavily drawn the principles of contract fairness from the new consumer unfair contract protections laws. If it's fair for consumers, it's fair for small business people - the self-employed and independent contractors.

We are currently writing to Australian corporations asking them to commit to contract fairness in their dealings with small business people.
Election Face-off 2010
The federal election was held on on 21 August 2010. ICA was active in assessing the policies of the ALP and the Coalition. Here's our comparative summary of the parties' policies just before the election.
Tax burden: UK versus Australia
Just as the UK is moving toward more sensible small business (contractor) tax laws, in Australia we're having to defend the progress we've made.
Laughing lawyers
You'll be amazed by the 'slips' that some lawyers make in court.
Failure to fix unfair business contracts
ICA says "extend unfair contract protections for consumers to small business".

New laws:
Legislation #1 (March 2010)
Legislation #2 (June 2010)

Here's our summary of the situation.
How the legislation defines unfair contract terms.
Why small business people should have TPA protections from unfair contracts.
Industry/Retail super funds must come out
The Cooper Review into superannuation says the big funds are not disclosing enough and must be forced to do so. This is vital. See Chapter 4.

Here's why workers' money is at risk if disclosure is not enforced.
Look after your retirement
The Cooper Review of superannuation says Self Managed Super Funds are good and need little change to existing arrangements. This is welcome. See Chapter 8.

The Report also seems to have stopped the attack against SMSF's.
Stand Up for Your (Contract) Rights!
We're monitoring contracts in general and promoting good contracts in particular. For example:
Another bad contract (Jun 2010)
One of the worst contracts we've seen (Jan 2010)
'Tom' versus DEEWR (Nov 2009)
But a positive development from government
Ken Phillips comments
And some interesting discussions
Problems with Phoenix companies
Two ICA members' tell their stories
ATO information on reporting suspect activity.

Govt's attempts to do something:
ICA comment

Newspaper comment:
The Australian
The Age/Sydney Morning Herald
Business Spectator

What 'Tom' thinks
What 'Jim' thinks
Stop Sham Contracts!
ICA supports the prevention of sham contracts. We monitor what's happening with them:
One person's story
Successful FWO prosecution (Dec 2009)
Info from Fair Work Ombudsman (July 2009)
First sham contract prosecution: ICA summary
Make a complaint to FWO
Business Spectator article
Read the debate
Watching Global Economies
Watching the USA
The US economy appears to be in recession. At the very least, we're getting very mixed signals about what's happening. Click here for a rundown on some of the best links we've found.
Watching China
China has just passed Japan as the world's second largest economy. It could become the largest global economy by 2030. We're maintaining a watching brief on the Chinese economy here.
Watching Goldman Sachs
Rolling Stone magazine has blown the lid on Goldman Sachs:
Article 1 [July 2009]
Article 2 [April 2010]
Article 3 [May 2010]
Central Banks on Debt
Since mid-May, central banks have been worried about sovereign debt. Click here for a list of useful links and summaries.
What the Pessimists said (January 2010)
We've brought together some pessimistic views about economics and likely economic trends in 2010:
US toxic loans
'US as sick as Greece'
Ken Phillips's summary
An 'IMF' perspective
Predicting 2010
Government debt a giant ponzi scheme?


Click to enlarge.

Ken Phillips on the debt equation

Understanding "Us": Self-employed People
ICA is committed to quality research to understand self-employed people.

6 July 2010: We released a unique research report made possible by an unusual collaborative effort. The report shatters many preconceived beliefs about 'us'; small and micro-business people. We believe it has global implications.

Main points and commentary
Summary
Full report.

20 July 2010: Here's further research from Flying Solo:
Report Summary; Full report and from Kelly Services: Report. And here's a comparative chart of our own.

Australian military aircraft (JSF). Bad deal?
Australia's decision to buy the Joint Strike Fighter (JSF) as the backbone of our air defence is under attack. Is this a bad procurement and contract management stuff-up? We've summarised the arguments and included some useful videos.

We Oppose Workplace Bullying
ICA opposes attempts by construction unions to bully their way on to work sites. Here are the issues from 2010:
Overview
Union violence on Westgate
Unions make threats

The Mr Contractor Case
Letter 1: The Company


1 June 2010
Dear Mr X,

We write to raise with you an issue relating to the way one of our members has been treated by your company in his engagement with a government department.

We refer to Mr Contractor and his current dispute with your company. Mr Contractor is a member of Independent Contractors Australia, but we do not represent or act for him in his dispute with your company. Our interest is to see if we can encourage a resolution to his concerns through commercial processes rather than legal ones. We have also written to the head of the government department alerting him to the case. Mr Contractor is aware of our efforts and of this letter.

In the simplest summary, our understanding of the situation is as follows:
  • Mr Contractor is an experienced information technology specialist. He works through his company Contractor Pty Ltd.
  • Mr Contractor was approached in March 2010 by your company to undertake some work for the government department that was to last for 3 months.
  • Mr Contractor had not worked through your company before. Your company did not supply Mr Contractor with a copy of a contract before the work began.
  • Mr Contractor started the work on [date]. Given that there was no contract sent to him and to ensure clarity, on [date] Mr Contractor supplied your company with his standard terms and conditions of contract under which he was prepared to do the work.
  • On [date], your company sent Mr Contractor your company's standard form contract.
  • Mr Contractor was not happy with aspects of your company contract and sought to negotiate changes to the terms before he would sign the contract. The changes sought were to reflect the terms and conditions of Mr Contractor's own contract as supplied to your company. Your company informed Mr Contractor that your company's contract was non-negotiable.
  • Because Mr Contractor would not sign your company's contract without the changes he required, your company terminated Mr Contractor's work with the government department on the (date) 2010. Mr Contractor disputes the validity of the contract termination.
Chief amongst a number of your company contract terms with which we understand Mr Contractor was not happy, was the ability of the contract to be terminated at any time by your company with, it would seem, little reason and entirely at the discretion of your company.

From Mr Contractor's perspective, we believe it could be argued that the legal situation is as follows:

    [some perspectives included, but deleted for the public document]

If this perspective were to be accepted by a court, it seems to us that Mr Contractor has a reasonable action to claim payment by your company for the balance of the contracted work. Of course, there may be other circumstances that may change the facts and it would be for a court to decide the nature of a contract in play and whether any monies were owed as a consequence of Mr Contractor's contract being terminated.

Independent Contractors Australia is a not-for-profit lobby and advocacy group dedicated to improving the commercial circumstances in which Australia's 2.1 million self-employed people are able to conduct their business activities. We run many campaigns on many issues at www.contractworld.com.au. Of greatest importance is our campaigning related to good contract regulation and practice which we refer to as 'integrity of contract' and which generically relates to the idea of 'fairness'.

In our view, for example, when a contract stipulates a period for the term of work, that period (say 3 months) is fixed and forms a core part of the offer and acceptance terms. We accept that if one party fails to perform, is negligent, or so on, it is reasonable for the other party to terminate the contract. The capacity to terminate should be stipulated in the contract but should not be at the sole discretion of one party. That is unreasonable. A contract that is fair, or that has 'integrity', will stipulate an internal dispute-resolution process with a view to rectifying the problem, with ultimate recourse to an external arbitrator to determine if termination is consistent with the contract terms.

The commercial reality from an independent contractor's perspective is that in accepting work that specifies a particular period or a specified result, the contractor will often have to reject other work that may be available. The nature of the project may require a full dedication of available work hours to complete the work in the period required. If the work is then unilaterally terminated before the period is up or result is completed, the independent contractor loses money.

We raise this, in particular, because we have frequent complaints brought to us by information technology self-employed contractors who are repeatedly confronted by standard form contracts of the type that enable unilateral termination by the engager.

Many of these contracts, we believe, would probably fall foul of legislative protections that exist for fair contracts for self-employed people, namely:
  • Unfair contract provisions of the Independent Contractors Act: The contract element we have mentioned above would likely give rise to arguments that the contract was 'unfair'. The Independent Contractors Act was passed in 2006 and two cases have been heard under its unfair contracts provisions since then, with both resulting in decisions in favour of the applicants.
  • Unfair contracts action under the Trade Practices Act: There appear to be a number of possible mechanisms in the TPA which enable consideration of unfair contract terms and which could possibly be applied.
In writing to you, we have several motivations unrelated to any possible legal action potentially available to, or contemplated by, Mr Contractor. As stated earlier, we do not act for, or represent, Mr Contractor and he will take whatever action he sees as appropriate. However:
  • We would be pleased if you could consider appropriate resolution of Mr Contractor's concerns. He tells us that he has suffered loss of income as a result of this situation.
  • There are concerns over Mr Contractor's reputation in the industry. The IT contracting industry is relatively small and reputation is everything. The practice in the sector seems to be based on an expectation that IT contractors will accept the 'take it or leave it' standard form contracts and that anyone who does not is a 'trouble maker'. It would be unfortunate if Mr Contractor were in this situation as a result of his involvement with your company. We don't know if he is or is not. But all that Mr Contractor did was to do what any sensible and prudent business person should do---that is, assert their reasonable rights under contract.
  • One of ICA's key motivations is to help bring about improvements in commercial custom and practice where businesses engage self-employed people. We would be most pleased if your company were to review the contracts it uses in the light of the principles of contract 'fairness', but specifically the general requirements under the Independent Contractors Act and Trade Practices Act. Chief amongst these, from our viewpoint, would be:
    1. The practical ability of contractors to seek reasonable changes to contract terms expeditiously and without undue influence.
    2. Where a contract stipulates a period or result to be completed/achieved, the contract cannot be unilaterally terminated by one party.
    3. Dispute-resolution processes be included in all contracts.
    4. Parties agree to ultimate dispute resolution by an agreed, external independent third party.
We would be pleased if you could initiate action with Mr Contractor to settle the matter commercially without resort to legal action.

We would be further pleased to discuss with you the principles of fairness embodied in the contracts you may use in your business when you engage self-employed people.

We look forward to your earliest response if this is feasible.

Regards

Ken Phillips
Executive Director
Independent Contractors Australia


Click here for the associated letter to the government department.

Here's an overview of the situation.