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 2: The Department


1 June 2010
Dear Y,

We draw to draw to your attention, and seek your review of, a situation concerning the managerial practices of the government department in the way it engages self-employed people and whether those practices are by their nature unfair.

The specific situation concerns a self-employed IT specialist, Mr Contractor, who was engaged to undertake work for the government department through a contract management company.

Arguably, Mr Contractor has been subject to unfairness in the way he has been engaged and treated. He is in dispute with the contract management company, but it affects the government department. The specifics of Mr Contractor's situation raise broader issues of managerial fairness in the way the government department conducts its affairs with self-employed people. We seek your review of the government department's practices in this respect.

By way of background, Independent Contractors Australia www.contractworld.com.au is a not-for-profit advocacy and lobbying group dedicated to securing fair and equitable treatment for self-employed people in Australia. Our primary focus is public policy issues, but we also look at how commercial custom and practice affects self-employed people in practical ways. Our interest is the achievement of good contractual arrangements that work to the mutual benefit of all parties.

We do not act for or represent Mr Contractor. Mr Contractor is a member of ICA but that membership (which is $50 per year) does not extend to us providing professional advice or representation over an individual's contractual circumstances.

Looking at the IT sector across Australia in more general terms, it is common for IT contractor engagement to occur through third-party contract management companies. The end user does not have a contract with the supplier of the services (the self-employed person) but with the contract management company. This is a legitimate and mostly efficient commercial arrangement. However, we (that is, ICA) receive regular complaints from IT self-employed people who say that the contracts that they are required to sign are inherently unfair. The contract management companies say that the contracts that they have reflect the terms forced on them by the end user.

When receiving complaints from self-employed people, it is rare for them to be prepared to commit to paper, as they fear reputational damage and being frozen out of work opportunities. In the case of Mr Contractor, he has been prepared to stand up for his contractual rights---which is why we write to you.

In summary, we think this is Mr Contractor's position:
  • The government department has a contract with the contract management company (we presume) for the supply of IT specialists from time to time.
  • The contract management company engages the IT specialists who do the work for the government department.
  • In this instance Mr Contractor sought to engage with the contract management company under his standard conditions of service in the absence of any other contract being provided.
  • The contract management company sought to impose a contract on Mr Contractor after he began work for the government department, some of the terms of which Mr Contractor was not prepared to accept.
  • Primary amongst the terms, we understand, was a clause that allowed the contract management company to terminate the contract at its sole discretion, even though the contract was for a fixed term. It is this clause, amongst others, that raises our concerns about unfairness.
  • Mr Contractor was dismissed by the contract management company after he began work for the government department because, fundamentally, he would not accept the terms of the contract which he considered to be unfair.
  • Mr Contractor is now in dispute with the contract management company.
We appreciate that in the strict legal sense the government department is not party to the dispute between the contract management company and Mr Contractor. There is presumably no contract between the government department and Mr Contractor, for example. However, from a practical and managerial perspective, Mr Contractor was doing work for the government department. It was the fact of this work that caused Mr Contractor to be engaged, and from which the question of unfairness arises.

Mr Contractor is in an odd situation. He is, like all self-employed people, the supplier of services/products but he is also in a consumer-like position. He is the weaker party presented with a take-it-or-leave-it, standard form contract. That contract has arguably inherently unfair terms in it---for example, the capacity of the corporate buyer to terminate the contract immediately and often without cause, even where the contract is for a fixed term/result. He has no practical capacity to negotiate the contract or to enforce any rights under the contract because the contract terms give him no rights.

If this were judged to be unfair, (for example, in a court) the government department is indirectly and probably inadvertently a party to the arguable unfairness.

In considering what is 'fair' for self-employed people, we draw in part from the principles established under the unfair contract provisions of the Independent Contractors Act. We see strong parallels with the ideas of fairness that apply under the franchising code. There are also strong, similar concepts of fairness under consumer law. Broadly, the principle is that the potentially weaker party in the transaction processes is entitled to measures of reasonable protection through the terms of the commercial contract.

The issue is one of ensuring reasonable balance in commercial relationships. Both parties should have responsibilities and liabilities towards each other. In relation to self-employed people, we do not seek special treatment or privilege for them but rather the right to secure reasonable terms in their contracts. This is the right we believe Mr Contractor was and is seeking.

In writing to you and raising Mr Contractor's situation we seek the following:
  • We would like to see a commercial resolution of Mr Contractor's situation without recourse to legal avenues. If it were appropriate for the government department to encourage a commercial settlement, we would be pleased for this to occur. But that is for the government department to judge what is appropriate.
  • We believe that the government department would be concerned should its managerial practices have indirect and inadvertent unfair outcomes. We would be pleased if the government department reviewed the way it engages self-employed people with a view to ensuring that fairness is operative in the contractual arrangements it employs. We would be particularly keen for the government department to ensure that the practices of those third parties its uses for engagement purposes (such as contract management companies) also comply with the fairness principles to which the government department subscribes.
  • There is a broader public policy issue of what constitutes contractual fairness for self-employed people. We believe that discussion of this is only in its infancy. We would be pleased if the government department were to place this as a key item for consideration in its ongoing policy development work and how this relates to good public policy design and outcomes.
As previously stated, our motivation is to see a successful resolution to Mr Contractor's situation, along with improvements in commercial custom and practice, together with good public policy design which may assist this.

We are available to assist where this might be constructive and would be happy to meet with the government department should this be thought desirable.

With thanks.

Regards

Ken Phillips
Executive Director
Independent Contractors Australia


Click here for the associated letter to the contract management company.

Here's an overview of the situation.