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Integrity of Contract Campaign:
Was "Tom" Screwed?

In July 2009 we announced the first phase of our Integrity of Contract campaign.

Basically, integrity of contract means that when an independent contractor (a self-employed person) enters a commercial contract, he or she can have certainty that the contract and the behaviours accompanying the contract conform to the common law principles of contract. This is the best way of ensuring 'fairness' under contract.

In early September, however, we were contacted by an ICA member (we've identified him only as "Tom") who is unhappy with the treatment he has received from a federal government department under a commercial contract. We have looked closely at the case and, given the information we have seen, the member's problem appears to be a perfect example of breach of contract integrity on behalf of the department. ICA Executive Director Ken Phillips followed this up with an article in the Business Spectator.

[What do you think of "Tom's" case? Please read the original posting and if you would like to contribute to this discussion, please e-mail your thoughts to us at: integrity@contractworld.com.au.]

On 5 October 2009, an ICA member wrote:
    One of the fundamental principles of a democratic state is that all citizens are equal in the eyes of the law. By contrast to a totalitarian regime where there are different rules for different people. George Orwell once famously wrote in his novel "Animal Farm": "all animals are equal but some are more equal than others" as a parody of corrupt political systems. His message in that novel is also that we should look to the true intent of the people in our society that hold themselves out as leaders. What are they really saying and what are they really doing?

    The current government has introduced the Fair Work Act this year. In a clear expression of worker solidarity they have implemented a system that purports to protect all workers. Moreover, in a dramatic expression of egalitarianism they have also included independent contractors in the legislation. But have they really?

    Many independent contractors work under an ABN. They must operate this way if they are to comply with the taxation system and be able to function effectively. Try providing your services to a business and ask them to deduct tax on your behalf. Some organisations will but many wont as they do not want the relationship to be construed as that of employer-employee. So many contractors operate under their own ABN. However, if you do then you have no rights as an independent contractor under the Fair Work Act. This is not presumption, it is fact. Ring Fair Work Australia and ask them. So there are rights for some independent contractors but no rights for others. Sound familiar?

    It seems odd that a government with clear socialist leanings would expose itself in this way. They have implemented legislation in a democratic nation that has clear signs of totalitarian intent. They will act for some of the people but not all of the people. Isn't the role of a democratically elected government to represent every citizen?

    It is an interesting corollary between the current government and Orwell's Animal Farm: "When the animals take over the farm, they think it is the start of a better life. Their dream is of a world where all animals are equal and all property is shared. But soon the pigs take control and one of them, Napoleon, becomes the leader of all the animals. One by one the principles of the revolution are abandoned, until the animals have even less freedom than before.

On 17 September August 2009, Neville wrote:
    I read the case of "Tom". It seems to me that the dept concerned were looking for an employee on the cheap---ie having someone to perform duties but not pay the ongoing costs of an employee. In the case of someone with knowledge of the computer industry, their own costs such as research and pi insurance alone are considerable.

On 21 September August 2009, ICA Executive Director Ken Phillips responded:
    Agreed Neville. It seems its common for departments to underestimate the real costs of their own direct employees. When they compare to contractor costs, they are not doing a real apples-to-apples comparison. Regards. Ken P.

On 17 September 2009, Amanda commented:
    My thoughts on the article about "Tom" are that he should never have started the work if he wasn't satisfied a written contract had been properly agreed to by all parties. DEEWR would probably have been less likely to breach it if they had actually dotted the i's and crossed the t's of the contract, so to speak. I feel sorry for Tom, but having a properly signed contract is probably the easier thing to advise contractors to do, rather than the prospect of "reform", which seems unlikely.

On 21 September 2009, ICA Executive Director Ken Phillips responded:
    One should always try to get a written contract in place first. But often in dealing with a large organisation they can't produce the contracts quickly enough and the line managers are wanting work done 'urgently'. It seems to us that Tom was acting in reasonable good faith and was trying to help out DEEWR. We've all done this on occasions and just hope we don't get caught out. Regards. Ken P.

[If you would like to contribute to the discussion, please e-mail your thoughts to us at: integrity@contractworld.com.au.]