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ICA Statement on 'Making it Work': The report of the Parliamentary Inquiry into independent contracting and labour hire arrangements

On Wednesday 17 August 2005, the Federal Parliamentary Inquiry into independent contracting and labour hire released its report. The report is over 200 pages long and contains 17 recommendations. Click here for the full report.

Summary:
The report itself is a summary of the wide range of views on independent contracting and labour hire put to the lower house parliamentary committee. It is written in such a way that, on any given topic, readers will find paragraphs with which they strongly agree and other paragraphs with which they strongly disagree.

It is split, however, into a majority report and a dissenting minority report, based on party political lines. The ALP committee members support the minority report.

The important items in the document are the 16 recommendations. All of the committee support nine of the recommendations. The minority report rejects seven recommendations and proposes some alternative recommendations.

The nine majority recommendations call for:
  • Statistical data collection on independent contracting and labour hire. (Recommendation 1)
  • Development of a best practice guide for labour hire. (Recommendation 5)
  • Improvements in work safety processes and practices related to independent contracting and labour hire. (Recommendations 6,7,8,9)
  • Creating of consistency in workers' compensations schemes. (Recommendation 10)
  • The creation of a voluntary code of practice for the labour hire industry. (Recommendation 11)
  • Development of a series of business education resources for independent contractors. (Recommendation 12)

The seven recommendations supported by the government members but not supported by the ALP committee members call for:
  • Maintaining a common-law approach for distinguishing independent contractors from employees. (Recommendation 2)
  • Adding a PSI component to common law for federal legislation. (Recommendation 3)
  • Creating national consistency with the States in identifying independent contractors. (Recommendation 4)
  • Broaden the description of independent contractor for the Workplace Relations Act to extend beyond a 'natural person'. (Recommendation 14)
  • Protections for independent contractors consistent with being a small business under commercial law, with access to small claims processes. (Recommendations 14,15)
  • Enabling the Federal Magistrates Court to provide dispute resolution for independent contractors. (Recommendation 16)

The minority report effectively rejects the common-law position as defining the difference between independent contractors and employees, and proposes an overriding statute definition which it details. [See alternative recommendation 2.]

Comment
It is refreshing to see cross-party political support for statistical data collection, work safety improvements, consistency in workers' compensation regimes and development of educational resources. Workers' compensation consistency is urgently needed. ICA had made considerable comment on work safety laws. (See our submissions to the Victorian OHS Review and the NSW OHS Review.) The creation of a voluntary code of practice is probably consistent with the operation of most labour hire businesses, who already comply with codes established in the industry.

The majority report's position seeking to secure common law as the defining difference between independent contractors and employees is strongly endorsed by Independent Contractors of Australia. This is, and must remain, the bedrock of independent contracting.

Incorporating aspects of PSI into the foreshadowed Independent Contractors Act has the potential to resolve many practical, operational issues in some industry sectors.

Ensuring that independent contractors are treated as small businesses and afforded all the protections available under commercial law---including effective and cheap contract dispute-resolution procedures---has long been a position at the core of ICA's lobbying efforts.

The effective rejection of common law in the minority report is perplexing. The suggested statute definition is an incoherent shambles that would create massive commercial confusion and effectively dump known and stable commercial legal systems and relationships. The suggested statute definition amounts to no more than a legal banning of independent contracting and labour hire, and replicates the attempts to outlaw independent contracting made by State governments over the last decade or more. In addition, it effectively rejects the latest International Labour Organisation acceptance of, and support for, the legitimacy of independent contracting. ICA strongly opposes the minority report.