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During 2007 ICA had extensive liaison with the ALP on its independent contractor policies. We published ALP statements to us and our commentary. Below is a consolidation of the key ALP statements and our comments. We are assured by the ALP that these statements are the firm policies that it took to the November 24 election and we assume they will be the polices implemented during this term of its government.
134 Labor supports reward for effort, risk-taking and entrepreneurship.
ICA strongly supports this.
135 Labor supports the choice of Australians to pursue a career as independent contractors and small business operators. Australia's independent contractors and small businesses are vital contributors to national prosperity and job creation.
ICA strongly supports this.
136 Labor recognises, as recognised by the ILO, that genuine independent contractors are governed by commercial law, while employees are governed by employment law.
ICA sees this as a significant and welcome breakthrough for Australian independent contractors. Finally, the reality of the legal framework in which independent contractors work is recognized as a policy principle by the ALP. ICA is keen to see this policy principle fully reflected in the specifics of ALP policy and that it is not subverted or reversed in the policy detail.
137 Labor opposes sham contractor arrangements, where employees are re-classified as contractors by employers to avoid obligations such as superannuation guarantee payments, workers' compensation coverage and the payment of annual leave and sick leave entitlements. Labor will ensure that, as far as practicable, ambiguity and uncertainty regarding the nature of the contractual relationship is minimised.
ICA strongly supports this.
138 Labor supports the principles behind the alienation of personal services income regime and will apply these principles with consistency and transparency.
ICA strongly supports this.
139 Labor recognises that TCF workers and owner-drivers are among the most vulnerable groups of workers and accordingly commits itself to the maintenance and enhancement of existing protections for these workers.
ICA strongly rejects this. On ICA's investigations and experiences, many of the existing alleged 'protections' for TCF workers and owner-drivers in fact disadvantage TCF workers and owner-drivers. TCF workers and owner-drivers, like all independent contractors, are vulnerable to bad commercial practices and bad laws.
- TCF: Because of the nature of the clothing contract manufacturing chain, the processes imposed by Federal and State laws deliver price control to unions. These processes have escalated the cost of contract transactions and depressed the price paid to TCF workers. Further, the complexity of the processes has encouraged the closure of the local industryÑdirectly costing the jobs of some of the most vulnerable NESB, women in our community.
- Owner-drivers: The NSW owner-driver laws facilitate massive intimidation of owner-drivers by unions. The NSW laws directly dictate prices paid under commercial contracts, thereby suppressing the pay to NSW owner-drivers. The Victorian owner-driver laws are largely beneficial to owner-drivers because they impose processes for ensuring integrity in commercial contracts. ICA supports these aspects of the Victorian laws. Regrettably, the Victorian laws also allow for processes that impose price controls under commercial contracts for owner-drivers. In the long term, this will suppress owner-drivers' remuneration.
ICA supports law that strengthens the integrity of commercial transactions and the operation of free markets. Any form of price-fixing, however disguised by sham language, distorts commercial transactions and free markets, and disadvantages independent contractors.
142 Labor supports competition in the business sector. Where market failure creates anti-competitive conditions Labor will legislate to promote competition. In particular, Labor will legislate effective protections against monopolistic pricing, collusive behaviour, abuse of market power, predatory pricing and unconscionable conduct. Labor recognises that collective bargaining can benefit the public by allowing small businesses and independent contractors to address imbalances in bargaining power with larger businesses. Labor believes small businesses and independent contractors should have choice as to who represents them in collective bargaining.
ICA supports this with the proviso that the way in which 'choice' is allowed under law does not force independent contractors into a collective arrangement or compel them to use a union or any other prescribed body as a bargaining agent.
147 Labor recognises the imperative of small businesses and independent contractors to have access to low-cost, timely and informal dispute resolution procedures in respect of their employment and commercial disputes and will ensure that such avenues are available. Dispute resolution procedures will be able to deal with claims of unfair contracts.
ICA strongly supports this and encourages the ALP to move strongly in the direction of developing and promoting small claims-type processes for independent contractors as already exist in some States.
1. Question: The ALP supports the principles behind the alienation of personal services income legislation. Does this mean that the ALP supports the existing personal services income tax legislation or are changes proposed? If changes are proposed, what would these involve?
ALP reply: No changes are proposed.
ICA Comment: The response is positive. The reforms to alienation of personal services income tax have taken some time to settle down, but ICA believes that they appear to be working well. A strong degree of clarity in the laws has emerged (Link to ICA tax explanation) and further changes are not warranted.
2. Question: The ALP supports the ability of small business and independent contractors to bargain collectively and to have choice about who represents them in collective bargaining. Does this mean that choice in representation will not be restricted in any way, including preference towards unions or any specified associations?
ALP reply: No preference will apply. Independent contractors will have free choice.
ICA comment: This is positive which ICA supports.
3. Question: The ALP supports collective bargaining for small business under the Trade Practices Act. Would the ALP extend this to force or require independent contractors to use unions if and when they choose to bargain collectively?
ALP reply: No.
ICA comment: This is positive which ICA supports.
4. Question: Can the ALP confirm that unions will not be able to interfere in the negotiation of commercial contracts for independent contractors unless with specific and individual authorization from each individual contractor?
ALP reply: Yes.
ICA comment: This is positive which ICA supports.
5. Question: ALP policy recognizes that independent contractors are governed by commercial law. However, ALP policy also appears to hold that the industrial relations system should be extended beyond a narrow definition of employee to include those in employment-type relationships. These policy statements could potentially be in conflict. The traditional identification of transactions subject to commercial law are those transactions occurring under a commercial contract as found under common law. Can the ALP guarantee that the definition of a commercial contract (and hence an independent contractor) will be that as defined under common law?
ALP reply: The common law definition has been used by the current Independent Contractors Act and there are no plans to change it.
ICA comment: This is positive. ICA strongly supports this. See the extended comments above.
6. Question: The Independent Contractors Act overrides State industrial relations and employee-type legislation that treats independent contractors as if they were employees for industrial relations purposes. Will the ALP retain this aspect of the Independent Contractors Act and extend it to cover all independent contractors?
ALP reply: Owner-drivers and TCF contractors are the only exemptions. This will be our policy.
ICA comment: ICA objects to the exclusion of owner-drivers and TCF contractors from the protections of the Independent Contractors Act. We disagree with both the Government and the ALP on this issue. (Link to ICA comment 14 May 07) But it is positive that the ALP is guaranteeing that further exclusions will not occur.
7. Question: Will the ALP outlaw clauses in industrial instruments that prohibit, restrict or control the use of independent contractors?
ALP reply: Labor does not and will not have a policy of closed shops. Labor supports the rights of working Australians to join or not join a union.
ICA comment: The answer relates to freedom of association and the right to work in relation to union membership, and to this extent it is positive. However, ICA has continuing concerns about whether or not industrial instruments (awards, enterprise agreements, etc.) can contain clauses which impose restrictions on the numbers of independent contractors allowed to work and/or clauses which control the pay rates to independent contractors. This has been a traditional process by which unions have used 'backdoor' forms of discrimination against independent contractors exercising their right to freely go about their legitimate business. The situation has in the past been particularly oppressive in the construction industry. The workplace reforms introduced by the Government put a stop to this discrimination. ICA strongly supports the reforms.
8. Question: Will the ALP outlaw and prevent unions imposing service or other fees on independent contractors?
ALP reply: No imposition of fees will be allowed.
ICA comment: This is highly positive which ICA supports.
ICA requested feedback from the ALP on the following two specific threshold issues: The ALP has provided a one page response attached at the end of this commentary.
Issue 1:
ICA asked: Would independent contractors continue to be protected from secondary boycotts under existing provisions 45 (d) and (e) of the Trade Practices Act?
ALP answer (summary): "...secondary boycott laws will remain in their current form in the Trade Practices Act." (See full statement below)
ICA comment: The ALP has a provided clear and straight forward answer to this question. The ALP has committed itself to continuing this core protection for independent contractors. ICA welcomes and strongly supports this position. It supports the historical shift towards positive recognition and acceptance of independent contractors. It secures legislative teeth to protection of independent contractors from discrimination under secondary boycotts.
Issue 2:
ICA asked: Will clauses in industrial instruments (legislation, awards, agreements) that seek to control, restrict or impose conditions on independent contractors be outlawed by the ALP?
ALP answer: See below "Freedom of contractors"
ICA comment: The answer supplied on this issue lacks the total clarity of other answers supplied and is subject to interpretation to understand it's meaning. It has the potential for taking on additional meanings. ICA therefore is not satisfied that the response enables us to fully understand the ALP's policy position regarding this key point.
Dispute resolution
In addition, the ALP has made a further commitment on an issue on which we have long campaigned. That is the problem of the excessive cost of contract dispute resolution for independent contractors.
They ALP has stated that it will develop lower cost dispute resolution procedures for unfair contract disputes under the Independent Contractors Act. Further, it has committed itself to the promotion and the greater use of low-cost contract dispute resolution procedures that are available within State and Territory legislation. We expect that this means encouraging access to and use of the small claims processes available to independent contractors under the States' fair trading Acts.
This is also a welcome development. It is an issue that ICA believes is very important, and one upon which we have campaigned for a long time. If commercial contracts are to have integrity, then quick, cheap resolution to simple disputes is essential. Where legal resolution can be achieved quickly and cheaply, parties tend to have fewer disputes and confidence in commercial activity grows. This is an important development for independent contractors.
Secondary boycotts
As announced in our Forward With Fairness Policy Implementation Plan, the secondary boycott laws will remain in their current form in the Trade Practices Act.
Role of contractors
Labor understands the growing importance of contractors to the Australian economy.
Labor's policy is that independent contractors are small businesses that should be regulated by commercial law and not industrial law.
Labor believes that the use of contractors should be supported and facilitated, and that contractors should be given fair opportunity to access work.
Freedom of contractors
Labor recognises that employers, particular small business employers, need an industrial relations regime that does not permit inappropriate interference from third parties.
Under Labor, employers and employees will be free to bargain the terms of workplace agreements about matters which suit them.
However, the terms of an agreement must be lawful and cannot breach discrimination laws, OHS laws or Labor's principles to guarantee freedom of association.
This means clauses which involve matters such as union preferences or union bargaining fees cannot be included in an agreement, nor can agreements prescribe that contractors be engaged or not engaged on the basis of their industrial arrangements.
Labor agrees that unions should not be permitted to interfere in commercial arrangements. Under Labor, there will be no closed shops and no return to a 'no ticket no start' culture.
Under Labor, unions will not be able to interfere in the negotiation of commercial contracts for independent contractors unless with specific and individual authorisation from each individual contractor.
Low-cost dispute resolution for contractors
Labor will develop low-cost dispute resolution procedures for contractors who are experiencing an unfair contract as defined in the Independent Contractors Act. At present, a contractor can only bring a claim in the Federal Magistrates Court. This can cost a contractor at least $5,000 for legal advice and representation for a one-day hearing.
Labor will also be working with state and territory governments to ensure that the dispute resolutions forums for which they are responsible are promoted and easier to access by contractors.
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