John Murphy (Lowe, Australian Labor Party, Parliamentary Secretary to the Leader of the Opposition) Share this | Hansard source

The High Court’s indicia of employment test includes such factors as whether the worker supplies and maintains tools and equipment, whether the worker receives paid holidays or sick leave and whether the worker is integrated into the hirer’s organisation. It is important to note that the court has not seen any particular indicia as determinative of a particular relationship. It should not take a legal expert to see that a contract can be fashioned in such a manner that legally deems a worker to be an independent contractor when, for all intents and purposes, they are properly seen as employees.

Nonetheless, should it take a legal mind to convince the government that the current common-law rules are too broad and inexact and cause an injustice to many so-called independent contractors, there are many out there whose advice the government should heed. Creighton and Stewart in the 4th edition of Labour Law have argued that:

... with a modicum of care and ingenuity it remains possible for businesses to obtain work from individuals who are virtually indistinguishable from employees, in terms of their close connection to the organisation and subordination to its managers and supervisors, yet whom the common law does not characterise as ‘employees’. This can in most instances be achieved simply through a well-drafted contract that is designed to look as much like a client’ contractor agreement as possible.

That is outrageous, but it does not end there. The New South Wales government’s submission to the Senate Employment, Workplace Relations and Education Legislation Committee quotes labour law professor Andrew Stewart as suggesting:

... any competent employment lawyer can take almost any form of employment relationship and reconstruct it as something that the common law would treat as a relationship between principal and contractor….thereby avoiding the effect of a wide range of regulation which is typically applicable only to employees, such as industrial awards, registered agreements, leave and superannuation legislation ...

I disagree with Professor Stewart on one point here. It would not take a competent employment lawyer to construct such a contract. Such is the flexibility and broadness of the common-law rules that even an incompetent one would do. I could quote this sort of legal advice for hours, but what I have quoted will suffice. This advice is damning stuff, but it has been wilfully ignored by the Howard government during its blind pursuit of ideological ends.

Non-standard work arrangements, including the use of independent contractors, should not flourish when their mere purpose is to avoid employment rights and responsibilities. Industrial relations legislation and policy should recognise that many independent contractors are only so in name, not in substance. Many are disguised employees who do not carry on their own businesses and are not their own bosses, but are working in a dependent way for another firm. Calling these people independent contractors should not make them so if, in reality, they are in a form of disguised employment. They ought not be deprived of their entitlements, including leave and superannuation, on the basis of a fictitious construct, particularly when many of these workers are likely to be from a vulnerable demographic group, such as the unskilled or the young.

It is for this very reason that state governments have chosen to protect many so-called independent contractors from exploitation by introducing legislation that deems them to be employees. If it is good enough for unscrupulous employers to deem employees as independent contractors through the underhand use of contract law, it is good enough for state governments to deem independent contractors as employees through legislation.

These state deeming provisions redress the unequal bargaining power of certain categories of workers which may compromise their ability to negotiate fair working conditions. They ensure the likes of milk vendors, cleaners, blind fitters, bread vendors and painters are properly granted employee related entitlements. These state deeming provisions are also entirely consistent with international shifts to ensure employee protections are not lost through disguised employment.

Yet, in a monumental act of betrayal that sells out many ordinary Australian workers, the primary outcome of this bill is to override these deeming laws to appease critics that purportedly represent just 200 independent contractors and those that represent the big end of town. Clearly, it is necessary to remind government members of the International Labour Organisation’s conclusions in its ‘Resolution concerning the employment relationship’:

Disguised employment occurs when the employer treats a person who is an employee as other than an employee so as to hide his or her true legal status ... The effect of such practices can be to deny labour protection to the worker and to avoid costs ... There is evidence that it is more common in certain areas of economic activity but governments, employers and workers should take active steps to guard against such practices anywhere they occur.

This is just what the state governments have done through their deeming provisions, yet the Howard government has the temerity to override them in this bill under the guise of protecting independent contractors. If the Howard government is really concerned that genuine contractors can be deemed employees, it ought to also be concerned that genuine employees are being fashioned as independent contractors.

Let us be clear about this bill. This bill is not about enshrining the status of independent contracting as a wholly legitimate form of work. It offers no guidance, let alone a solution, as to who a genuine contractor or employee is. Given the ambiguity surrounding this legal definition, this bill is not about protecting independent contractors. It removes the mechanisms in place which ensure many so-called independent contractors have access to the protections they are due.

The minister may contend that anti-sham arrangement provisions in the consequential bill will adequately protect workers who no longer have the protections of state deeming provisions. It would no doubt disappoint the minister that these anti-sham provisions are themselves a sham—sham by name and sham by nature. The explanatory material accompanying this bill states:

A sham arrangement is an arrangement through which an employer seeks to cloak a work relationship to falsely appear as an independent contracting arrangement ...

However, the anti-sham provisions still draw upon the flawed common-law definition of an independent contractor.

As we have seen, there will be many occasions where workers are dependent on one source for income but still unwittingly find themselves under the law as independent contractors. These arrangements, though not reflecting the reality of the working arrangements between the parties, would not be considered a sham. They would only be a sham if the worker can establish that the contracting arrangement was really an employment arrangement and that the intended employer knew, or ought to have known, this. We know how easy it is to construct a contractual relationship out of what would appear to be an ordinary employment arrangement. It should surprise no-one if the most contrived contractual arrangement survives this test. Pity the poor worker when the odds are so stacked against him or her.

But that is not all. Even if by some legal miracle the worker passes the first hurdle, they then need to establish that the intended employer could reasonably have known that it was an employment arrangement. We have a common-law indicia of employment test that operates on a case-by-case basis and produces arbitrary and unpredictable outcomes. Other than with the most profoundly illegitimate arrangements, how could any worker unequivocally assert that a contractee knew, or ought to have known, they were entering into an employment relationship? How can a worker argue this with conviction when they too are uncertain about the true legal nature of the employment arrangements?

I suspect most workers would not have the time, money or capacity to bring this sort of litigation to a courtroom. I suspect the minister knows this also and has deliberately—not in error—left this deficiency in the bill. Let there be no doubt that the anti-sham provisions afford little by way of protection to dependent contractors or disguised employees.

There are many other objectionable parts of this bill, including the limitations of the new unfair contracts jurisdiction and the deceitful watering down of protections to outworkers and owner-drivers. Time does not allow me to go into these in detail. I will only comment that their continued existence in this bill is explicit confirmation by the Howard government that some workers and contractors require our protection. It is a disgrace that the government has chosen to destroy the fair and balanced protections previously provided by state legislation.

Before I conclude, I would like to make a comment about the feigned justifications that mask the real reasons for this bill’s existence. We hear that state laws, including deeming laws, create a barrier to the use of independent contractors in Australia. Yet we have not seen any haemorrhaging in the use of independent contractors in Australia as a result of the protections afforded by state governments to many unwitting independent contractors. We hear that contracting relationships are being dragged into the sphere of employment law by state deeming provisions, distorting the choice and intentions of the parties to a contract. That there have been so many cases taken to tribunals and courts by workers hardly bodes well for the minister’s claim that contractors wish to remain free of so-called ‘limits, constraints or barriers on the freedom to contract, the freedom to operate as a genuine independent contractor’. If this were true, we would not see shower repairers, forklift drivers and many other ordinary workers taking their cases to court.

When will the government accept that there is a proliferation of one-sided, unread and unbargained contracts in the workplace which often provide the catalyst for such legal action? When will it accept that the assumption that all contracts are entered into by choice or that all independent contractors have consciously chosen their work arrangement has ceased to be a commonplace reality?

We know that for many workers the notion of independence is an illusion. We know that on many occasions the choice and freedom in their working arrangements have been not for them but for the benefit of those who hire and fire. It is not a choice when a worker is shown a range of contracts on a take it or leave it basis and is forced to choose the least obnoxious of them. The minister speaks of respecting the freedom to contract. Is the minister suggesting that a worker choosing between two highly undesirable alternatives chooses freely? I certainly would not.

With the Howard government’s Work Choices legislation and now the Independent Contractors Bill, that is what is being suggested, and the result is this: many workers are now being left to fend on their own without state based protections, without access to unfair contract provisions and without access to employee deeming provisions. Shamefully, those who are most likely to be affected by this bill are those who are least able to stand up for themselves. Yet again this government is seeking to appease the big end of town by tearing down protections for the workers who need them most.

While we are used to the Howard government attacking workers’ rights, it is unconscionable that it would do so with no substantive reasons in mind. The government has not made out its case for overriding state independent contractor laws. As I mentioned earlier, besides ideology which is fundamentally flawed this bill has nothing to recommend it. I cannot find any justification for the government’s refusal to allow the states to guard against what Professor Stewart has termed the ‘antisocial outcomes that can be expected from an unregulated labour market’. These antisocial outcomes include low wages when families are already finding it hard to make ends meet and excessively long working hours when families are already finding it hard to spend enough time together.

The Howard government must put aside its infatuation with a free market and govern for all Australians. Given the Howard government’s unjustified antipathy towards the union movement, it would not surprise me if it has ignored their well-founded calls for restraint with this bill. It also would not surprise me if this arrogant government ignores the call of the churches to protect workers. Reverend Harry Herbert from UnitingCare has stated that the bill ‘deprives many low-paid workers of adequate protection against exploitation’. For this and many other reasons, I oppose the bill and urge every member of this House to vote against this unfair legislation.

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