Uncertainty grows for independent contractors

Labor’s commitment to retaining key safeguards for independent contractors has been cast into doubt following comments by Workplace Relations Minister Julia Gillard.

Independent contractors believe they could be excluded from workplaces if clauses can be included in union or non-union collective agreements requiring businesses not to use contracting arrangements.

Before the election, Gillard attracted praise from independent contractor groups when she said that collective agreements should not be able to be used to interfere in commercial arrangements involving contractors.

But more recently Gillard, who is currently consulting widely on Labor’s second tranche of IR laws, has not clearly ruled out the possibility that such clauses could be allowed in collective agreements.

Ken Phillips, chief executive of Independent Contractors Australia, says it is vital for independent contractors that their commercial arrangements with businesses cannot be affected by separate industrial relations arrangements.

“For independent contractors the key litmus test is that they are regulated through commercial law, not employment law, and anything that crosses that boundary we would absolutely oppose,” he says.

However, Phillips says he is not concerned by Gillard’s failure to definitively rule independent contractors outside of the scope of collective agreements.

“We have had very strong commitments from Labor in writing in terms of their policy on this. We took those at face value and I don’t believe there is anything to cause us to believe they are changing their position,” Phillips says.

Independent contractors effectively operate as their own business rather than as an employee of a business.

Adrienne Unkovich, managing director of workplace consultancy Workforce Guardian, says independent contractors are often particularly important to small businesses.

“In small business you can’t be good at everything, and independent contractors provide business owners with access to a set of skills that they can’t afford or don’t need on permanent basis,” Unkovich says.

The uncertainty over independent contractors comes as treasury documents obtained by The Australian raise questions over the costs associated with Labor’s planned extension of unfair dismissal laws to small business.

The document, prepared by Treasury in April last year before the full details of Labor’s policy was known, says the unfair dismissal change is likely to see “employment decline and red-tape increase”.