Self Employed Australia

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Independent contracting

In London on joint international self-employed defence campaign

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London-QueenI’ve been in London over the last week-and-a-bit. We (SEA) have a long association with several UK self-employed associations and have been working with them on common issues to defend self-employed people. Hence the London presence.

The two big issues are:

  • The UK tax authority’s (HMRC’s) unfair treatment of self-employed people. (Sound familiar to the ATO??)
  • Identifying whether an individual is an employee or self-employed and what ‘rights’ each has.

Reforming tax administration

After many months of planning we were lined up for meetings/presentations with UK MPs in Westminster. These meetings were to discuss how HMRC could be reformed along the lines that we’re campaigning on for reform of the ATO. That is, using the USA laws covering the IRS as a template. However, the passing of the Queen and her funeral have meant that all these meetings were cancelled. Once the Royal transition is complete and the UK Parliament starts operating again, we’ll be working with our partners to re-initiate the campaign.

Our aim is to see if we can get a common movement in UK and Australia for reform of the HMRC and ATO. The treatment of self-employed people by both administrations is terrible, and their intimidatory behaviours share similar features. With a joint campaign effort we may increase our chances of achieving fairness for self-employed people.

Self-employed status and ‘rights’

We did, however, go ahead with a planned workshop session on self-employed status and ‘rights’. Included in this workshop were like-minded friends from the USA. This issue is ‘hot’ in the UK and USA (think California outlawing self-employment). Even though the media were present, we’ve recorded the workshop and presentation and will also release this once the Royal transition is complete. This issue has great importance for the UK, the USA and Australia. In Australia the Albanese government is committed to ‘smashing’ the self-employed. And the Albanese government, we predict, is likely to replicate very confusing UK ‘little bit pregnant’ laws to achieve its aims.

We’ll have a lot more to say about this and to explain the issues over the coming weeks/months. But at this stage we’re putting together a UK/USA/Oz ‘team’ to focus on the common themes to defend the right of people to be self-employed. We’ve gotta be organised!

More soon.

Apparently we’re a ‘cancer’ according to the Albanese government

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cancer-aged-care-gigWorkplace Relations Minister Tony Burke recently called gig work a ‘cancer’. Give us a break! What a ridiculous overstatement.

Let’s get real. Only 0.19 per cent of workers earn their full-time income through gig platforms. Yes, 0.19 per cent! That’s it. But, on the back of this cancerous depiction of gig work, the Albanese government intends to clamp down on it.

People who do gig work are, by definition, self-employed. Attacking gig means attacking self-employed people. Burke’s comment is insulting to self-employed people.

But if we’re going to apply such politically emotive language to policy analysis, where’s the real ‘cancer’?

Take the aged care sector. This is one sector Minister Burke identified as having a (cancer) problem.

The 2020–21 Royal Commission into Aged Care exposed abusive treatment of people in aged care. It was and is a massive scandal. The Royal Commission recommended that self-employed people and gig work be banned from aged care.

However, the Royal Commission offered no evidence as to why self-employment/gig should be outlawed. Was it because self-employed people abused elderly people? The Commission was silent. The fact is, however, that 96 per cent of people working in aged care are direct employees of aged care providers. Surely this overwhelming percentage would suggest that the problem lies in employment, not with self-employment/gig.

Facts speak louder than assumptions.

Care workers in aged care are on rock-bottom low wages. This leads to high worker turnover and lower quality care. Low pay rates occur because the award minimum pay rates, in practice, are the maximum being paid.

But the evidence is that the 4 per cent of workers in aged care who are self-employed are routinely paid more than employees. This evidence, which is accepted as valid, comes from Mable the largest gig platform operating in aged care. The higher rates occur because the self-employed workers are free to negotiate their remuneration directly with the people they care for. This doesn’t happen with employees.

The Commonwealth funds aged care. But there’s evidence to suggest much of that money disappears into a black hole. Look at these facts.

Funding for the top level in-home care is around $114 per hour. Aged care ‘providers’ are overwhelmingly not-for-profit charities and manage the money. They pay their ‘employed’ award workers roughly $32 an hour (casual). Add workers’ compensation premiums and so on and the cost is $35 an hour. The providers routinely charge another 32 per cent ($36 an hour) for their services of assessing and monitoring need, and organising workers.

There’s a gap, therefore, of $43 an hour of unexplained and unaccounted Commonwealth funding. What’s going on?

This month, media leaks from a yet-to-be-released Health Department report state that 9-in-10 in-home care providers don’t meet minimum government price transparency requirements. Some 275,000 older Australians receiving government-funded home care can lose up to 60 per cent of their allocated money in provider fees.

This ‘disappearing’ money is being spent on “excluded items” such as holidays, TVs, renovations and more. Maybe a good portion of this expenditure is justified? But is this where $43 an hour goes?

What is obvious is that the front-line employees doing the care are paid rubbish. Surely within existing funding budgets there is ample room to pay workers more. There’s a lot of fat in the system. Self-employed gig workers individually can and do negotiate higher remuneration. This doesn’t happen with employees.

What really emerges is that it’s the employed 96 per cent of workers in aged care who are being exploited by the ‘employment’ system.

The ‘cancer’ in aged care looks much more like the result of employment management systems than the outcome of gig platforms. In fact, gig-organised self-employment could well be the answer to a sick aged care system.

The Albanese government should take off its ‘cancer’ blinkers. Gig and self-employment offer real solutions, not problems.

Unions and labour lawyers in panic. High Court disaster!

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contract-kingA major High Court decision in February this year has sent unions and labour lawyers into a panic. The High Court declared that when deciding whether a worker is an employee or self-employed that the written contract is king!

We’ve waited until we received detailed legal analysis of the decision before making comment, which we can now do. We’ll send out several news alerts on this. It’s extremely important.

In simple layperson’s terms the High Court has said that:

  • If a written contract is clear and comprehensive, a court must primarily rely on the written contract in coming to a decision.

This seemingly knocks out what’s been used for the last 40 years or more. Courts have applied the ‘multifactorial’ test, which is a basket of behavioural indicators only one of which is the written contract. The High Court has said that the lower courts have misunderstood the situation and that the High Court has always had the view that the written contract is supreme.

This has sent unions and labour lawyers into a spin. The multifactorial test has been great for lawyers and unions because they could retrospectively examine a case going back years. It is a great source of income for lawyers and has allowed unions to intimidate businesses and self-employed people.

But the High Court has said that it has a duty to create certainty, stating that the multifactorial test:

“… is apt to generate considerable uncertainty, both for parties and for the courts.”

And

“It is the task of the courts to promote certainty with respect to a relationship of such fundamental importance.”

We see this as extremely important. There are 2.1 million self-employed people in Australia. We have a right to clarity and certainty. The High Court has done the right thing by society in its drive for clarity.

But there are others who want uncertainty. This is bad. And the pressure is already coming on the Albanese government to pass legislation to create uncertainty. We will campaign strongly against this.

But first we want to ensure that there is clarity about what the 99-page High Court judgement says.

We’ve prepared the following links for SEA members:

We’ll have more information and comments soon.

Paying small business on time. Albo: Please keep the good bits of the ABCC!

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paying-on-timeThe most important, practical issue facing all small business people is getting paid on time. But when working for a large business, far too many of us self-employed ‘mugs’ discover that we’re being used as a cheap source of finance for our ‘clients’ through delayed payments.

Payment reporting

The Morrison government set up a ‘big business–pay small business on time’ reporting system. The Small Business Ombudsman’s latest analysis of payment times shows that ‘more than half of big businesses are missing their own deadlines for paying their small business suppliers’. This is damning of Australian big business. It’s a rort that’s being going on for decades.

Construction sector ‘pay on time’

But there is one brighter spot. In the construction sector, subbies are routinely screwed over by big builders paying invoices really late. However, the construction regulator, the ABCC, runs a system requiring builders to pay subbies on time. It’s very effective.

This is because the ABCC’s power enables a significant ‘closing of the stable door before the horse bolts’. The key is that the ABCC’s powers rely on commercial triggers, rather than complex legal or administrative processes.

That is, construction contractors risk losing access to Commonwealth government-funded contracts if they fail to pay their subcontractors on time. It works really well. The outcome is that big builders don’t dare pay subbies late. The commercial risk is too high.

However, the construction unions hate the ABCC because the ABCC takes militant unions to court for breaking the law. Now the Albanese government is to close the ABCC to keep the unions happy. Okay. Fair enough. We all understand the political play.

Please keep the good bits, Albo!

We’re asking the Albanese government to ‘please keep the good bits of the ABCC’. In other words, keep the processes in construction that ensure that small business subbies are paid on time. It’s really important.

Numerous attempts by governments to find regulatory fixes for late payments in the construction sector have a poor record. The ABCC’s model, on the other hand, has worked.

  • When payments are within agreed/required terms, better cash flow management operates throughout the sector.
  • Better financial discipline operates through the sector when builders do not/can not exploit subcontractors as forced financiers of their businesses.
  • When payment times are tight and major builders go broke, the loss exposure of subcontractors should be/is limited to the agreed/required terms of trade. That is, loss exposure should be limited to (say) 30 days of trading instead of (say) 90–120 days of trading.

Our interest is of course the construction subbies—that is, the self-employed people who actually work on the tools, physically doing the building—and the myriad of self-employed specialist construction consultants as well. But frankly, proper payment times are good for everyone.

Great news! Albanese ‘beefing up’ unfair contract laws

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albanese-unfair-contractGet ready for a profound disruption to some core big business operations in Australia. And this is great for small business people, consumers and (believe it or not) big business as well.

The Albanese government has committed to introducing new unfair contract legislation in the current parliamentary sitting period. Labor promised this in 2019—a pledge we totally endorsed. We again strongly endorse this move by Labor.

We campaigned for seven years for the unfair contract laws for small business and achieved these in 2016. But the laws have proven to be too weak.

Australia’s unfair contract laws are arguably the world’s first (and in global terms possibly the only) laws that have addressed the issue of bad standard form contracts in a holistic way. The laws were introduced for consumers in 2010 and extended to small businesses in 2016. Insurance products were included in 2021.

Why the laws

Some lawyers say unfair contract laws are wrong because they override the principle that a contract once entered into is set in concrete, even if it disadvantages one party. This is a perverted view of contract. The Australian unfair contract laws effectively codify in statute the elements under common law that make a commercial contract a proper contract.

As examples, unfair contract laws hold that if a standard form contract enables one party but not the other to unilaterally change the price of a contract, or cancel a contract or change its terms, then the contract is ‘unfair’.

Why the need to ‘beef up’

The Australian Consumer and Competition Commission has been responsible for enforcing the unfair contract laws. Since 2016, the ACCC, with then chair Rod Sims at the helm, has consistently expressed frustration at big business ignoring the laws.

Until now, unfair contract terms could only be ‘voided’. There were no penalties for their use. Unfair contracts could only be sanctioned after they had done harm. This enabled ‘let’s screw people over’ big businesses to laugh off the laws.

To his credit, Rod Sims led the charge for a ‘beefing up’ of the laws. A ‘beefed up’ Bill was presented to Parliament earlier this year. It is this Bill that the Albanese government has as a template for making unfair contracts ‘illegal’.

If Albanese implements the template Bill, unfair contracts will be illegal with civil penalties of up to $100,000 for individuals and $10 million for corporations. A court will be able to make an order if it thinks there might be a loss. In other words, harm can be prevented before it occurs. Other provisions give real bite to enforcement.

Further, the current $300,000 threshold for the size of a contract subject to the laws is being removed. The size of a small business is being lifted from 20 to 100 employees.

On any assessment this is a major economic reform. It will protect consumers. But just as importantly, small businesses will discover a new level of equality of power with big businesses as both buyers and sellers of goods and services. Australia’s 1.3 million self-employed sole traders will have protections from bullying clients that they have never had before.

It’s a huge step forward.

 

‘They’ plan to screw over 2.1 million Australians

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dark-menaceLet’s be clear. There’s a cabal of unions, labour academics and self-interested businesses that are gunning to destroy the right of Australians to be self-employed.

Their strategy is brilliant in its simplicity. They plan to push through new Federal legislation that will throw into chaos the law that defines who is self-employed and who is an employee. This will directly harm the capacity of Australia’s 2.1 million people who are self-employed—people who, by definition, are their own boss.

That’s right. The Australian Bureau of Statistics identifies 2.1 million of us comprising:

  • 1,391,900 self-employed (own boss) who don’t have employees and
  • 805,800 self-employed (own boss) who have employees.

The ‘cabal’ is mostly targeting the 1,391,900 self-employed who don’t have employees. Think hairdressers, owner-drivers, care workers, gardeners, personal trainers, and the massive numbers of IT, accounting (and more) consultants to identify just some. What the ‘cabal’ is calling for is legislation that will strip away your right to be your own boss. They want forced employment.  Such law will also have an impact on the other 805,800 self-employed.

The cabal wants legislation that invents ‘employee-like’ arrangements.

Understand what this would do. It would destroy the integrity of the commercial contract. It would give smart-arse lawyers the ability to carve out and deconstruct the very legal basis of commercial activity upon which our society is based and which defines who is self-employed. It’s a sneak guerrilla attack. But once in place it will have devastating effects.

Legislating to invent employee-like arrangements is to take social or psychological concepts and to fashion law on those concepts. It’s incredibly dangerous for our society. It’s something the High Court seemingly commented against in a ground-breaking judgment in February this year.

The High Court said (See par 44):

The employment relationship with which the common law is concerned must be a legal relationship. It is not a social or psychological concept like friendship.

That is, the employment contract, and its opposite, the self-employed contract are legal concepts. This comment by the High Court was within the context of the most important judgement on the definition of self-employment in 50+ years.

After more than 50 years of legal confusion the High Court said (See par 58):

It is the task of the courts to promote certainty with respect to a relationship [employee/self-employed] of such fundamental importance.…

and

The parties’ legitimate freedom to agree upon the rights and duties which constitute their relationship should not be misunderstood.

The fact is that people have a right to determine their contractual (self-employment) relationship themselves. Employee-like legislation would strip away that right. It would create massive uncertainty in defiance of the certainty the High Court says should exist.

Unfortunately, Labor’s federal ‘Secure Jobs Plan is to create ‘employee-like forms of work’ legislation.

Campaign to defend self-employed people: It’s going to be a battle

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self-employed-battleWith the election of the Albanese government, there’s been a frenzy of academic, union and Labor government commentary about how big changes are coming for self-employed people. There’s the:

  • Demonisation of the ‘gig’ economy, as if every gig worker works in some sort of oppressive Dickensian environment.
  • Pushing of ‘employee-like’ independent contractor concepts and of bringing such people into employment regulation.
  • Calls to change the definition of self-employment/independent contracting.
  • Renewed attack against owner-drivers.

Let’s be clear. The Albanese government has stated its intent to implement new, aggressive policies around each of these issues. Workplace Relations Minister Tony Bourke explained on ABC Radio the ‘big shift’ that’s to happen.

Frankly, we (SEA) have been around too long (since 2000) and we are too experienced to fall for the spin that this is to ‘protect’ self-employed workers. These types of agendas have been promoted by the broad Labor movement (unions, ALP, Labor academics) since the 1990s. The agenda is to squeeze the life blood out of people who are, and want to be, their own boss. We know the game.

But this time is different from the last three decades-or-so. With The Greens and at least one independent Senator, Labor has the numbers to push its agenda through parliament.

Their agenda is, of course, damn nonsense and will be cancerous to the livelihoods of Australia’s 2.1 million self-employed people. You won’t know the cancer is there until you start feeling the pain.

However, don’t expect something different from the Dutton opposition. After the Morrison government’s 2019 win, the Coalition demonstrated a brain deadness on small business issues.

  • Yes, it introduced some good ‘pay small business on time’ requirements but didn’t go far enough.

But,

  • It continued to allow the ATO to bully, harass and oppress small business people without any checks and balances.
  • It failed to implement the beefing up of unfair contract laws that were ‘ready to go’. Did it do a deal with the big end of town to put this off?

Now for some balance. While we’re warning about, and will campaign against, Labor’s destructive agenda for the self-employed, there’s some good news.

The upshot is that we have a battle on our hands. The are some positives in the Albanese government’s small business agenda, but also some shockers. We’ll be producing considerable commentary and analysis to explain the good and the bad over the coming months.

Is your superannuation money safe? Morrison v Albanese

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super-safeIt’s the final run to election day and it’s anyone’s guess as to the outcome!! We’ve put out several news alerts comparing Labor and Coalition policies. We’ve sought to highlight the policy facts affecting self-employed people. Here’s our final pre-election analysis.

Last Sunday Scott Morrison made a big pitch with a new housing policy. It’s a pitch to first-home buyers. Morrison announced that if he retains government, first-home buyers will be allowed to dip into their superannuation money to boost a deposit. His theme is ‘it’s your money!’

Our comment, however, is on a broader issue affecting everyone with money in the big superannuation funds, including self-employed people. This issue shows a stark difference between Labor and the Coalition.

Do superannuation funds present a risk?

Incredibly, up until now, super funds—particularly the union/employer association-controlled Industry funds—had few if any legal requirements to be public about how they manage your superannuation money.

Compare this to listed companies, particularly banks. Banks have strict disclosure requirements. Heavy penalties apply if the banks breach these laws. Disclosure means that government, the media, financial analysts and so on can keep a close eye on the banks, not just from a performance perspective but also in terms of the key question of whether deposits are safe.

Superannuation funds have effectively faced none of the disclosure requirements that apply to the banks. We know this because of a review into superannuation (The Cooper Review) conducted by the Labor government in 2009. The global audit company Morningstar said in its submission to the Review:

Australian superannuation scheme providers and fund managers currently have a mish-mash of approaches to holdings disclosure … Superannuation and managed funds disclosure in Australia is also poor when compared with the extensive mandatory disclosure requirements for listed securities …. Regular, comprehensive holdings disclosure would also provide greater opportunity for detection of undesirable behaviours…

Neither APRA nor ASIC appeared to undertake any form of direct auditing. APRA only reported what the super funds reported, saying it took no responsibility for the data reported.

The Cooper Review recommended major changes to require disclosure. But Labor chose to ignore these, and nothing was done.

Last year the Morrison government pushed through laws that force superannuation funds to disclose how and where they invest your superannuation money. These laws took effect in March this year. Labor, along with unions and the industry superannuation associations, strongly opposed the new disclosure laws and actively sought to block them. More disclosure requirements are needed.

There is now $2.3 trillion in the big Australian superannuation funds. It is extremely concerning that Labor would oppose complete and major disclosure requirements. As Morningstar stated in 2009, without proper disclosure there is always the threat of ‘undesirable behaviours’.

Morrison’s dead flat small business pitch

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election-2022-pitchLast week Morrison made his pitch for the small business vote. It fell dead flat. That’s strange really.

It’s almost an Australian political truism that political parties cannot win government in Australia without a sizable chunk of the small business vote. So, for Morrison, who’s supposed to be ‘Scotty from marketing,’ his seeming blindness to this alleged truism is odd.

Morrison’s pitch was that by lowering overhead costs and energy bills he’d create a vast number of new small businesses. This pitch is not specific and applies generally to any business (or family) in the economy. There’s no ‘joining of the dots’ between the pitch and the lives of the self-employed, small and family businesses.

Again, it’s strange that Morrison has totally missed his small business target. The Coalition in fact has a substantial history of not only spouting the small business mantra, but of having substance to support the mantra as well. Take some examples.

John Howard created the Independent Contractors Act to protect the status of the self-employed. Tony Abbott committed to the introduction of a Federal Small and Family Business Ombudsman and put the wheels in motion for unfair contract laws for small business.  The Abbott-era commitments were finalised and delivered under the Turnbull coalition government.

Self-employed, small business people profile strongly on the measure of informed and swinging voters. They are extensive seekers of information. This again is why Morrison’s dead flat small business pitch seems so strange at this election.

At the 2019 election Morrison promised to introduce security of payment laws for small business. He’s done this. And it’s good. It’s strange that he’s not pitching it.

He also promised to ‘beef up’ unfair contract protections for small business people. The Bill was ready to go. But strangely this major pro-small business Bill was deserted immediately before the election was called. Did the ‘big end of town’ get to Morrison to pull the Bill?

Then there is the elephant in the room. The Australian Taxation Office has been crucifying small business. The ATO has destroyed small businesses in the research and development space—claiming dodgy use of grants—but the ATO subsequently admitted that it was wrong.

The ATO has been attacking small and family business trusts, forcing trust beneficiaries to pay tax when (even the ATO admits) the beneficiaries have not received any income. The ATO has also sought to change trust distribution rules retrospectively, thereby creating tax debts in the past where, under then-existing ATO rules, no tax debt existed.

In the 2021 Budget the Morrison government declared in Parliament that “We are backing small business in over the ATO. No longer will the ATO be able to garnishee and takeaway (alleged tax debt) while the dispute is in train”. But this promise turned out to be false. The implemented policy only enables small business people to ‘apply’ to have a disputed debt ‘paused’ until appeals have been heard.

Morrison’s pitch to create large numbers of small businesses falls dead flat if those new (and existing) small businesses find themselves under unfair attack from the ATO without the protections afforded by a rule of law regime.

To win and retain the small business vote the Coalition has historically made a policy of substance that it then delivers when in government.  This time Morrison is not selling what he’s done and not promising anything new for small business.

It’s almost as if Morrison has abandoned the small business vote. How odd!

Albanese plan to smash Australia’s 2 million self-employed

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election-2022-smashThere’s now clarity on what Albanese’s Labor intends to do to self-employed small business people if elected. Labor intends to attack us.

The ALP Secure Jobs Plan says:

“Labor will extend the powers of the Fair Work Commission to include ‘employee-like’ forms of work…” Labor intends to attack “…new forms of work such as gig work.”

Last Monday (2 May) this was further made clear at an Albanese street-walk rally in Brisbane. The Australian Financial Review reports from the rally that Labor will legislate to invent new law that says that self-employed people are a ‘little bit’ an employee, like being ‘a little bit pregnant’. It’s clear that the policy is directed at giving unions control over gig workers and any other self-employed person they choose to target. Hairdressers, for example!

The policy is a direct lift from the Californian law called AB5, introduced in early 2020. It was a job killer which hit the most vulnerable self-employed people. Think of single mums running their own transcription business from home! Closed down! There are thousands of examples.

The United Kingdom has an old 1986 ‘little bit pregnant/employee’ independent contractor law. This was used by the UK transport union in 2021 to attack gig ride-sharing. It’s thrown commercial contracts into chaos in the UK.

Albanese’s Labor says it wants to do ‘nice’ things such as giving ‘little-bit-employee’ self-employed people access to collective bargaining, superannuation and the minimum wage. But this is a beat-up.

Self-employed people (us) already have easy access to collective bargaining authorised under competition laws. Superannuation is clearly required when an individual, self-employed persons (not structured as a P/L company) works for a business. The Independent Contractors Act requires that independent contractors should not be paid less than employees.

The truth is that self-employed people are protected under commercial law regulations. Think of the unfair contract laws. Albanese’s Labor wants to drag us into the mess of union-controlled industrial relations law. Forget it!

And quite recently the Australian High Court reaffirmed that self-employed people operate under commercial law. The Court also stated that UK-type (little-bit-employee) laws are not part of Australian law.

Further, the International Labour Organisation, a United Nations body, declared in 2006 that national laws should not interfere in the commercial relationships of independent contractors.

The Albanese plan defies international labour rulings and secure (High Court-determined) contract law. It is a repeat of the disastrous Road Safety Remuneration Tribunal introduced by the 2012 Gillard Labor government. This ‘protection’ invention was about to destroy the businesses of 50,000 self-employed truckies before the Turnbull government abolished the Tribunal.

The obsession Labor has with the ‘evil’ gig economy is silly. Only 0.19 per cent of the Australian workforce earned their full-time income through gig work. But Labor is using a near-hysterical, anti-gig campaign as an excuse to attack self-employed people.

It’s clear that if Labor wins government, we (self-employed people) will have a big fight on our hands to retain our right to be self-employed. It’s about our right to decide how we want to earn our living and to control our working lives. Labor wants to attack that right.