Self Employed Australia

"Everyone needs an Advocate"

“Everyone needs an Advocate”

Self-employment

There’s a small business reform ‘steam train’ happening with the federal government

by

There’s considerable reform occurring at the federal level affecting self-employed, small business people. This is all positive ‘stuff’.

Paying Small Business on time
From 1 January 2021, businesses with more than $100 million in turnover must report to a central government database their small business supplier payment terms and practices. We understand that the information will be publicly available. Next year we expect to see legislation where if a large business does not pay small business on time, the large business will lose access to government contracts. The reporting scheme is important for this. These are major moves to stop large businesses using small businesses as ‘banks’.

Beefing up unfair contract laws
In 2016 large businesses were required to have ‘fair’ contracts with small businesses. What is ‘unfair’ under the law is common sense. See here. But the laws were weak on enforcement and now the federal government has achieved agreement from all the state and territory governments to ‘beef up’ the laws. This is a significant development.

  • Currently, unfair terms are ‘null and void’. Now unfair terms will be ‘unlawful’.
  • Financial penalties will now apply.
  • The definition of small business is expanded.
  • Clarifying what is a standard form contract.
  • Currently, the law only applies to contract up to $300,000. Now there will be no limit.

Big businesses have bought these tougher laws on themselves. Too many large businesses have ignored the laws. Now the laws will have real teeth.

Small business insolvency
Following the Covid disaster, many small businesses will collapse or have collapsed. The federal government is changing insolvency laws for small business. This will give small business people a better chance to turn their businesses around or to retain some control of the situation during the insolvency process. For too long some insolvency practitioners have simply ripped out the value of a failed business to fund the insolvency practitioner’s business. The new laws are broadly designed around the US ‘Chapter 11’ insolvency laws.

These individual reforms are important but as a package are hugely important. If small businesses and self-employed people are to rebuild after the Covid-induced huge downturn, these reforms are doubly important. We congratulate the government on these moves.

There is more reform in the pipeline and we’ll talk about it in the coming weeks.

Victoria Covid-19 – Blaming the self-employed and anyone else in sight

by

Having lived in Melbourne all my life, I’m ‘picking up’ that this Melbourne Covid-19 deep lockdown has induced fear. Fear is in the Melbourne air.

Yes, it’s fear of the virus. But it’s also fear of continuing incompetence by the Dan Andrews government. The incompetence has led to the Stage 4 lockdown. This is not a party political comment. Labor governments in Western Australia and Queensland have so far successfully and impressively contained the spread of Covid-19.

Instead, there’s something uniquely ugly about the Dan Andrews-led government we’ve seen to date.

  • It has the stench of double standards. One rule for some people. Another rule for others. “You can’t do x. BUT it’s okay if some do!!” This has resulted in confusion about what people can and cannot do. Perhaps the Stage 4 lockdown will be consistent?
  • Gross administrative incompetence.
    • The blame for the ‘sex in quarantine hotels’ scandal lies squarely at the government’s feet. Premier Andrews refused Australian Defence Force personnel oversight. Every other state welcomed the ADF. The virus surged out of the hotels.
    • Management of Covid-19 testing, reporting and tracing is compromised. There appears to be a confused bureaucracy. Just one example from last week. A business shut down due to one staff member testing positive. Other staff were refused testing by the health department, yet the doctors wanted to test the staff. What the hell?!
  • Blame everyone but yourself. ‘It’s not me’ Premier Andrews has constantly stated in press conferences reported by media. He’s blamed the federal government for aged care problems, families for whatever (?), workers for going to work, the private sector and young people amongst many others.

We feel compelled to jump into this ‘blame others’ game when the Premier directs blame towards self-employed people. Last week Premier Andrews again blamed what he called “the structural weakness in our economy … insecure work”. This included contractors (the self-employed). We reject that. The Premier’s own report on ‘insecure work’ shows it is a positive contributor to society. Here’s our summary of the report.

This is part of the Premier’s declared war on the self-employed we reported in mid-June. The Premier has an agenda to make self-employment illegal, to wreck the lives of self-employed people. This reflects the authoritarian approach under Dan Andrews. It’s ugly and induces well-founded fear in Melbourne/Victoria.

Is there now a change in attitude? Perhaps. In press conferences over the last two days, Premier Andrews has been more inclusive. He’s thanked the PM for assistance, including ADF help. We haven’t noticed as many ‘blame others’ statements. If that marks a change in attitude, we can only welcome it.

Jobkeeper and JobSeeker Extension Information

by

Last week (22 July) the Morrison government announced that JobKeeper and JobSeeker are being extended past the current cut-off of at the end of September. But there are changes to eligibility and the amounts being paid.

We’ve waited a week to produce this update to check some details with the ATO. Be aware that the legislation for the extension has not passed Parliament, so our summary below is the best information available at the moment.

Current JobKeeper – No changes. Everything is the same until 27 Sept 2020. See here.

Summary: JobKeeper extension (after 28 Sept 2020)

Employees and self-employed people are still both eligible as per current rules.

Payments are reduced (and will be smaller still if you worked fewer than 20 hours a week in February 2020—see note below):
$1,200 a fortnight for October, November, December 2020 (28 September 2020 to 3 January 2021). But
$750 a fortnight if you/your employees worked fewer than 20 hours a week in February 2020.
$1,000 a fortnight for January, February, March 2021 (4 Jan 2021 to 28 March 2021). But
$650 a fortnight if you/your employees worked fewer than 20 hours a week in February 2020.

Payments continue to be made in arrears.

Turnover requirements change

Projected turnover is out. Actual turnover will be used.
For small businesses your turnover must still be down 30%+, but this must be down
in both the June & September 2020 quarters for the $1,200 ($750) payment;
in the June & September & December 2020 quarters for the $1,000 ($650) payment.

If you are not currently on JobKeeper, you can still apply if your turnover then drops during the extension period.

Declaring turnover

This is assessed on your BAS return for actual declared GST turnover.
You do not include any JobKeeper receipts in your turnover because JobKeeper doesn’t have GST. (We have checked with the ATO on this.)
Generally, you compare your 2020 quarterly turnover with your 2019 same quarter turnover (eg: September quarter 2020 to September quarter 2019 and so on).

Hours worked—Self-employed
Whether you have worked 20 hours more/less each week is based on the work you did in February 2020. That is, if you worked more than 20 hours a week in each week of February 2020, you will need to prove that to the ATO.

Based on our long experience with the ATO we expect that the audit division of the ATO will conduct aggressive audits of this. We cannot find any information on what hourly work records the ATO expects of you, particularly as a self-employed person. We strongly urge that if you intend to claim the higher amount (+20 hours) that you go back to your work records first and check that you have significant proof of hours worked. This should include invoices to clients and so on.

Summary: JobSeeker
Higher Covid-19 payments for unemployment (JobSeeker) and other social security have been extended to the end of December 2020, but the amounts drop.
On top of the $565.70 per fortnight you receive

Plus $550 per fortnight to 24 September 2020 (current) but this drops to
Plus $250 per fortnight from 25 September 2020 to the end of December 2020.

Government source documents
Check the government’s fact sheets for full information:

JobKeeper here.
JobSeeker here.

Dan Andrews (Victoria) declares war on small business – ‘destroy em’ they say!

by

Thursday, July 16, 2020

Yesterday the Victorian Labor government released its report into the ‘gig economy.’ The 228-page report should be read as a declaration of war against self-employed, small business people across Victoria, and Australia. This is so because a key recommendation calls for laws that would effectively make self-employment illegal.

The recommendation (page 193 of the report) reads:

Recommendation 6
The Inquiry recommends that the FW Act be amended to
(a) codify work status on the face of relevant legislation (rather than relying on indistinct common law tests)
(b) clarify the work status test including by adopting the ‘entrepreneurial worker’ approach, so that those who work as part of another’s enterprise or business are ‘employees’ and autonomous, ’self-employed’ small business workers are covered by commercial laws.

This dumping of the common law definition of self-employment with the creation of a new test (called the ‘entrepreneurial test’) would smash small businesses in Victoria.

We know this because we’ve been following in detail exactly the same laws in California that came into operation on 1 January this year, just before Covid-19 hit. We can confirm reports out of California this week that this ‘kill self-employment law’ has smashed 4.5 million Californian jobs on top of the Covid-19 damage. The Californian law explains why 27.7 per cent of California’s workers are on the dole compared to the national US average of 15.7 per cent under Covid-19.

This is the damage that Premier Dan Andrews and his government now seek to inflict on Victorians. The reports calls for the Federal Government to change the law and, if not changed Federally, for the Victorian government to do this in Victoria.

This is vindictive madness. It displays a distinct hatred of self-employed people, that we are worthless, and of no value to society or the economy. That we must be supressed and eliminated in Victoria.

And to set a course in this direction just as everyone is being smashed by Covid-19 displays an ideological disconnect from reality.

We’ll be preparing a full analysis of the report, but here is our submission to the inquiry in 2019 and our statistical analysis of the gig economy.

We’ll be calling on the Morrison Government to defend self-employed small business people from the Dan Andrews’ attack. But first we’ll get our full analysis done.

Frankly. Good Grief!!!!

Anti-Trump Democrats get political black eye from small business

by

Thursday, May 28, 2020

The anti-Trump forces in the USA have just suffered a surprise defeat in a Californian bye-election that has likely implications for the November US Presidential election.

The Democrats suffered a massive backlash against them because of vicious anti-small business laws that have crushed the self-employed small business sector in California.

The law (AB5) started on 1 January this year and essentially outlawed self-employment in California. It’s caused havoc with huge job losses, large numbers leaving the state and economic collapse in independent contractor industry sectors. This bad job wave swept across California just before the Covid-19 disaster.

The Democrats who control the California legislature and created the anti-self-employed laws have responded with arrogance. Go get a union ‘employment’ job they say! Self-employment’s not a ‘real’ job the Democrats claim. Voters have thought differently.

The political power cards play out as follows.

In the US Federal Congress (parliament) the Trump Republicans control the Senate (upper house). But the anti-Trump Democrats control the (lower) House of Representatives with 235 seats to the Republicans’ 197 seats. This Democrat control of the House of Representatives frustrates and limits the Trump agenda. California is the key state giving Democrats their control.

Of the 435 seats in the House, 53 come from California. The Democrats have 46 of those seats. If the Trump Republicans were to win 20 seats from the Democrats and Trump remained President, Trump would control the US Congress. The Californian Democrats’ hatred of small business raises just that scenario: a Trump Presidential and Congressional win.

Just a week ago a Republican Trump loyalist won a bye-election for a Californian House seat, defeating the incumbent Democrat with a 19 per cent swing. A bye-election ‘flip’ of this sort has not happened in California since 1998, let alone one with a swing of this size.

The Trump Republican candidate campaigned hard against the Californian Democrats’ anti-small business law (AB5).

The national implications are clear. The Democrats’ Presidential candidate, Joe Biden, has endorsed California’s AB5, promising to take it across America if he wins. The Trump Republicans will campaign saying Democrat Biden will destroy small business across America. It’s powerful political messaging underpinned by the glaring reality of California’s AB5.

The Democrats have dug themselves into a deep hole. Their actions speak of hatred of self-employed, small business people.

What unfolds in the USA with the November Presidential and Congressional elections over the rights of self-employed people holds potential lessons for Australia—namely, can a political party attack self-employed, small business people and survive politically? Watch this space!

Regulation-lovers with a ‘solution’ desperately seeking a problem—Gig it!!!

by

Monday, August 05, 2019

Since the Global Financial Crisis, unemployment has dropped to low levels in most of the developed world at least. That’s fantastic. It needs to continue.

One of the important factors in this positive trend seems to be the evolution of work arrangements that enable quick responses to fast-moving markets and consumers. Flexible work creates work! But this gets regulation-lovers worried. They reckon that if work isn’t controlled through government regulation, there’s got to be something wrong. Currently their focus is on the so-called ‘gig’ economy. Apparently, it’s a big ‘problem’ that needs a solution.

We’re intensely interested in the ‘gig’ issue because ultimately the regulation-lovers’ push is about squashing the right of people to be self-employed. And that’s a right that we love!

There are heaps of inquiries and reports. As examples, there are questions over Uber (ride sharing), Facebook, AirBNB and so on generating big media coverage. But here’s a core question. Just how many people are earning their income through ‘gig’ engagement’? How big is the issue?

We’ve pulled together data from reliable sources covering the United States, the United Kingdom and Australia. Here are the summary tables.

Get this. For all the big noise about the ‘gig’ economy the number of people using ‘gig’ engagement as their income source is tiny. The stats show that:

  • Only 1 to 1.8 per cent of workforces are involved in ‘gig’ work but, of those,
  • 0.63 per cent to 0.88 per cent are in fact ‘regulated’ employees.

And significantly

  • For 56 per cent, gig work is less than 15 per cent of their income. (UK)
  • 69 per cent earn less than £1,000 a year from gig work. (UK)

The results are similar in the USA and Australia.

That is, for the bulk of people using gig engagement, it’s pocket money or top-up ‘nice-to-have’ income, but not core income.

But it’s important also to distinguish between ‘gig’ and other self-employed work. The Centre for Research on Self-Employment (CRSE) in London has produced a great research report on this. The report looks at the freelancer side of self-employment and finds that:

  • 85 per cent of freelancers undertake project-based and ‘portfolio’ work.
  • Only 15 per cent are gig workers.

This is consistent with our summary table.

What’s more, CRSE identifies that the freelance sector generates some £140-145 billion of economic output for the UK economy. It’s major stuff. Here are some key extracts from the CRSE report.

An important finding by CRSE identifies skills as the key issue relating to income levels, not the nature of the contract:

…high skilled gig work generates higher quarterly income than equivalent employee work. It seems that skill rather than the nature of the employment contract is the most important determinant of a worker’s income…

Why are we concerned? Too often we’ve seen attempts by worker regulation-lovers to use ‘invented’ problems to try and kill off self-employment. It’s a campaign that’s been ongoing since around the 1990s. Its current rebirth is ‘gig’ focused.

Regulations are needed for real problems. But let’s not invent problems. We want a fact-based debate. Self-employment in its many forms—freelancing, gig, traditional shop-keeping, trades and so on—all make an important mix for job creation, economic activity and personal income creation. Let’s not kill off the good stuff!

Reflections on an incompetent ATO—ABNs & Gig stuff

by

Friday, June 28, 2019

Earlier this week we discussed the history of Uber in its global legal battles to have its drivers accepted as independent contractors. The Uber battle is at the forefront of the gig ‘question’.

Today we focus on the Australian Taxation Office and its incompetence (from our experience) in assessing employee vs independent contractor status. The ATO should learn from a significant Uber legal decision in Australia. It probably won’t though

The issue is important because the ATO has the unrestrained power to destroy the business of self-employed individuals simply by denying individuals their Australian Business Number. It can do this by declaring an independent contractor to be an employee.

This is because under the ABN legislation a person is entitled to an ABN if they are ‘carrying on an enterprise,’ a business being a ‘Profession, trade, employment, vocation or calling.’ But a business does not include an occupation as an ‘employee’.

Under this definition, self-employed people should easily qualify for an ABN because the definitions are so broad, intentionally so we believe. However, the ATO can legitimately deny a person an ABN if the person is an employee at common law.

We have sighted ATO assessments of ‘employment’ when the ATO has denied or withdrawn people’s ABNs. The ATO did this to some 17 individuals in late 2017. The story of the case is here. The ATO was eventually pressured into returning the ABNs to these people.

We have sighted the ‘employment’ assessment done by the ATO in this case. On our assessment the ATO’s process was amateurish and incompetent at best and at worst was manipulated by the ATO to achieve its predetermined view that the independent contractors were/are employees. By these actions the ATO strips itself of its legitimacy.

One of the ATO’s current obsessions is the gig economy and an apparent determination to deny that gig platforms legitimately use self-employed independent contractors. If the ATO is to have legitimacy in this area, it must demonstrate that it follows proper common law processes in undertaking its assessments.

Fortunately, there are some authoritative recent Australian examples that the ATO should replicate if it is to have legitimacy in this area. We present and analyse the major Uber case here.

Will the ATO fix its incompetency? On past experience, probably not.

Hysterical reaction to Uber (gig) drivers not being employees. ATO wake-up call

by

Tuesday, June 25, 2019

Earlier this month the Fair Work Ombudsman released a statement that, after a two-year investigation, it has concluded that drivers working through Uber are not employees.

The Transport Workers Union described the decision as ‘…devastating for workers in the gig economy’. One academic said the decision was ‘very disappointing’.

We disagree. The Fair Work Ombudsman’s decision is consistent with a highly detailed investigation and legal ruling on Uber drivers by the Fair Work Commission in December 2017.

We have a message for the labour movement and its apologists: Wake up! The world has changed. By their actions people demonstrate that they want to be independent and control their own working lives. The worker vs bosses war is irrelevant to most people. Read the tea leaves from the recent federal election. You’re flogging a horse that will kick you! Our message is equally directed to the Australian Taxation Office: We reckon that you’re breaching the law!

So, after getting our ‘rant in reply’ out of our system, let’s look at the facts.

There’s a big push from the Victorian Labor government, the unions, some academics and many in the federal bureaucracy (particularly the ATO) to clamp down on or stop the gig economy. They have similar motivations in our view. They don’t like, understand or accept that independent work can actually exist. They are obsessed with controlling all work.

But independent work is a legal, economic and behavioural fact discovered and found in clear, established processes of investigation. There is no mystery or confusion about this. Unless it’s confusion created by those who want to stop it. (Oooops. I think we are still ranting!!!)

The Uber decision matches those facts. Proper investigative process was followed by the Fair Work Commission and, it would appear, the Fair Work Ombudsman. On the basis of the facts, Uber (gig) drivers are engaged in independent work.

It’s important to base analysis on facts. We’ve put together an analysis of the facts and issues relating to the Uber/gig economy issue. It covers:

And we have a message for the ATO. In our experience the ATO demonstrates gross incompetence in its investigations and analysis of who is an ‘enterprise’ for the purposes of ABN allocation. The ATO needs to learn from the Fair Work Commission and the Fair Work Ombudsman and become competent in this area.

Some sensible facts in the ‘gig’ economy/small business debate

by

Sunday, March 24, 2019

We recently discussed the re-emerging campaign against self-employment being cooked up principally by unions and the Labor ‘left’. We’ve seen this over many decades and this time the ‘evil’ is the gig economy.

  • And we’re witnessing the Victorian government conducting what we see as a cooked-up Inquiry. Frankly, we think they’ve written the conclusion before starting the Inquiry. In our detailed submission we’ve said that the discussion paper is littered with misinformation, plainly wrong on basic facts and implies a forbidding imaginary scenario. Yes, we have our bias (a big bias) in favour of self-employment.

But it’s really good to see some sensible, independent, factual analysis injected into the debate. Bernard Salt is one of Australia’s top demographers. He talks facts. In his most recent article in The Australian he supplies some illuminating information.

Sole trader numbers surged, he says, by 65,000 last financial year. And

  • “Further analysis revealed that many of these new businesses are connected to the gig economy…”

However, this article focuses on small businesses employing 1-19 workers. He says

  • There are “823,000 such businesses in Australia employing, by my estimates, six million workers or close to half the nation’s workforce.”
  • “Over the preceding decade … small business … expanded by 80,000 supporting about half a million jobs.”

But it’s the diversity that’s interesting. He says

  • “Non-standardised product or service delivery is where small employing businesses are expanding, delivering bespoke housing solutions and one-on-one medical advice.”

He points out where this is happening and where it needs to happen.

  • “There is evidence of a rising pool of small employing businesses—a kind of start-up culture if you like—emanating from the Sydney, Melbourne and even the Adelaide CBDs. But this is not the narrative in Perth or Hobart or Canberra or Darwin.”
  • “But if we are to cultivate a culture of entrepreneurship then we need stronger small-business hubs delivering measurable net new employing businesses in the smaller states and territories.”

Bernard urges politicians to get the policy settings right because it’s here where the big growth in jobs will come from.

We agree. That’s why over the decades we’ve fought for reforms to work safety laws, the Independent Contractors Act, small business unfair contract laws, Small Business Commissioners and more. These are the sort of policy settings that support small business and the creation of jobs. The anti-gig economy campaign is dangerously irrational in its non-factual attack against business systems that create small business opportunity.

But, on a big upside: We’re becoming quietly hopeful that we’re about to see a big advance from the ATO in its processes for dealing with self-employed small business people. We’ll keep you informed.

The gig economy is under attack—from people who seemingly don’t care about the harm they do

by

Wednesday, October 17, 2018

I was in an Uber the other day and got talking to my driver. He was a Sikh. We had quite a conversation about his religion and the importance of it to his everyday life. I’ve never met a Sikh before! He was most interesting. I asked him why he drives Uber. His response was quick. He loves being his own boss. He can make his work fit around his family commitments.

My Sikh driver reminded me of why we at Self-Employed Australia have been doing what we do for almost 20 years. We’ve been defending the right of people to be self-employed. We’ve seen attacks from many directions. The attackers always seem to argue that somehow ‘we’ are being exploited. They can’t seem to contemplate that in self-employment there is economic liberty and freedom! My Sikh driver knows and lives that reality.

Now we are witnessing a renewed attack. This time the new ‘evil’ is the gig economy. We first discussed this in August this year. This ‘gig’ attack is just another of many attacks we have seen that ‘squeezes’ self-employed people through regulation.

On the basis of our experience and analysis, the outcomes sought in these current attacks are clear. The ‘anti-self-employed’ antagonists want to impose ‘sham employment’.

It looks like we have another long and hard counter-campaign on our hands!

Join us in the campaign. Your membership contributions help us maintain the fight. Join here.