Self Employed Australia

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Self-employment

Small business hugs Karl Marx? That’s a turnaround!

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karl-marxIn the nineteenth century, the father of communism, Karl Marx, ‘created’ class ideology where ‘evil’ capitalists always exploited the working class (who were little more than wage slaves). The worker–bosses war has been fought ever since. Workers have been allowed to strike and bargain collectively through unions to secure their rights against the exploitative bosses.

However self-employed, small business people upset this simple idea because we are both the worker and boss in one. How is it that we can ‘exploit’ ourselves? This has resulted in confused law. It’s confused unions who try hard to force self-employed people to be employees so we can be ‘exploited’ and join the union class. It’s pretty silly really.

But the Australian Consumer and Competition Commission (ACCC) has come to the rescue. The ACCC regulates the economy, checking that big businesses doesn’t use their dominant power to exploit consumers. But now the ACCC has taken another step to stop big businesses using their dominant power against self-employed, small business people. The ACCC is making it really easy for small businesses to bargain collectively with big businesses.

Small business collective bargaining has been available for a few years, but you needed significant legal knowledge to do it correctly. And you had to receive ACCC approval. Now it’s very simple. It:

Only requires a one-page form. No lodgement fee.

Authorisation is then automatic.

Your business turnover must be less than $10m a year.

The ACCC link is here.

What does this mean in practice? Here are some simple examples:

If you are (say) an IT contractor supplying services to (say) a government department that applies a standard pay rate across all similar services, a group of IT contractors could get together to negotiate a different rate.

If you are a retailer and want to bulk buy a product from a supplier, you could get together with other small retailers to negotiate a better price if you buy collectively.

If you are putting in a tender to supply (say) HR services to a large company, you could get together with other HR independent contractors to put in a collective tender.

This collective bargaining process offers opportunities to at least partially match the bargaining power of big business and government by self-employed, small business people. It creates real, additional opportunities for small business.

Combine this with the new pay-on-time laws and the planned ‘beefing up’ of the unfair contract laws and Australian small business people are really starting to receive a fair go in the Australian economy. These are big, important reforms.

The only problem is that unions and others who passionately believe in Karl Marx’s workers–bosses war might feel a bit annoyed. If class ideology is suppressed by new, fairer market regulation, how do unions and others still maintain the battle?

Unfair Contracts BIG Beef UP. Fantastic! Bank of Queensland slapped down

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dragon-slayerWith all the focus on Covid, it’s good to see that major reform efforts are still underway. Last week the Morrison Government released the Bill to ‘beef up’ the unfair contract laws. It’s a ripper. It’s a game changer.

In 2015 the Coalition government passed unfair contract laws for small business people. As Self-Employed Australia was the primary, often the only, advocate for the laws (we campaigned for seven years) the laws achieved about 70 per cent of what we wanted. This new law will make the laws really strong.

The new Unfair Contract Bill

The Exposure Draft Bill has been negotiated with and supported by the states. It applies both to consumers and small business people.

The Bill Expands the definition of small business to businesses of up to 100 employees. Currently it’s only 20 employees. The Bill applies no limit on the value of the contract. Currently it’s only contracts to $300K. Plus the Bill clarifies what is a ‘standard form’ contract to one where the contract has been used before.

The Bill also expands the scope of Court Orders. If a clause is declared unfair in one contract, it will be unfair in all contracts. Fines can be imposed for using unfair clauses. A person can be banned from ‘managing a corporation’ for using unfair clauses.

The Bill gives real teeth to the laws. Big businesses and their managers will be in major trouble if they try to use unfair contract clause under this proposed legislation. It truly will make for a greater power balance between big businesses and consumers/small businesses.

Bank of Queensland slapped down

Take this example: The Bank of Queensland (BOQ) has known about unfair contract laws for six years. They were dumb if they didn’t! Yet they ignored the laws. The Federal Court has now slapped down BOQ. They had clauses in small business contracts that (1) let them change contracts at their whim, (2) allowed BOQ to declare a default anytime, (3) allowed BOQ to charge customers for BOQ negligence and (4) forced the customer to disprove a debt if BOQ declared a debt. These are all bastard clauses that have now been removed by court order.

But under the new Bill, BOQ and their managers would be in real trouble for having these unfair clauses. Their executives, lawyers and managers could face been banned from being a manager in banking or any corporation. Are you listening big business managers? Now it’s serious.

The Bill is subject to further consultation. We’ll be putting in a submission of STRONG support. Here’s our summary of the Bill.

Is the ‘gig’ up? Is a ‘secure’ job a fiction? We say it is!

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security-blanketThe Senate is currently holding an inquiry into ‘insecure’ work. The Terms of Reference state: “…to inquire into and report on the impact of insecure or precarious employment on the economy, wages, social cohesion and workplace rights and conditions….”

Well we, self-employed, independent contractors, gig workers, contractors and so on—that is, people who are their own boss—are seen by labour academics and unions as doing ‘insecure’ work. And they see that as a huge social problem that has to be fixed. The Victorian government wants to ‘fix’ us as a problem by outlawing us. Some fix!!

We say that ‘secure work’ is a “figment of imaginations searching for legal expression”. In other words, ALL work is insecure. What people need is not a ‘secure’ job but continuity and certainty of income. This is a more sensible way of approaching the issue. Trying to manufacture ‘secure’ jobs is just the old left-vs-right thing. It’s plain dumb and doesn’t get us anywhere.

We say that self-employed people need ‘protections’ through commercial regulation, such us the unfair contract laws and pay-on-time laws. These sorts of things provide real, practical solutions.

We were asked to appear before the Senate Committee which we did on Tuesday 27 July (this week).

Here’s our one-page summary of our stance on the issue.

And here’s the 37-minute video of our discussion with Senators on the issue.

If you owe the money, pay up! That’s damn good policy

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pay-on-timeMy heart was gladdened recently by the spectacular collapse of Greensill Capital, once a darling of the financial and (some) political elites in Australia and the UK.

Greensill was a ‘leader’ in reverse factoring, also known as supply chain financing. In its simplest formulation, reverse factoring enables a supplier to receive faster payment of money owed to it by paying a fee to a finance company. The finance company pays the supplier and takes over the debt. It can be good.

But the way it was working under Greensill had the stench of ‘come in sucker’.

Greensill claimed to have hundreds of clients, all of whom seemed to be big-end-of-town types such as Telstra.

But the trick that was happening under Greensill is that its clients seemed to routinely screw their small business suppliers by extending payment terms out to 90+ days. The deal then was that the small businesses would pay a commission to Greensill so that Greensill would pay them the money they were owed by the conglomerate.

In summary, the conglomerate takes money from the small business by extending payment terms. Then the small business had to pay Greensill to be paid. For small business it was rip-off territory.

But what was really on display here was capitalism at its grubby, manipulative worst.

Market economies and societies are not Wild West, unrestrained capitalist societies. Successful markets regulate behaviour. Good market regulation is as ‘light touch’ as possible. In the Greensill case, the regulators had moved in on this reverse factoring model and went further.

In the 2019 Federal Election campaign the Morrison Coalition made a firm commitment to introduce a package of small business pay-on-time laws. This included the government paying small business suppliers within 20 days, as well as requiring large businesses contracting with government to do the same. And further, establishing a compulsory small business pay-on-time reporting system for all large businesses.

As of now, each of these promises has been implemented or is in the final stages of implementation. Cross-party political support has been firm.

In this case of Greensill the damage to small businesses by the exploitative reverse factoring game was limited. The regulatory push moved in comparatively early. Too often, if the market is unregulated and left to ‘self-correct’, the damage to individuals is horrendous. Harm done to a few cannot be justified by the alleged benefit of the greater good in the long term.

In this ‘pay on time’ story we can witness perhaps an example of quality, ‘light touch’ regulation.

And there’s one simple principle in play. If you owe money: Pay!

Without doubt, for small business people, being paid on time is the BIG issue!

Deliveroo decision is NOT a win for unions. Just normal stuff!

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There’s a lot of excitement coming from the union movement over the recent ‘Deliveroo’ decision. ‘This is the end of gig’ they say.

They are excited because the Fair Work Commission (FWC) has declared that Deliveroo food deliverers are employees and not independent contractors.

However  there’s nothing at all unusual about the decision. In 2018, a similar company to Deliveroo, the German-based Foodora, left Australia after its delivery people were declared to be employees. Conversely, in April  2020, Uber Eats delivery people were found to be independent contractors not employees.

You might ask, ‘is there some inconsistency here?’ Well, no! In fact the FWC (and the courts) are being entirely consistent. What the law requires is the application of the standard common law tests to distinguish an employee from a self-employed person.

The process involves considering up to about 20 or more factors such as: Did the worker have to work certain times? Was the worker ‘required’ to work? How was the worker paid? The task at law is to look at all the  factors and give an overall assessment.

Even though Foodora, Deliveroo and Uber Eats appear to do the same thing—organise riders to collect food from restaurants and deliver the food to customers at home—in fact they each have different contracts and manage the process differently. That’s why the rulings differ.

I’ve examined both the Deliveroo and the Uber contracts. I’m not surprised by the Deliveroo decision. There are major operational differences between the companies. The fact is that the Deliveroo decision supports the legitimacy of the gig economy.

In 2006, Federal legislation secured across the country the ‘common law’ test for employee vs contractor determinations. The Independent Contractors Act followed on from a 2006 International Labour Organisation declaration which secured the right of people to be self-employed. Australia is a signatory to that international obligation.

Further, Australia has done more than any country to protect and defend self-employed people.

The Independent Contractors Act has unfair contract provisions. In addition, we have specific Federal unfair contract laws for small business people that are currently being ‘beefed up’. Then there are the current moves to create pay-on-time laws for small business people. The JobKeeper and JobSeeker benefits were made immediately available to self-employed people during 2020.

At the same time, there is no tolerance for sham contracting, with specific laws against that practice.

These Australian protections for self-employed independent contractors are world-leading.

But this regime that protects the right to be self-employed is hated by Australian unions and labour in general. They run scam media plays trying to boost the argument that self-employment is on the way out.

This ‘we hate independent workers’ movement is deeply embedded in Australian Labor.

The Victorian government is proceeding with an agenda to kill off self-employment. But Victorian Labor’s plan is confronted by the Independent Contractors Act which overrides state laws on the issue. This then explains the hype around the (very normal) Deliveroo decision.

Labor is eager to turn ‘gig’ into an election issue. But it’s up against the most advanced package of self-employment protections in the world. Labor’s agenda threatens those protections.

Australian unions see flying ‘gig’ pigs landing from the UK

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You may have seen reports that the UK’s top court has decided that Uber drivers are not independent contractors. The UK decision seems to support the unions’ campaign against the gig economy. It gives the appearance of international support for Federal Labor’s anti-gig (anti-small business) policy announced earlier this month.

However, sorry to disappoint the small business-haters in the unions and Labor, but the UK’s decision has no relevance to Australia.

The facts in Australia are that Uber drivers have been declared to be independent contractors by:

And last year (2020) the FWC declared that Uber Eats delivery people are independent contractors. In this 2020 decision the Commission looked at the UK law above and stated that its irrelevant to Australia. Here’s why.

In Australia we use the well-known common law tests which identify whether there is a commercial contract or an employment contract. All independent contractors (self-employed people) earn their income through a commercial contract. This is locked in under Australia’s Independent Contractors Act 2006. It protects the right of people to be their own boss.

In 1998 the UK created statutes which say that even if you’re an independent contractor you can still have access to some employment ‘rights’. This is the ‘little bit pregnant’ idea. The UK statute says that someone working under a commercial contract can be a ‘little bit’ an employee. This is the statute that has been ruled upon by the UK Supreme Court last Friday in the Uber case.

The UK has made, and is making, a mess of its treatment of self-employed people. Self-employed UK people have been treated as economic trash during the Covid crisis, receiving little if any income support. For 20 years the UK tax office (HMRC) has been trying to stop the self-employed from having business tax rights. The Uber decision now throws massive uncertainty into commercial contract law.

Fortunately, in Australia since around 2006, we’ve developed policies to support and ‘protect’ self-employed people. This has included the same access as employees to the federal parental leave scheme (2010), JobKeeper and JobSeeker (2020) and the introduction of unfair contract laws (2016) and their planned ‘beefing up this year. Also, this year the full pay-on-time laws for small business should pass.

We ‘protect’ small business people by giving them access to a practical commercial ‘rule of law’ environment, backed by sensible access to social security support where needed. This creates a stronger economy with small business at its core. Let’s hope that the UK small business destruction disease doesn’t spread to Australia.

For a longer version of this article which includes a link to the UK Supreme Court ruling, click here.

Would you consider the Victorian Premier the most dangerous person in Australia?

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The most recent Covid lockdown of Victorians resulting from hotel quarantine failures must lead many to believe that the incumbent Victorian government is a danger to the health and safety of Victorians, and Australians.

The first lockdown—lasting 112 days in 2020 and costing 801 lives—resulted directly from disastrously incompetent mismanagement of hotel quarantine by the government. The Victorian government has admitted this.

But the evidence from this latest lockdown is that the government’s failures continue. The spread of Covid out of the Holiday Inn Airport Hotel is a direct result of the repetition of the same mismanagement evidenced in the first lockdown. This has occurred even though the government has radically reorganised the bureaucratic structures for hotel quarantine management.

It is this bureaucratic mismanagement that is the problem. It is a failure of governance, common-sense management and transparency. It is of such a scale as to put the health, safety, lives and livelihoods of Victorians and Australians at major risk.

Bureaucracy ‘reformed’

The evidence of the latest outbreak is as follows.

Following the 801 deaths resulting directly from the first hotel quarantine failures, the then Department of Health and Human Services (DHHS) has been disbanded. It was replaced in late 2020 with three new bureaucracies responsible for quarantine. They effectively took over on 1 February.

Most functions of the hotel quarantine program are contracted out to various businesses providing food, cleaning, supplies and staff under labour hire.

The government maintains control over every aspect of the operations. This includes daily control of the numbers, type and qualifications of staff, PPE use, movement of persons through the hotels and so on. The government exercises all decision-making over testing, tracing, isolation and so on. All control and decisions on site are subject to direct instructions from the three bureaucracies.

The staff operating the quarantine in the hotels—the ones in direct contact with travellers—effectively have little decision-making authority. The decision-making lines are remote from the hotels and disjointed. The Holiday Inn was controlled directly through the processes described above.

Sequence of events

The uncontrolled outbreak at the hotel followed the following publicly identified timeline in February.

Wednesday 3rd: A family of three arrived from overseas. Someone in the family had Covid.

Sunday 7th: An ‘authorised officer’ at the hotel tested positive. Other workers subsequently tested positive. Household members of the staff were not contacted or told to isolate.

Tuesday 9th: Household contacts were finally contacted. But one of the household members had already worked at airport terminal, possibly exposing 3,500 travellers. Another staff member tested positive.

Thursday 11th: Another household member tested positive. The government reported 13 positive cases, including some external to the hotel.

Friday 12th: Lockdown announced.

On these basic facts, the failure to contact people for up to three days who were known to be in close contact with the positive case on Sunday is the primary cause of the current outbreak. That is, management failure by the three controlling bureaucracies is the cause.

But we have more information. Our sources tell us the following.

There were regular delays of three days before hotel workers who had close contact with Covid-positive travellers were notified to quarantine.

When the bureaucrats were notified of possible staff contacts, instructions were not immediately forthcoming and only given some hours later.

There is no comprehensive written procedures manual to guide staff at quarantine hotels. Procedures are disjointed. Infection scenario procedures are inadequate or non-existent.

What training of staff there is occurs onsite and does not include written procedures manuals. The most ‘training’ onsite staff receive is a three-minute video.

There also appear to be clear breaches of quarantine protocols. Even though workers were under instructions to work in isolated and defined areas to avoid risk of transmission between workers, at least one ‘group meeting’ of all staff was undertaken in which staff were required to attend.

These events all point to major failure in basic management processes, processes that are just common sense and should not fail.

Still no quarantine plan

In a statement to the Board of Inquiry into the Covid Hotel Quarantine Program, Kym Lee-Anne Peake, then Secretary Victorian Department of Health and Human Services stated that “As at 26 March 2020, there were no plans in place for a mandatory hotel quarantine program for returned travellers.”

It would appear from observations of the current hotel quarantine program, that no written comprehensive plan or procedures manual for the management of quarantine currently exists. If one does exist, it is certainly not public. We understand that none of the quarantine workers at the airport hotel had sighted, been made aware of, or been trained in compliance with an operations manual.

Not following Coate recommendations

Recommendation 22 from the Coate Report (late 2020) states:

Accepting the need to bring in expertise, every effort must be made to ensure that all personnel working at the facility are not working across multiple quarantine sites and not working in other forms of employment.

Contrary to this recommendation, quarantine staff are working at multiple locations and in other forms of employment.

Government dysfunctionality continues—restructuring mess

It is understood that the old health department effectively ceased operating on 1 February 2021. People from the old DHHS who were overseeing quarantine were moved to other jobs. New people came in who had no quarantine background experience or working knowledge of the program and its current status. It would appear that this led to defective or critically slow decision-making, or to none at all.

For example: staff at the Holiday Inn requested instructions on whether to attend work as they had been in close contact with Covid-positive travellers. The bureaucrats responded that they didn’t know and had to wait for a group meeting. When instruction came not to attend work, it was too late. The workers had already attended work as rostered.

In other words, the bureaucracy was incapable of responding to queries from the hotel within the timelines that are necessary when running a 24/7 operation. The failures were/are at the bureaucratic level.

Conclusion—The government is the problem

The current lockdown has occurred because the quarantine management of the Holiday Inn by the government was demonstrably slow to respond to known infections. Close contacts, including staff, were not notified for up to three days or more and not given instructions as to what to do. Consequently, close contacts who were unknowingly Covid-positive went about their activities in the community unknowingly spreading Covid.

This high risk was is well known by the government. The bad management of the hotel quarantine program in 2020 proved the horrendous consequence of such bad management. But the Victorian government has clearly not fully and properly learned the lesson or fully and properly implemented proper processes.

In this respect the government in its current form and leadership poses a major risk to the health and safety of the people.

California Attacks Santa Claus – A Victorian Agenda?

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Tuesday, December 22, 2020

We’ve covered before the weird laws in California (called AB5) that have made self-employment illegal. On the evidence, it seems that these laws have pushed California’s unemployment rate to 50 per cent higher than the US average. The laws came into force on 1 January this year. But it’s now impacting on Christmas.

Patrick Turnbull has been a Californian Santa for 20 years. He doesn’t work as Santa all year round. That’s logical. Not much Santa work outside Christmas! So, he’s worked as an independent contractor Santa. Now the Californian AB5 law say that’s wrong. In this 4-minute video, Patrick (Santa) Turnbull explains why denying him his Santa ‘rights’ is so bad.

You tell ’em Santa! (click the image for the YouTube video):

What’s worrying is that Dan Andrews’ Victorian government also has an anti-Santa (independent contractor) agenda. We’ve told the government in very blunt terms, ‘leave us alone … we have a right to be self-employed.’ We ‘demand’ the right to be Santa if we want!! Viva la Santa revolution!

Oh yeh. And Merry Christmas! We all deserve it this year.

Oz unions’ weird desire to impose ‘permanent’ wage slavery

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News just out is that private-sector union membership in Australia has plunged to 9 per cent of the workforce. Unions are rapidly becoming public-sector-only, with about 37 per cent of that workforce. Perhaps this is why unions are campaigning so hard to try and force ‘wage slavery’ onto all of us. They are fighting for survival.

The ACTU’s core campaign is against ‘insecure work’. It aims to impose ‘permanent’ employment on Australians. But it’s illogical. In particular their campaign has been mugged in the blink of Covid eye reality.

When planes can’t fly, ‘permanent’ airline jobs also ‘fly’. Empty hotels mean an emptying out of permanent hospitality jobs. When cruise ships no longer cruise, the impermanency of every ship job hits home. Economic reality determines everything. Like it or not!

The ACTU’s claim that ‘insecure workers’ are more likely to face unemployment is just plain wrong. No job type—permanent, casual, part-time or contract—escaped the Covid mugging.

The illogicality of the ACTU stance extends to statistics. Unions portray ‘insecure’ work as a growing ‘problem’. That is false. Recent analysis from University of Melbourne Professor Mark Wooden confirms the following.

Casual employment has remained at around 20 per cent of the workforce for 20 years. Labour hire and gig work is small, at less than 5 per cent of the workforce. Self-employment has sat at around 2.1 million people but declined slightly as a workforce percentage to around 17 per cent over the last 15 years or so.

What’s also illogical in the ACTU stance is the complaint about casual employees’ lack of access to ‘entitlements’ such as holiday pay. This is plain nonsense.

Casuals get paid 25 per cent plus more than permanents to make up for holidays and so on. Casuals receive holiday pay built into their hourly pay. Permanents get paid less upfront and get paid the money when they take holidays. In fact, casuals end up with more money than permanents because full-time ‘entitlements’ usually only add about 19 per cent to their pay. Casuals can receive up to 6 per cent more than permanents.

The Federal government’s proposed new workplace laws will allow casuals to access permanent part-time work after 12 months. They will allow part-timers to work extra hours. The ACTU continues to find problems even under these reforms.

Even the economic ‘war’ with China has taught Australia that there is no such thing as ‘permanent’. We now are fully aware that reliance on permanency of trade with China or any one big national market is massively risky. Trade security is found in having a wide range of trading partners. It’s the same with work for individuals. Having a range of work and income sources is safer than relying on one ‘permanent’ job. In reality, ‘permanency’ is insecurity.

Too often the ACTU agenda falls apart in the face of the facts. On this issue their ‘anti-insecurity’ agenda looks like a policy solution searching for a policy problem that doesn’t exist.

We need to focus on ‘solutions’ for a 24/7 economic reality in which Covid and China have both taught us that nothing is permanent. To pretend otherwise is to live with fantasies that will harm us.

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

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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.