Whether your enterprise involves providing regular gardening, plumbing or IT services, prepare for years of legal chaos as the power titans of the nation, the High Court of Australia, and the ALP government gird for battle.
The Federal Government’s 784-page blueprint for conducting business in Australia is clearly designed to increase complexity, lower productivity and return union control to wide areas of the business community.
No where else in the bill is the aim more devious than in the proposed changes to contract relationships where currently, thanks to the High Court of Australia, the Australian Tax Office and our clear treaty obligations to the International Labour Organisation, there is currently great clarity.
Readers should be aware that I have been helped in the research for this commentary by the executive director of Self-Employed Australia Ken Phillips. He is clearly biased by few have such a clear knowledge of the issues.
The full High Court in February 2022 (in the Personnel case) declared that if a written contract is clear and comprehensive then it alone should be relied on in determining whether an arrangement was contracting or employment.
And the High Court went further in establishing contracting rules declaring: “It is the task of the courts to promote certainty with respect to a relationship of such fundamental importance.” (Paragraph 58 of the HC Ruling).
In previous decades, Australia had a chaotic set of tests to determine whether a person was a contactor or employee know as the “multi-factorial tests” which asked a series of questions that produced conflicting answers when applied to this fundamental pillar of conducting business in Australia.
If there is a contractual relationship and the arrangement is declared a commercial contract based on common law then it’s subject to competition and commercial statutes,regulations including competition and price fixing rules, and the wonderful protection of the unfair contracts act.
The ACCC is the overall administrator.
That’s totally different from an employment arrangement which is regulated through industrial workplace relations statutes, including Fair Work Australia.
The split between the employment and commercial contract rules are critical to the operation of the Australian economy, which is why High Court referred to it as a “relationship of such fundamental importance”.
With its “bull in a china shop tactics” the ALP government seeks to remove High Court clarity by inserting what is known as Clause 15AA of the 784-page bill and explanatory notes, which aims to do something never before done under Australian statutes.
The clause would remove common law (as ruled by the High Court) as the defining difference between the commercial contract and the employment contract for the purposes of federal workplace relations statutes.
Section 15AA demands that in considering the totality of the relationship between the individual and the person, regard must be had not only to the terms of the contract governing the relationship, but also to other factors relating to the totality of the relationship including, but not limited to, how the contract is performed in practice. That legal wording morass in effect that restores the old confusing tests and uncertainty.
The consequences are potentially chaotic because a contract could readily be declared a commercial contract based on common law and therefore subject to competition and commercial statute and regulation, yet the same contract could be declared ‘employment’ under 15AA and subject to the statutes and regulation of industrial/workplace relations law.
Competition law and industrial workplace relations law have fundamentally opposed objectives driving their different processes.
Competition (commercial) law and regulation are about the prevention of price-fixing and anti-competitive collusion in the economy.
Industrial workplace relations are about the implementation of price-fixing (wages) and collusion to enforce that price-fixing.
In other words, self-employed, independent contractors (as defined by the High Court in common law) and the businesses/persons that engage them will find themselves subject to competition law, yet at the same time be forced or required under industrial workplace relations laws to breach competition law.
No one in the commercial law administration will forget the classic situation where the previous management of transport group Toll made an arrangement with the Transport Workers Union whereby the TWU would use its industrial relations powers to examine the books of Toll’s competitors and pass on valuable information which could be used in the contract in sphere.
It was a clear case where the industrial relations rules were applied to breach the competition rules and then head of the ACCC, Rod Sims was horrified at the long-term implications.
We are headed into that territory and, as with the entire 784-page bill and explanatory memorandum, the nation’s prosperity is in the hands of the seven independents in the Senate.
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