You may have heard about some changes the federal government is proposing to workplace relations laws this year. These proposals will touch on a range of areas including:

• ‘employee like’ arrangements in the gig economy
• wage underpayments
• disputes about unfair contract terms.

With so much change on the cards it is hard to know where to start in wading through what seems to be an infinite series of industrial relations reforms.

Is independent contracting in the residential building industry at risk?

Independent contracting arrangements are unfortunately always under the microscope. The many state and federal laws that set out different tests for determining a worker’s status are complex and uncertain.

For example, an independent contractor may be deemed an employee for superannuation purposes but remain an independent contractor for the purposes of the Fair Work Act (which generally only applies to an employment arrangement). This means that while you may be required to pay an independent contractor’s superannuation, that worker is not entitled to other minimum employment conditions and entitlements, such as annual leave or personal leave. 

There are concerns that the current proposals that would impose minimum terms and conditions on ‘employee like’ forms of work will impact independent contracting in the residential building industry. HIA understands that these measures are targeted at the gig economy and digital platforms, not genuine independent contracting in the residential building industry. But, if this changes, we stand ready to fight for the industry.

HIA’s view on the proposals 

HIA is regularly consulting on these proposals with Government and has made several submissions on the range of measures.

HIA has urged the Government not to make any changes which may impact the way that tradies may choose to, or are able to, work as an independent contractor. Independent contracting arrangements are a long-standing feature of the residential building industry. The industry relies on these work arrangements as a way of productively managing the needs of building businesses, especially small businesses.

Restricting the use of independent contracting in our industry will only serve to undermine the contribution of the sector to overall economic growth and exacerbate the challenge of making housing more affordable.

What to do now?

Considering what is being proposed, HIA recommends that members not only check the wages and entitlements of your employees but also review the current arrangements you have with your contractors.

1. Check the wages and entitlements of any employees

There are criminal offences for wage underpayment on the way so ensuring you are correctly paying any employee is crucial to avoiding significant penalties.

Underpayments can not only include failing to pay the minimum wage, but might also include a failure to:

• Pay appropriate loadings and/or penalty rates. Under most Modern Awards, higher rates of pay are payable for work on weekends and public holidays.
• Adopt an appropriate RDO system. A system of rostered days off is required under several Modern Awards, including the Building and Construction General Onsite Award. Under these arrangements, employees work 40 hours a week over a four-week period, accruing two hours per week towards a paid day off. 
• Pay appropriate allowances. Condition specific allowances must be paid when those circumstances are present, for example, if working underground.

The Government is also considering criminalising a failure to keep accurate employee records and accurate pay slips. It would be timely to make sure you are keeping the correct employment records and all required details are included in your employees’ payslips.

2. Clarify and review your arrangements with contractors

It is important to regularly review these arrangements to ensure that your contractors are still independent contractors, rather than employees. There are a range of factors to consider including:

• Do you have written contracts in place? There are already significant changes to the laws about unfair contract terms coming later this year, however, the Government is also considering changes that would allow businesses to challenge unfair contract terms through the Fair Work Commission.
• Has the contractor provided you with an Australian Business Number (ABN) and do they pay their own tax and GST?
• Who supplies the tools, materials and equipment?
  Whether your contractor provides their own tools and materials is important in assessing whether someone is a contractor or employee. You should not provide independent contractors with tools or equipment or pay them an allowance or reimbursement for the cost of the tools and equipment 
• Is the engagement for a fixed fee and for a specific project or period?
  Hourly rates should be avoided and there should be no expectation of ongoing work. An independent contractor should have autonomy and flexibility on the job, as well as the hours they work. The priority is completing the scope of work set out in the contract.
• Does the contractor have the authority to employ or engage suitable, competent personnel to carry out the work at their discretion?
• Is the contractor responsible for any financial risks and rectifying any defective work?
  These matters should be dealt with in your contract.
• Has the contractor provided you copies of their own insurances, including workers compensation (where applicable), public liability, and sickness and accident insurances?

Before working with any independent contractor, you should have each of these documents from the contractor. You should not provide any of these insurances to the contractor.

These are just a few factors you should consider when checking whether your worker is a genuine independent contractor. HIA will continue to monitor the Government’s plans closely, make representations on behalf of the industry and keep members informed as the reforms progress.

To find out more, contact HIA's Contracts and Compliance team

Email us

First published on 2 August 2023