Itcra Supplementary Submission to the Victorian Inquiry Into the Labour Hire Industry

ITCRA SUPPLEMENTARY SUBMISSION TO THE VICTORIAN INQUIRY INTO THE LABOUR HIRE INDUSTRY

AND INSECURE WORK

Submitted: 15 March 2016

By email to:

ITCRA is the professional body for the ICT and professional contracting and recruitment sector in Australia and New Zealand. ITCRA Members supply and/or manage professional talent on behalf of their clients for permanent and flexible roles, including contracting, across Australia and New Zealand as well as multiple international markets.

ITCRA’s ICT Employment Trends Report provides an overview of the key movements and data that affects the ICT industry in terms of business conditions, human capital needs, recruitment activities, and expectations. SkillsMatch data is a major source of information for this Report, as is data from Burning Glass, Seek, and Live Salary.

SkillsMatch is a monthly reporting program of data from ITCRA Member systems that includes: position title and requirements, available positions, salaries offered, placements made and time- to-fill for ICT contract and permanent roles.

Developed by ITCRA, iSafe sets a new benchmark for those who supply or manage white collar professional talent as it consolidates system and site assessments for companies who deliver recruitment, contract management, professional and management services as well as for their clients and contractors.

The People Talent Management Standard (PTM), in partnership with Certex International and Service Excellence Consulting, sets best practice for organisations that recruit and manage workers.

ITCRA SUPPLEMENTARY SUBMISSION TO THE VICTORIAN INQUIRY INTO THE LABOUR HIRE INDUSTRY AND INSECURE WORK

EXECUTIVE SUMMARY

The Information Technology Contract Recruitment Association (ITCRA) appreciates the opportunity to provide a supplementary submission to the Victorian Inquiry into the Labour Hire Industry and Insecure Work (Inquiry).

ITCRA relies on the material already submitted in its initial response to the Inquiry on 27 November 2015, and now wishes to respond to and provide comment on the following issues that have been raised in other submissions and during the public hearings relating to the Inquiry:

1.  the distinction between labour hire professionals and “vulnerable” workers in the ICT and other professional sectors and the processes ITCRA has in place to protect such workers;

2.  whether an industry wide definition of independent contractor is feasible;

3.  how non-standard work is an attractive option for the majority of temporary contract workers and secure work is a misnomer;

4.  compliance with occupational health and safety (OHS) laws; and

5.  that a licensing system or other additional regulation is not viable for the professional contracting sector, and what this would mean for ITCRA Members.

4  - A distinction must be drawn between labour hire “professionals’’ and “vulnerable” workers

It is ITCRA’s experience that the individuals engaged by its Members in alternative forms of work are predominantly skilled professionals capable of making decisions as to their preferred form of engagement. Further, the anecdotal surveys conducted by ITCRA Members indicate the majority of these individuals do not actively seek permanent roles.

The position of these individuals is quite different from those persons who were the focus of the submissions of organisations such as the Australian Council of Trade Unions (ACTU) and Professionals Australia, which have focused on the disadvantages of labour hire and particularly the exploitation of “vulnerable” workers.

ITCRA submits that the concerns raised by the ACTU exclusively relate to vulnerable workers such as migrant and unskilled workers in particular blue collar sectors within the labour hire industry. In considering any regulatory or statutory reforms to the labour hire industry, a distinction must first be drawn between professional workers who are engaged on labour hire arrangements and those labour hire workers who are truly “vulnerable”.

It follows that heightened protection should be afforded to those workers less able to understand the terms of any labour hire arrangement, or those who are less likely to be in a position to freely choose their mode of engagement. Focusing any increased regulatory protection on certain classes of vulnerable workers would protect those most at risk of exploitation. This would also allow genuine independent contractors, and their hiring entities, to freely negotiate the terms of engagement without the fear of those terms unintentionally falling foul of sham contracting or other laws aimed at preventing exploitation of temporary workers, which could arise if there was a rigid and overly simplistic definition of independent contracting adopted.

If the Inquiry results in the Victorian Government (Government) implementing regulatory protection for temporary workers, ITCRA respectfully submits that it should be limited to vulnerable workers and should not extend to professional white collar temporary workers.

5  - Considering a definition of ‘independent contractor’

Many commentators and some of the submissions argue for a simple and clear statutory definition, which “settles” the distinction between an employee and an independent contractor.

The common law test for determining an employment relationship and whether a worker is an employee or an independent contractor is not always precise or straight forward. It does however provide the level of flexibility necessary for the courts to examine the true nature of varying employment relationships.

ITCRA agrees with Australian Industry Group’s (Ai Group) submission that a ‘one size fits all’ definition of independent contractor would prevent all the nuances of individual circumstances being fully considered. The development of a single statutory definition to accurately categorise all workers within the labour hire industry across all sectors in Australia is not feasible and would only lead to future complications as work arrangements continue to evolve. Of particular concern to ITCRA Members, is the likelihood that a narrowly drafted definition would adversely affect current genuine arrangements.

As part of ITCRA’s ongoing commitment to developing industry best practice, we are holding a Forum on 7 April 2016 during which we will be encouraging Members and other interested

stakeholders to engage in an informed discussion surrounding the development of workable, specific descriptors and definitions of the different types of employment relationships most commonly adopted by our Members.

Although the results of the Forum are not available to include in this submission, ITCRA is happy to provide this information for consideration by the Inquiry.

6  - Workers are choosing non-standard forms of work

The Productivity Commission Draft Report on the Workplace Relations Framework observed that workers value different forms of work and that the availability of alternative forms of work satisfies the wide variety of preferences of workers.1 This is particularly the case among professional workers such as those represented by ITCRA Members across ICT, accounting, engineering and banking finance sectors, with the majority of workers in these sectors finding the autonomy offered by non- standard forms of employment an attractive option.

The freedom to determine the type of employment relationship that is most beneficial to their circumstances, when to take work and when not to, and the opportunity for career growth and development that working with different organisations provides are just some of the reasons why contracting professionals choose to enter the labour hire industry.

1 Australian Government, Productivity Commission, Workplace Relations Framework: Productivity Commission Draft Report (August 2015).

Any regulatory reforms should consider the intentions and preferences of these individuals and recognise the distinction between professionals who are capable of choosing for themselves the appropriate form of employment, as opposed to “vulnerable” workers within “at risk” industries.

In ITCRA’s experience, the vast majority of professionals who work under a labour hire arrangement have no desire to become permanent employees working for the same employer. This is due, in part, to the fact that these professionals know they enjoy the same legislative protections.

Further these professionals, especially those working with ITCRA Members, will have experienced good employment practices that comply with relevant laws and regulations, often providing superior wages and conditions.

It is simply not the case that non-traditional forms of work are indicative of low quality work or poor conditions and caution should be exercised in considering submissions representing all non-standard forms of work as ‘precarious’. This is certainly not the situation in the professional contracting sector. ITCRA is unaware of any examples that demonstrate a lack of opportunity for contractors to negotiate fair terms or being engaged under less favourable pay and conditions.

In ITCRA’s experience, labour hire is predominantly used to fill a specific specialist function within a business. It is also commonly used as a longer-term supplement to a permanent workforce, with permanent and labour hire professionals working alongside each other performing the same work. The labour hire firms and client businesses operating within the professional contracting sector do not use contracting as a way of avoiding employment costs and obligations; rather it is used to supplement their workforce – to fill a short term niche or to add specific skills.

The contractors who work with ITCRA Members can have multiple contracts concurrently with different clients and different recruiters, and many will move between states on short term contracts. At the end of the engagement, if the role is not what the worker had hoped than they have the option to move on and the client has the benefit of sourcing someone more suitable.

ITCRA Members offer plenty of permanent vacancies as well but they often find workers preferring to work under contract terms to give them variety and other benefits of flexibility as discussed above. ITCRA Members’ clients also prefer to engage with this model.

The most significant evidence of the demand for contracting roles is in the regular data ITCRA receives and has independently validated as part of its Employment Trends Report. The statistics reflect the roles advertised and filled and clearly show the market driven preference for contractors, as illustrated below:

iComparative hourly rates are calculated by dividing permanent annual salaries by 1,672 hours, representing 44 weeks per year at 38 hours per week. This takes into account 52 weeks per year, less and approximated hourly earnings of permanent entitlements represented by four weeks of annual leave, two weeks of statutory holidays, one week of sick leave, and one week of long service leave.

1  - Compliance with OHS laws

ITCRA has observed that compliance with OHS has been a prominent focus of the Inquiry, in particular the concern that labour hire workers are likely to be more vulnerable to safety risks. Industry associations like ITCRA play a prominent role in assisting Members to navigate and comply with OHS legislation to ensure high levels of compliance and minimise the health and safety risks to temporary workers.

As part of its commitment to OHS compliance, ITCRA has developed a unique site, system and document risk management review solution called iSafe that supports, in a practical way, the notion that everyone has a right to a safe work environment. ITCRA’s iSafe program sets a new benchmark for those who supply or manage professional workers by consolidating these reports for reference by participating companies.

The iSafe program is designed to:

•  ensure all OHS site and system reports and follow ups are managed to the same quality benchmark;

•  deliver consultation, co-operation and co-ordination through a centralised team of qualified OHS practitioners;

•  document a process for OHS Risk Management, where there are multiple parties involved,

that ensures stakeholder engagement; and

•  provide an opportunity for a collaborative process for overall practice improvement.

There is a growing need to ensure workplaces, where there are multiple stakeholders (recruiters, contracting companies, contractor management organisations, payroll service providers, professional services and managed solution providers), have a co-ordinated approach to OHS Risk Management. Consultation, co-operation and co-ordination, as required under the legislation, makes common sense and can be facilitated through a centralised process, such as the iSafe program.

The statistics from the program track OHS conformance on sites where professional contractors are engaged. ITCRA also partners with its insurers to compare this evidence against their claims history for the sector. The levels of compliance are illustrated below: