For years, we thought that we were “astute”, using one-sided professional on-hire contracts that were stacked in the agencies’ favour. Clients wanted compliant professional labour without the costs of employment; and on-hire agencies developed business models that met, and continue to meet, that demand – despite the inherent risks.
It should have changed as the professional contracting sector came under increasing competition from contracting platforms such as UpWork and Fiverr. It should have changed; but it didn’t.
It should have changed in 2016, when the Australian Consumer Law was amended to prohibit the use of unfair terms in standard form, small business contracts, because the independent contractors were supposedly in business on their own account. It should have changed; but it didn’t.
It should have changed in June 2021, when the ACCC granted a class exemption to allow small businesses, including professional contractors, to bargain collectively on price, terms and conditions without breaching competition law. It should have changed; but it didn’t. Though there are some encouraging signs that the bargaining exemption is being adopted by health and medical professionals and by IT professionals.
It should have changed in February 2022, when the High Court said that if you’ve set yourself up as a mere purveyor of subservient, dependent, and compliant labour, and your contractor’s promise to perform work is a “core asset” of your business, then you’re looking a lot like an employer.[i] It should have changed; but it didn’t.
In New Zealand, it should have changed in August 2022, when amendments to the Fair Trading Act, which prohibited the use of unfair terms in standard form, small business contracts, commenced. It should have changed; but it didn’t.
It should be changing as the professional contracting sector is increasingly impacted by AI-driven technologies. Ask any recruiter about the ace-up-their-sleeve against being superseded by AI-driven technology, and they’ll tell you that it has something to do with their human touch and their contractor care programs. Well, if that’s right, it should be reflected in their contracts. It should be changing; but it isn’t.
Perhaps it will change in November this year, when the Australian Consumer Law will once again be amended to increase penalties for having unfair terms in standard form, small business contracts to $50 million.
Perhaps it will change; but my guess is that, unless the professional contracting on-hire agencies wake up to the changes that have taken place in their sector over the past decade, and stop using engagement and supply models developed in the 1980s, it probably won’t … at least not until their clients and contractors also wake up to the political, economic, social, and technological environment in which they’re now operating.
Post Script: Throughout February 2023, I was privileged to conduct a sustained Tuesday TalkAbout Live! masterclass exploration of issues facing professional contracting on-hire agencies. In March, I will be extending that exploration by taking a deeper dive into the Consumer Protection & Fair Trading regulation of the sector in Australia & New Zealand. One of the outcomes of our March masterclasses will be the development of a methodology for conducting a Consumer Protection & Fair Trading self-assessment. In April, we will shift the focus of our exploration into the field of competition regulation and explore ways to take advantage of exemptions and authorisations that facilitate the development of innovative supply models.
I hope you’ll take time to follow our exploration and participate in one of the sessions.
Let’s talk again, soon!
Andrew C. Wood
[i] CFMMEU v Personnel Contracting (2022) HCA 1.