Industrial News 2005

June 2005

Independent contracting in the nursing profession

With the Howard Government considering legislation to make it easier to engage workers as independent contractors rather than employees, nurses need to be careful about agreeing to arrangements which label them as independent contractors.

There is a fundamental distinction between being an employee and an independent contractor. The essential difference is that an employee works for an employer, while the independent contractor operates their own business.

An employee is usually covered by an award/agreement and has the right to join and be represented by their union in the workplace and in industrial tribunals, such as the Australian Industrial Relations Commission and state industrial commissions.

In the past, this distinction has been understood and accepted by employees, employers and government as a matter of principle.

It has also been recognised that there are some instances where it is genuinely difficult to determine which category applies - for example, where a nurse may provide services to a number of different clients within a short period of time, and therefore looks to be running a business, yet has few if any business assets, and no identifiable business name or identity.

In this situation, it has been the practice of the courts and industrial tribunals to determine which category the worker belongs in by applying a number of tests, commonly referred to as control tests.

Simply put, the control tests examine the worker's control over their hours of work, and the extent to which the person who provides the service and the client share an expectation of ongoing and regular work.

Where the worker is engaged by a single client; is required to be personally responsible for tasks on a regular basis; and is unable to sub-contract the work to others, the worker is usually classified as an employee rather than as an independent contractor.

However, as the Howard Government moves to change the industrial climate, this traditional understanding is being challenged, and employees, including nurses, stand to lose significant entitlements if they are not vigilant.

The Howard Government has clearly indicated a preference for separate legislation for independent contractors in order to remove them from the jurisdiction of existing industrial tribunals, including relevant awards and agreements.

However, the ANF considers any such move will open the way to exploit workers engaged under this form of employment.

In a recent submission to the Australian Government inquiry into independent contracting and labour hire arrangements, the ANF strongly opposed a move in this direction.

The ANF is arguing instead for changes to legislation to ensure employees of labour hire companies and independent contractors are covered by awards and collective agreements; have the right to join and participate in their unions; and are generally subject to the jurisdiction of the relevant industrial tribunal(s).

In the nursing industry, it appears employers have been looking at ways to move nurses away from the traditional employment relationship to one which they argue is independent contracting for services between the nurse and a client.

For example, in recent years, the Department of Defence has engaged nurses as 'contracted health practitioners' to work in health care facilities for members of the Australian Defence Force throughout Australia.

Under this employment arrangement, nurses have been required to sign an individual contract 'negotiated' with Department of Defence representatives. The contract contains a flat hourly rate of pay in lieu of most of the usual benefits, including any leave entitlements.

Nurses are also expected to provide their own professional indemnity insurance, injury/income protection insurance and separate cover for public liability.

The ANF does not agree with the view held by the Department of Defence that under this arrangement nurses are 'independent contractors' and not employees, and has argued that under the control tests that would ordinarily be applied, there is sufficient evidence to demonstrate that nurses engaged as 'contracted health practitioners' are in fact 'employees'.

In a recent development, the Department of Defence has set about reorganising the provision of nursing services to its health care facilities, this time taking it a step further and establishing a tender process.

As a result of this process, the majority of defence health care facilities will now be staffed by nurses supplied by nursing agencies selected through the tender process.

The department has told nurses previously employed as 'contracted health practitioners' that if they wish to continue to offer their services to the Department of Defence, they will need to make appropriate arrangements with the relevant agency.

The actions of the Department of Defence illustrate the risks associated with non- standard forms of employment and the need for further legislation to ensure that individual rights and entitlements are maintained regardless of the form of employment.

If this protection is not available, there is great potential for employers to misuse employment arrangements. This will only exacerbate the disadvantage that comes with precarious employment, including uncertainly about having work, and uncertainty about earnings and financial security.

Nurses need to be mindful of these moves and be vigilant when entering into employment arrangements.

Nick Blake
ANF Federal Industrial Officer