If Fed Gov ICT Contractors are ’employees’ what kind of employees are they

As Recruitment Hive described in our recent blog Federal Government ICT Contractors – Employees or independent contractors of recruitment (labour-hire) companies? it is
our opinion that a recruitment company would be in contravention of the Fair Work Act (2009)’s Sham Arrangement clauses (that stipulate a $82 500 fine) and be
at risk of a Court order to pay (unbudgeted for) holiday leave to a Contractor if we represented to that Contractor that they should be engaged to Recruitment Hive under an independent contractor agreement to perform work within one of our Federal Government clients.
If ICT professionals working within Federal Government clients under contract with labour-hire companies should not, in Recruitment Hive’s opinion, be engaged under independent contractor agreements, then what other options of engagement are there?
The answer is full and proper “Employment.”
Employment of ICT professionals for Federal Government contracting, by Labour-hire companies, is the only alternative if independent contractor agreements can be successfully challenged, in a court of law, on the basis that they are a sham.
According to the Australian Fair Work Ombudsman there are officially nine different ways workers can be employed under the Fair Work Act (2009). They are: Permanent (Full-time & Part-time), Casual, Fixed-term, Shift workers, daily hire and weekly hire, probation, apprentices and traineeships, outworkers & employees with a disability.
Due to the features and characteristics of long-term federal government ICT Contracting, shift, daily and weekly hire, probation, apprenticeships, traineeships, outworking and, in most cases, disability employment are not suitable for the employment of long-term federal government ICT Contractors by labour-hire companies.
Only three suitable employment options remain for consideration:

1. Permanent (full-time or part-time)
2. Fixed-term, or
3. Casual

Most federal government ICT Contractors are contracting as their preference due to the higher remuneration that is available through hourly or daily rates. Such levels of reward are not available to fixed-term or full-time permanent employees due to the extensive employer costs such as holiday and sick le® ave, paid public holidays, parental leave and related entitlements and notice of termination and redundancy pay.
With much higher rates of pay, ICT Contractors do not receive any holiday or sick leave and they only get paid for actual hours worked, but with the financial reward often being more than double than what is achievable through permanent employment, they prefer to make this trade.
If permanent full-time and fixed-term employment agreements offered by recruitment companies are generally rejected by ICT Professionals due to the unsatisfactory remuneration necessitated by extensive employer costs, then only “casual” employment is left as an option?
Not so simple unfortunately as one of the favourite sayings about federal government ICT Contractors is that they are “more permanent than the permanents”.
Which they quite often are.

It seems that someone who stays in the same permanent role for more than two or three years could risk stagnating their career. Federal government Permanent employees are often focused on growing their careers by winning that next promotion or transferring to their preferred division or department.
For whatever reason, it appears that a rolling stone gathers no moss when permanently employed within federal government. ICT Contractors, on the other hand, seem to be more content in their careers and settled in their roles. Over time they gather ever-growing bits (literally) of information that make them more and more indispensable to their federal Government host-clients.
The Federal Government Work Orders used to engage ICT Contractors reflect this with regular 12 month initial contract terms that included budgeted for extensions in the order of a further 12 + 12 months. It is not uncommon for federal government ICT Contractors to have been in the same role, with the same client, for many more years than this.
17 years is a real example!
Additionally, the Work Orders issued by Federal Government that prescribe the work circumstances clearly expect the ICT Professionals to work on a basis that is more accurately described as permanent rather than casual work (8 hours per day, 40 hours per week, 48 weeks per year, a further option to extend for two more twelve-month periods – up to three years in total).
Can a long-term federal government ICT contractor, working for a recruitment company, be employed under a casual agreement? What does employment law say?
The Fair Work Amendment Act (2021), section 15A, confirms that a worker is a casual employee if:

1. an offer of employment made by the employer to the person is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person; and
2. the person accepts the offer on that basis; and
3. the person is an employee as a result of that acceptance.

(15A[2])There are only 4 factors that determine whether an employer’s offer doesn’t include a firm advance commitment. They are:

• whether the employer can elect to offer work and whether the person can elect to accept or reject work;
• whether the person will work as required according to the needs of the employer;
• whether the employment is described as casual employment; and
• whether the person will be entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer or a fair work instrument.

This information from the Fair Work Amendment Act (2021) used to determine if an employer’s offer does not include a firm advance commitment reinforces the appropriate use of casual agreements by recruitment companies in employing long-term federal government ICT contractors. When offering a long-term federal government ICT contractor casual employment, Recruitment Hive’s agreement is segregated into two parts:

1. Casual employment with Recruitment Hive, including the clear statement that there is no obligation to offer a Client Assignment and the worker has a choice to accept, or not, any Client Assignment offered;
2. 2. A separate Client Assignment agreement that directly relates to a Client Work Order.

Under such casual employment agreements, it is clear that Recruitment Hive is not making a firm advance commitment to continuing and indefinite work. The commitment is to present Client Assignments to our casual employees (ICT contractors), whom are free to accept of decline on a case-by-case basis.
Furthermore, the Fair Work Amendment Act (2021) section 545A provides that Court award of compensation for permanent employee entitlements payable to an employee miss-classified as a casual must be reduced by the amount of any identifiable casual loading paid to the employee:

545A (1) (b) If the employer pays the person an identifiable amount (the loading amount) paid to compensate the person for not having one of more relevant entitlement during a period

545A (2) When making any orders in relation to the claim, a court must reduce any amount payable by the employer to the person for the relevant entitlements by and amount equal to the loading amount.

If a recruitment company offers an ICT Contractor a casual employment agreement that specifies a casual loading amount within the total pay rate, then that ICT Contractor takes the recruitment company to court to argue that “they should have been employed under a full-time agreement, with leave entitlements” (due to the features and characteristics of long-term federal government ICT Contracting) then the recruitment company will have any leave entitlements they owe to the employee reduced by the amount they have alr ®eady paid to them as a casual loading, calculated as part of their higher hourly rate of pay they have already received.
This allows a recruitment company to employ a long-term federal government ICT Contractor as a casual employee without financial risk despite their work circumstances being such that, it could be argued in a court of law, they should have been employed as a permanent full-time employee.
In determining how to employ long-term federal government ICT Contractors from the options available, Recruitment Hive has three goals:

1. Achieving the highest possible remuneration for the ICT Professionals whom we employ and providing their capabilities to our Clients at the lowest possible cost;
2. Ensuring the ICT professionals we employ are appropriately supported and protected within their client work environments, and
3. Mitigating the risk of miss-classifying the labour-hire workers we provide to our Clients.

The takeout from all of this?
The employment of ICT Contractors under casual agreements is the only employment option that meets these criteria.