Employee-like: A radical agenda

We, the self-employed are under attack. Our right to be our own boss is under assault. Here's the current issue and whats at stake.

I suddenly realised the other day that it’s been a month since my last Substack post (China’s Mafia Capitalism). The good folk at Substack advise their mad keen writers (like me) to post weekly. But I tend to do deep dives into issues and churn ‘stuff’ through my mind before I’m ready to write.

This last month of May I’ve been grappling with a new Australian political and legislative agenda set to be implemented later this year (2023). It’s really rocked me because this is the most aggressive assault against the right of people to be self-employed (to be ‘our own boss’) that I’ve seen in Australia. And I’m a ‘lover’ of being self-employed. It’s a right I’ve been passionately defending for three decades or more.

Photo by Wesley Tingey on Unsplash

The right to be self-employed is not just under attack in Australia. There’s a global push to ‘kill us off.’ Probably the ugliest modern form of this is in California. In 2020 (just in time for Covid) the Californian legislature did a neat trick. They didn’t ban anyone being self-employed. They just made it illegal for any business to contract with anyone who was/is self-employed. Pretty nasty frankly. But I’ll tell that story in a future post.    

The push to kill off the right to be self-employed is principally driven and funded by a global union movement desperate to support it’s declining ‘business model’. In the USA and Australia for example, private sector union density is down below 8 percent of the workforce and still dropping. In comparison in the 1950’s union density was up around 60-70 percent of the workforce. That’s a pretty dramatic drop in relevance!

I can understand unions’ campaigns. No one likes to be associated with a business in decline. So unionists are fighting to prop up their union businesses. But they are doing it, not by providing competitive services, but by seeking to create monopoly protection through legislation. They are doing this using a traditional method of monopolistic capitalists. Yes, capitalists!  That is the best monopoly is the one delivered to you through government dictate. That’s the union push. They want government-delivered monopoly for unions.  But they are smart and sneaky. They create argumentative cover for their monopoly agenda.

A primary ‘cover’ for union monopoly is the ‘dependent contractor’ or ‘employee-like’ argument. This is an academically invented concept that holds that self-employed people are really in a ‘contract of dependency’ and ‘employee-like. ’ It’s an academic thesis that’s been around since the 1960s. The argument is that such ‘dependency’ justifies legislation that removes the right to be self-employed and forces everyone into employment. But this argument defies and deconstructs the laws of contract upon which economic activity exists. 

Again I’ll explain that in a future post.

This idea of ‘contract dependency’ actually has its seeds in the concepts of socialism/Marxism. And that’s why my Substack posts have spent considerable space trying to understand modern-day Marxism. And it’s why I attended the Marxism Conference 2023 last Easter in Melbourne!

Ah yes! I had a new subscriber to my Substack today who sent the following quote. “Venezuelan/Australian Libertarian - I learned from Socialism so you don’t have to!” So true. (A shout-out to Lionel! Thanks for joining my Substack)

And this is a good point to start a conversation. If you’ve read all or even some of my posts I’m most interested in your thoughts. Let’s start a conversation. Sharing ideas develop us all. Plus I’ve always held the view that seeking to understand the ideas of people with whom you may disagree (eg: Marxists), is one way you grow strength in your own ideas. Any Marxists want to join a discussion?

Photo by Juri Gianfrancesco on Unsplash

But let me move on to the specifics of this current Australian attack against us self-employed folks.          

The Australian ‘employee-like’ agenda

By way of background in January this year (2023) the Australian Treasurer Jim Chalmers released a major policy ‘think piece’ where he described his and (presumably the Labor government’s) vision for a new capitalism in Australia. Described as a “Plan for a Rebirth of Australian Capitalism” Chalmers talked in general terms of the “…beginnings of a new economic model…” a “….values-based capitalism…” where “…2023 will be the year we build a better capitalism…”

Chalmers’ ‘think piece’ laid out principles without specifics. However, the huge phase-one overturning of established Australian industrial relations laws and (arguably) the de facto nationalisation of the Australian gas sector in late 2022 had already provided specific details for Chalmers’ announced principles.

Later this year the government intends to introduce legislation to cover ‘employee-like’ independent contractors. No proposed legislation has been provided, but in mid-April (2023) the Department of Employment and Workplace Relations (DEWR) released a Consultation Paper. In many respects the paper somewhat echoes the vagueness and broad principle statements of Chalmers’ January paper. But the DEWR paper makes one thing abundantly clear.

The government’s plan is to allow employment regulation to regulate commercial contracts.

On any assessment this is a massive step across a fundamental threshold, the principles and practices of which are basic to the current operation of the Australian (and any free-market) economy.  

Effectively this involves the trashing of the principles and practices of competition law. It’s to be done through a process of stripping the right of self-employed people to be self-employed. That is, by treating a commercial contract (the one self-employed people use) as an employment contract, the capacity to be self-employed is denied. 

Put simply, competition law regulates commercial contracts. Employment law regulates employment contracts. Self-employed people are ‘regulated’ and ‘protected’ through competition law, not employment law. The current Australian government is intent on upending this.

The plan is to legislatively treat commercial contracts as employment contracts on the alleged grounds that some self-employed people are ‘employee-like’. More specifically, the plan is to bring commercial contracts into the industrial relations system.

The industrial relations system—that is, unions and the Australian Fair Work Commission—would then have jurisdictional coverage of these commercial contracts. 

Understand. This is a threshold issue. The government’s claim is that this can be done and limited to just some contracts. But this is not feasible. Once any commercial contract is dragged into the arms of the industrial relations system, the Rubicon has been crossed. Australian capitalism and the economy will be re-engineered beyond anything promised or contemplated at the last Australian federal election in 2022.

Photo by Romain Dancre on Unsplash

The provisions will immediately set up a clash between competition law and employment regulation. Specifically, the Australian Consumer and Competition Commission (the competition regulator) and the Fair Work Commission (the employment regulator) will both be required to regulate commercial contracts that have been declared ‘employee-like’, but each with different and opposing public policy objectives. The ACCC to prevent collusion over pricing and to ensure competition. The FWC to facilitate price collusion, thereby creating the circumstances for anti-competitive behaviour which the ACCC will have no power to stop.

If there were ever a policy to rip apart competition policy and eviscerate the Australian Consumer and Competition Commission (ACCC), here it is. The divide between the commercial contract and the employment contract is sacrosanct. That’s not my view but that of the Australian High Court.

The High Court declared in February 2022 (The Personnel Case) that:

“The employment relationship with which the common law is concerned must be a legal relationship. It is not a social or psychological concept like friendship. There is nothing artificial about limiting the consideration of legal relationships to legal concepts such as rights and duties.

By contrast, there is nothing of concern to the law that would require treating the relationship between the parties as affected by circumstances, facts, or occurrences that otherwise have no bearing upon legal rights. (at 22)”

The ‘employee-like’ concept is a social or psychological concept that holds that some self-employed people are ‘employee-like’. In pursuing this ‘employee-like’ concept the proposed policy stands in direct conflict with legal reality as explained by the High Court.

That is, the government’s policy invites a clash with the legal facts of common law. At common law, there is nothing in-between an employment contract and a commercial contract. Consumer law, competition law, and industrial relations law have been developed since federation (and globally) on this clear, simple distinction. This is the law, and this is common sense.

In effect, the plan is to ‘invent’ a new legislative contract form that is outside common law to thwart common law contract. In the absence of common sense and respect for common law, there is nothing to stop a parliament from creating such a legislative instrument.

Even Labor’s alleged respect for Australia’s International Labour Organisation (ILO) obligations can be thwarted by this legislative adventure. The ILO declared in 2006 that, “National policy for protection of workers in an employment relationship should not interfere with true civil and commercial relationships…” This ILO declaration became an Australian international obligation when, in 2006, Parliament passed the Independent Contractors Act and the sham contracting laws.

But what reeks of duplicity is that this is to be done under the pretext that some self-employed people need ‘protections’.  This ignores the fact that major ‘protections’ for the self-employed are already in place in Australia and more are coming. In fact, Australia is a world leader on this issue.

The sham contracting laws in Australia are possibly the strongest in the world. The Independent Contractors Act outlaws payment below similar pay to an employee. ‘Beefed up’ unfair contract laws begin in November 2023 and will be handled by the ACCC.  Collective bargaining for the self-employed is already available through the ACCC. Improved, easier dispute resolution can be made available through small business ombudsmen and more. And new ‘pay on time’ laws are currently being considered.

Significantly, however, all these self-employed, independent contractor ‘protections’ are provided under commercial contract frameworks and within the ambit of competition law.

At its base level, the government’s ‘employee-like’ agenda is a direct attack against small business people. It’s a move to deny individuals the right to be their own boss.

On an expanded level, the agenda is a radical assault upon the underpinnings of competition law and the jurisdiction and powers of the ACCC. If anyone was unsure about what Treasurer Chalmers meant when promising a ‘rebirth of Australian capitalism’ to create a ‘new economic model’, there can be no uncertainty now!

Advocacy campaigning

I’m well opposed to this government agenda. Through the advocacy body I head (Self Employed Australia) we’ve submitted an 11,0000 words response to the government’s ‘consultation paper.’ It was an exhausting writing exercise but we made the submission deadline of 12 May (2023).

Photo by Brandi Redd on Unsplash

There’s an odd thing about advocacy activity. When an idea is presented that sounds simple, in this instance, ‘employee-like,’ the countervailing arguments need to dig into the detail of the massive implications to demonstrate the complexity and harm that will occur.

Note: I’ll ‘carve up’ the big submission into ‘chunks’ and post these on Substack.

My next task is to seek to convince Australian parliamentarians to reject this legislative agenda. After some good coverage in the national newspaper this week The Australian I’ve been in contact with MPs and Senators. Part of the news coverage said

Self Employed Australia executive director Ken Phillips said the changes represented “a historic, unprecedented jump” that would discourage people from working for themselves.

“It’s a completely outrageous … attack against small business people,” he told The Australian.   “There are already laws that say a self-employed person, an independent contractor, can’t be paid less than a person on a similar employee wage.

Mr Phillips – who has served in the Australian Small Business and Family Enterprise Ombudsman’s policy forum group and the Australian Competition and Consumer Commission’s small business and franchising consultative committee – said he had lobbied for better conditions for the self-employed for years but the path the government was now taking was “just dumb”.

“There are further improvements that can be made … and we are supportive of those, but not what they’re proposing here,” he said.

“We get our protections, and we get (our) regulation through competition laws, through commercial law and through the ACCC. We are not employees.

I’ve a number of meetings already lined up and more to come so it’s going to be a busy several months.