ITCRA's Submission to the Fair Work Act Review 2012

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ITCRA’s Submission to
the Fair Work Act Review
2012
To: the Review Panel
Submitted: 17 February 2012 by email
Email: fairworkactreview@deewr.gov.au
Who is ITCRA?
Australia is well known globally as a source of innovative technologies and the Australian
information and communications technologies (ICT) industry continues to grow strongly and
integrate into ICT supply chains around the world 1.
ITCRA (Information Technology Contract & Recruitment Association Ltd) established in
1999, is the pre-eminent professional body for ICT2 recruitment and contract organisations,
their professionally accredited ICT consultants, and suppliers across Australian and New
Zealand.
The Association’s vision is to set the direction for the sector, and influence standards and
best practice through knowledge, education, benchmarking, business practice and
advocacy.
This is underpinned by a comprehensive Code of Conduct as well a Business and
Professional Toolkits and a unique dataset, SkillsMatch, to support its research program.
ITCRA Members
ITCRA Members provide a range of services broadly grouped and defined as follows:

Contracting Services
A commercial service where an organisation (ITCRA Member), in return for a fee, completes a
defined scope of work for a third party (Client). Such services may be performed utilising persons for
whom statutory payments/coverage (superannuation, withholding tax, payroll tax and workers’
compensation) may be undertaken by the organisation (ITCRA Member).

Contractor Management Services
A commercial service where an organisation (ITCRA Member), in return for a fee, manages aspects
of an engagement and contractual relationship between independent contractors and the person
conducting the business or undertaking (Client) for whom the independent contractors perform work.

Permanent Placement Services
A commercial service where an organisation, in return for a fee, recruits on behalf of a third party
(Client) candidates that match a desired profile for employment or engagement by the client.

On-Hired/Labour Hire Employee Services
A commercial service where an organisation (ITCRA Member) in return for an hourly fee, supplies
one or more of its candidates for whom statutory payments/coverage (superannuation, withholding
tax, payroll tax and workers’ compensation) must be undertaken by the organisation (ITCRA Member)
to perform work for a third party (Client) under their (the Client’s) general management instruction.
1
2
Austrade ICT Overview accessed 16 Feb 2012, 1006 hrs.
Information, communications and technology.
Information Technology Contract and Recruitment Association Ltd
T: +61 03 8622 4700 W: www.itcra.com E: info@itcra.com
The fundamentals that underpin the services supplied by ITCRA Members are FLEXIBILITY,
PRODUCTIVITY, INNOVATION, VALUE and CHOICE.
Basis for Submission
By virtue of the range of services provided by its Members under competitive global market
conditions, ITCRA is uniquely placed to provide insights with regard to selected key themes
in the FWA Review as they impact upon the ICT sector.
In preparing this submission ITCRA has commissioned and made use of the following
resources:

iPulse Survey Program
ITCRA uses an external online survey tool to gather Member input and the proposed changes were
the subject of a comprehensive survey of Members. The questions posed in the survey are set out in
Annexure A together with sample comments and the responses are articulated in the attached pie
charts.

Longhaus Statistical Overview Regarding Elements of the Australian ICT Contractor
Market, February 16, 2012
Longhaus is globally recognised as one of Australia's leading boutique ICT research and advisory
companies offering local research and analysis to assist major organisations overcome the
challenges presented by the adoption of global ICT solutions 3. The Longhaus overview is attached as
Annexure B.
3
http://www.longhaus.com/ accessed 16 February 2012, 1022hrs.
Information Technology Contract and Recruitment Association Ltd
T: +61 03 8622 4700 W: www.itcra.com E: info@itcra.com
Questions and Member Responses
"Has the Fair Work Act created a balanced framework for cooperative and productive
workplace relations that promotes national economic prosperity and social inclusion for all
Australians?"
Responses were neutral or negative in the main. A key observation was reported:
[It] has the potential to improve fairness and productivity but it also has the potential to reduce
productivity by returning to less flexible work arrangements and a more rigid bargaining
culture. The use of independent contractors on IT, and I suspect in other industry sectors, has
grown as a consequence of the real benefits it delivers to both employers and the individuals
who choose to contract.
In an industry sector where participants are presented with a real choice between contemporary
commercial and traditional models for engaging services/service, the preference for a commercial
model of engagement may tend to suggest that the FWA has not proved responsive to the needs of
sector participants.
"Can the Fair Work Act provide flexibility for businesses and is this being achieved?"
Responses were neutral or negative in the main. A key observation was reported:
Employers are crying out for more flexible work agreements, particularly in the current
uncertain economic climate. Independent contractors are not celebrated in this country
despite the inherent flexibility they offer in this regard.
The FWA is a piece of legislation that is principally about a traditional model for engaging service.
The observation suggests that whilst it remains so its capacity to provide the type of flexibility
demanded by new industries and emerging technologies will remain limited.
"Has the Fair Work Act facilitated flexible working arrangements to assist employees to
balance their work and family responsibilities?"
Responses were evenly distributed with comments suggesting that much of the flexibility needed to
assist employees to balance their work and family responsibilities was already in place prior to
commencement of the FWA. The FWA’s provisions with regard to carers’ and maternity entitlements
drew favourable comment
“Yes, there has been more recognition of ‘carers’ and working mums returning from maternity
leave.
"Has the Fair Work Act's focus on enterprise level bargaining helped to achieve improved
productivity and fairness?"
The majority of responses were neutral or negative, with some positive responses and one very
positive response. The ambivalence of the sector on this issue is perhaps reflected in the comment:
Information Technology Contract and Recruitment Association Ltd
T: +61 03 8622 4700 W: www.itcra.com E: info@itcra.com
Not really applicable for the ICT contracting industry, if anything the compliance and policy
has reduced productivity. In a company of five people we have two managing compliance
now, where previously this was something that took less than half a person.
"What has been the impact, if any, of the Fair Work Act on labour productivity?"
The majority of responses were neutral or negative, with some positive responses and one very
positive response. A significant proportion of respondents reported that FWA was not a relevant
factor with respect to labour productivity in the ICT sector. An indicative comment was:
“In the IT recruitment industry, the impact has not yet been experienced to any great degree
but there are a number of concerns that difficulties being experienced in other sectors may
flow on to our sector over time.
The specific characteristics and needs of the sector which tend to distinguish it from those sectors
where traditional models of service engagement are more prevalent was evident in this response and
was reinforced by the responses on questions related to bargaining and agreement as appears
below.
Does the bargaining framework promote discussion and uptake of measures to improve
workplace productivity?"
Half of all respondents indicated that the issue was simply not relevant to their enterprise model.
How have employers pursued productivity improvements during bargaining for a new
enterprise agreement? Are there any obstacles to achieving productivity improvements in
bargaining in the legislation?
Half of all respondents indicated that the issue was simply not relevant to their enterprise model. The
indifference of the sector shown toward speculating on a possible association between productivity
improvements and enterprise bargaining is perhaps explained in the observation:
Productivity in the Act is not an issue, therefore to focus on productivity is a moot point in
bargaining… if productivity improvements were part of the criteria for FWA to improve an EA,
then that would give employers more leverage
What has been the impact of allowing a wider range of matters to be included in enterprise
agreements by removing the list of “prohibited content” provided under the Workplace
Relations Act?
58% of respondents indicated that the issue was not relevant to their enterprise model.
What has been the impact on bargaining and productivity?
62.5% of respondents indicated that the issue was not relevant to their enterprise model.
Information Technology Contract and Recruitment Association Ltd
T: +61 03 8622 4700 W: www.itcra.com E: info@itcra.com
The specific characteristics and needs of the sector, which tend to distinguish it from those sectors
where traditional models of service engagement are more prevalent, were markedly demonstrated in
a supplementary question posed by ITCRA in its survey of Members.
Have you been impacted by enterprise agreements that contain restrictions on the right to
engage contractors?
Whilst Members’ responses indicated awareness of the issue and concern in respect of those areas
of operation where restrictions on the right to engage contractors were sought to be imposed, 83% of
survey participants reported “not applicable” (37.5%); “never” (33%) or “rarely” (12.5%).
The strong pattern of indifference in the sector toward speculating on the ability of the FWA to meet
sector participants’ demands for flexibility and productivity was repeated in responses to the
questions:
Are Individual Flexibility Agreements allowed for under the flexibility terms of enterprise
agreements providing employers and employees with the flexibility to tailor working
agreements to meet their genuine needs?"
75% of respondents “not applicable” or “neutral” on the issue.
Are employees appropriately protected when making Individual Flexibility Arrangements?"
54% of respondents “not applicable”.
Sector Summary
Utilising the methodology adopted in the Member survey:
•
It would appear that generally, on the scale from minus-2 to plus-2, the FWA has
failed to achieve any of its purported outcomes with an almost universal negative
result.
•
Most measures show a slight negative rating of between zero and minus-1
•
Generally, ICT recruiters are negative about the changes introduced by the Act
•
However, this appears to be primarily on issues of compliance red tape as a
distraction, and the lack of barriers to lodging spurious claims by disaffected former
workers
•
It appears that the expected outcomes of the laws have not been realised due to their
lack of provision for second-tier employment structures, with too great a focus on
first-tier employment.
Assessed against the background of these responses, the Longhaus observations
(Annexure B) assume critical importance to the growth and competitiveness of the sector:
In the recent ICT Spending and Priorities Study 2011, Longhaus found that as a core
business instrument for both cost-containment and strategic delivery, ICT contractors remain
Information Technology Contract and Recruitment Association Ltd
T: +61 03 8622 4700 W: www.itcra.com E: info@itcra.com
one of the top three (3) tactics employed by Australian ICT executives in the 2011-2012
financial year.
In the latest series of quarterly CIO studies undertaken by Longhaus across Australia since
July 2011 (with corresponding data back as far as 2009), the results for demand indicating
significant increases in ICT contractors has remained at a stable net positive .
Such demand increases remain steady for contractors in accordance with rising payment
rates for select skill sets and high experience.
What is clear, in ITCRA’s submission is that these observed effects are moulded under
competitive global market conditions that operate in an industry sector where participants
are presented with a real choice between contemporary commercial and traditional models
for engaging services/service. The preference for a commercial model of engagement may
tend to suggest that the FWA has not proved responsive to the needs of sector participants
and that in the course of proposing future changes special attention needs to be given to
creating the conditions necessary to promote FLEXIBILITY, PRODUCTIVITY, INNOVATION,
VALUE and CHOICE.
Information Technology Contract and Recruitment Association Ltd
T: +61 03 8622 4700 W: www.itcra.com E: info@itcra.com
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