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Independent contractors

Another element of engaging security workers that was of interest to the Inquiry relates to independent contractors performing security work. An independent contractor’s remuneration is not governed by the terms of a modern award or enterprise agreement, rather a contractor is able to agree upon any price point.  There is therefore an incentive by some businesses to engage independent contractors rather than employees as the price of labour can be lower.

Independent contractors are workers who have their own Australian Business Number [ABN], run their own business, and are responsible for their own tax (including goods and services tax) and superannuation. They usually negotiate their own fees and working arrangements, and can work for more than one client at a time1.

Councils, principal contractors and subcontractors need to ensure they are educated about the difference between a genuine independent contractor and an employee, to avoid sham contracting2.

The nature of work in the security industry means it is unlikely that an individual security worker would be a genuine independent contractor running their own business. This is due to a range of factors including:

  • no specialist skills required
  • commercial risks are borne by the principal contractor rather than the individual security worker
  • the work that they perform promotes the brand/reputation of the principal contractor rather than the individual security worker
  • guards provided with, and required to wear, the uniform specified by the principal contractor or the Council
  • guards required to perform work as prescribed by the principal contractor or Council
  • guards are paid an hourly rate of time based on the number of hours worked rather than being paid for specific tasks/projects
  • guards are unable to subcontract work out.

The evidence gathered during this Inquiry through discussions with workers, reviews of records provided by employers and discussions with Councils did not identify any evidence of sham contracting. This finding appears to be due to the higher level of awareness by Council procurement officers as well as contractual requirements to notify Councils and/or seek permission to subcontract.

  1. Independent contractors page
  2. ‘Sham contracting’ is where an employer deliberately attempts to disguise an employment relationship as an independent contracting arrangement. See the Independent contractors page