EXPLANATORY STATEMENT
Select Legislative Instrument 2011 No. 155
Issued by the authority of the Minister for Small Business
Independent Contractors Act 2006
Independent Contractors Amendment Regulations 2011 (No. 1)
The Independent Contractors Act 2006 (the IC Act) protects the freedom of independent contractors to enter into contracting arrangements and ensures that these arrangements are regulated by commercial, not workplace relations, law.
Section 43 of the IC Act provides that the Governor-General may make regulations prescribing matters required or permitted by the IC Act to be prescribed, or necessary and convenient to be prescribed for carrying out, or giving effect to the IC Act. Subsection 42(1) of the IC Act allows for the making of regulations relating to transitional matters. Subsection 42(2) provides that such regulations may prescribe modifications of Division 1 of Part 5 of the IC Act (Transitional Provisions).
To the extent that it is constitutionally possible, section 7 of the IC Act excludes State and Territory laws that require independent contractors to be treated as employees (deeming laws) or provide employment-like rights or entitlements (deeming-like laws).
Section 35 of the IC Act ensures that parties to service contracts entered into before, or continuing from, the IC Act’s commencement, and who are affected by deeming and deeming like laws, will be subject to those laws until the date when those contracts expire; or the end of the IC Act’s transition period on 1 September 2011, whichever comes first. Alternatively, parties can under section 33 of the IC Act, at any time, agree in writing that deeming or deeming-like laws do not apply to their service contracts (reform opt-in agreement).
Schedule 1 of the Independent Contractors Amendment Regulations 2011 (No. 1) (the Regulations) modifies paragraph 35(4)(b) of the IC Act.
Visiting medical officers (VMOs) are medical practitioners that provide medical services to public hospital patients on an honorary, sessionally paid, or fee for service basis. The extension preserves existing arrangements, for the delivery of services by VMOs engaged as independent contractors, while national health reforms under the Council of Australian Governments are implemented.
As a result, the IC Act’s transition period is extended for VMOs until 1 September 2014.
In developing the Regulations the Department has not conducted public consultation. This is consistent with section 18 of the Legislative Instruments Act 2003 as the extension of the IC Act’s transition period is minor or machinery in nature and does not substantially alter the law.
The Office of Best Practice Regulation agrees with the Department’s assessment that there are low or no compliance costs resulting from the regulatory change. As a result the proposal does not require a Regulation Impact Statement.
The IC Act does not specify conditions that need to be satisfied before the power to make regulations is satisfied.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commence on the day after they are registered on the Federal Register of Legislative Instruments.
Overview
The Independent Contractors Amendment Regulations 2011 (No. 1) were introduced to address the transitional needs of visiting medical officers (VMOs) in the context of ongoing national health reforms. Enacted under the authority of the Minister for Small Business, these regulations modify the Independent Contractors Act 2006 (IC Act) to extend the transition period for VMOs, allowing them to continue under existing arrangements until 1 September 2014. The objective is to ensure continuity in the delivery of medical services by VMOs as independent contractors while the broader health reforms are implemented, thereby preserving existing service agreements without imposing new compliance burdens. This legislative action aligns with the IC Act’s intent to exclude state and territory laws that would otherwise classify independent contractors as employees, facilitating a smoother transition during a period of significant health system change.
Scope and Application
The Independent Contractors Act 2006 aims to safeguard the freedom of independent contractors to engage in contracting arrangements, ensuring that these are governed by commercial law rather than workplace relations law. The Act applies to all independent contractors, excluding those who are treated as employees under state and territory deeming laws. The Act’s transitional provisions protect existing contracts and deeming laws until the end of the transition period, which has been extended until 1 September 2014 for visiting medical officers. The Independent Contractors Amendment Regulations 2011 (No. 1) were made to modify the transitional arrangements for visiting medical officers, without requiring public consultation or a Regulation Impact Statement due to the minor nature of the changes. These regulations are legislative instruments under the Legislative Instruments Act 2003, and they came into effect the day after their registration on the Federal Register of Legislative Instruments.
Key Provisions
The Independent Contractors Amendment Regulations 2011 (No. 1) make specific amendments to the Independent Contractors Act 2006 (IC Act). A key change is the extension of the transition period for the Act’s provisions as they apply to visiting medical officers (VMOs) (reg. 1). This is achieved through a modification of paragraph 35(4)(b) of the IC Act (reg. 1). The amendment extends the transition period from 1 September 2011 to 1 September 2014, allowing VMOs to continue to operate under existing arrangements while broader national health reforms are implemented (reg. 1).
Under the IC Act, parties to service contracts that were in place before, or continued from, the Act’s commencement and who are affected by deeming and deeming-like laws will be subject to those laws until the earlier of the contract’s expiry or the end of the IC Act’s transition period (s. 35). Alternatively, parties can choose to opt-in to the IC Act’s protections by agreeing in writing that deeming or deeming-like laws do not apply to their service contracts (s. 33). The Regulations extend this transitional period for VMOs, providing them with additional time to adjust to the new legislative framework (reg. 1).
The Regulations impose no specific obligations or requirements on the parties they govern, other than to extend the transitional period for VMOs. This extension allows VMOs to maintain their existing contractual arrangements without being subject to deeming or deeming-like laws for an additional period (reg. 1). This ensures continuity in the delivery of medical services during the implementation of broader health reforms (reg. 1).
There are no specific offences, penalties, or civil/criminal consequences for breach outlined in the Regulations. The extension of the transition period is a minor regulatory change that does not substantially alter the existing law or impose significant compliance costs. As such, the Regulations do not require a Regulation Impact Statement and the Department has not conducted public consultation (reg. 1). The Regulations are intended to facilitate the smooth implementation of national health reforms by providing VMOs with additional time to adjust to the new legislative environment (reg. 1).