Secret Agencies
Sydney Morning Herald
Wednesday May 7, 2003
The point
Confidential agreements are keeping businesses and workers in the dark about employment conditions.
Alan Smyth* calls it ``the dark side of employment agencies". It occurs when agencies operate as a middle man between the contractor and a business, linking them but keeping the conditions of employment secret.
``I object to the lack of transparency," says Smyth. ``Supposedly, the agency is beholden to the business [the client] and yet the business is not allowed to tell the contractor what they are paying the agency and the contractor is not allowed to discuss with the employer what he is being paid.
``This secrecy is wrong. Not even the client knows the entire transaction; agents insist on confidentiality on both sides. Is the reason to protect inflated profits at the expense of the client, the contractor or both?"
Smyth has been contracting for 10 years, mainly as a project manager in the defence industry but also with banks and federal government agencies. He has a company, so pays his own superannuation and workers' compensation. He claims the only large overhead the agencies have is payroll tax.
Deborah Coakley , the lead partner of Deloitte Re:sources , leaps to the defence of agencies. ``[Contractors] don't understand the cost of running a recruitment agency or the sales costs associated with securing the assignment the cost of obtaining the client," she says. ``The cost of sourcing the work is not cheap, running a recruitment agency is not cheap, the provision of other services [such as superannuation and workers' compensation if the contractor is not incorporated] is not cheap."
And Coakley defends the commercial in-confidence negotiations, claiming they are two separate contracts so the terms are confidential for each party. ``Part of the reason for keeping the contracts separate is competitive advantage," she says. ``I don't want my competitors to know the rate I have obtained from a client.
``But also if a contractor is earning $40 an hour and that is the market rate for that contractor, why should he be concerned what the agency is earning?
``At the end of the day, if it wasn't for the middleman many contractors wouldn't have a job. The major advantage of going through an agent is access to work; a number of corporates only deal with agencies."
Lydia Hanrahan , the manager of the prosecution branch of the Department of Industrial Relations, explains that ``the reason businesses use recruitment agencies is because they don't want to be bothered with [employment details]. When they enter into a contract with an agency, they are paying for the services the agency provides workers' compensation, remuneration and recruitment costs.
``They don't have to disclose that to the employee, as long as the employee is being paid the minimum award or, in the case of a contractor, professional rate. If they are not happy, they shouldn't enter into the contract."
Hanrahan points out that if you are a contractor you are outside the protection of employment legislation. ``You are more or less on your own," she says.
For disgruntled contractors, there is some recourse under the Contracts Review Act 1980 but only if the contract has been breached. The act excludes contracts that are covered by an award or industrial agreement. A spokesman for the Department of Fair Trading says the act will be reviewed this year.
And probably not before time, as the reality is that more Australians are now working on some sort of contract, from enterprise bargaining agreements to temp staff. The Deloitte Re:sources' 2003 survey of contractors' intentions reveals a trend towards ``career contracting" and the use of ``contracting as an alternative career path to permanent positions".
Figures from the Australian Bureau of Statistics are a bit dated (November 2001) but show that 288,100 (4 per cent) of the working population are on fixed-term contracts. In addition, of the 1.8 million identified as owner managers, 26 per cent said they worked as contractors.
Julie Mills , the chief executive of the Recruitment and Consulting Services Association , acknowledges the growth in contract workers and the increasing use of agencies to manage them. ``The agencies become a third player in the management of the business," she says. ``Employers are seeing the benefit of having a core workforce which they manage and a flexible, outsourced workforce [which the recruitment company manages]."
But Smyth remains unconvinced. ``I am comfortable with them saying there is a flat finder's fee but I'm not comfortable with them staying in the middle," he says. ``The lack of transparency rankles me."
* Not his real name.
© 2003 Sydney Morning Herald
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