- 1 Policy Statement
- 2 Principles
- 3 Procedures
- 3.1 Identify the Need
- 3.2 Business Case
- 3.3 Procurement Process
- 3.4 Professional Services Flowchart
- 3.5 Engaging the Professional Service Provider as an Independent Contractor
- 3.6 Risk & Insurance
- 3.7 USQ Contractor Questionnaire
- 3.8 Guidelines to Relevant Legislation
- 3.9 Code of Conduct & Conflicts of Interest
- 4 Non-Compliance
- 5 Definitions
- 6 Other Policy Information
- 7 Appendices
Scope and Application:
Strategic Procurement Administrator
Taxation & Insurance Accountant
Professional Services may be used to assist the University achieve organisational and program objectives where the University does not possess the necessary skills or expertise to complete a specific task or provide expert advice. These engagements may cover a range of services on a temporary basis. All Professional Service engagements shall be governed by this Policy. This Policy outlines the process to be followed in determining the nature of the engagement and the subsequent relationship between the University and the external party.
This Policy has been developed to assist the University in meeting its legal obligations and by necessity focuses on legislative requirements and other obligations in respect of risk and includes, but is not limited to, the following:
Income Tax Assessment Act 1997 (administered by Australian Taxation Office);
Taxation Administration Act 1953 (administered by Australian Taxation Office in regard to PAYG Withholding);
Superannuation Guarantee (Administration) Act 1992 (administered by Australian Taxation Office);
Independent Contractors Bill 2006 (administered by Australian Taxation Office);
Fringe Benefits Tax Assessment Act 1986 (administered by Australian Taxation Office);
Fair Work Act 2009 (administered by the Fair Work Ombudsman);
Payroll Tax Act 1971 (administered by Office of State Revenue (Qld) in regard to payroll tax on wages and other benefits as well as payments under relevant contracts; also included are the relevant acts in other states’ jurisdiction);
Workers’ Compensation and Rehabilitation Act 2003 (administered by WorkCover Qld in relation to contractors deemed to be workers, also included are the relevant acts in other states’ jurisdiction);
State Procurement Policy 2010 (administered by Qld Government Chief Procurement Office);
Financial Accountability Act 2009 (administered by Queensland Treasury);
Engagements to perform Principal Activities or Present Functions of the University will be under an employment contract.
Professional Services includes the provision of professional skills and advice including reports, personal efforts and skills, and work that is substantially for labour. These Services may be provided in conjunction with other supplies such as the supply of goods, the hire of equipment etc.
The University will use Professional Service Providers to provide the necessary skills, expertise or advice on a temporary basis only. These engagements may cover a range of services but shall not include the University’s core activities such as Principal Activities or Present Functions unless the existing capacity is fully utilized and the engagement is in conformity with the .
Professional Service Providers are not to be used by Faculties or Departments as a means of enhancing their staffing for the purpose of carrying out Principal Activities or Present Functions which should be undertaken by University employees during the normal course of operations of the University.
Any Professional Service undertaken by an employee of the University will be paid through the University payroll system and PAYG deducted, even if the engagement is made through an interposed entity or tax structure. An employee of the University cannot be engaged as an Independent Contractor.
The Professional Service Provider must accurately complete all questions on the when requested to do so. The University will use the information collected on the USQ Contractor Questionnaire to determine whether the Professional Service Provider will be classified and engaged as a Deemed Employee or as an Independent Contractor under the legislation, and paid accordingly.
The Professional Service Provider who considers that he/she is exempt from a particular classification made by the University will carry the onus to provide documentary evidence of an exemption from the requirements of PAYG withholding, superannuation guarantee, workers’ compensation and payroll tax to the satisfaction of the University.
The University’s contracts of insurance are premised on the basis that all Professional Service Providers engaged by the University will be required to carry their own insurance policies for professional indemnity, public liability and workers’ compensation.
The Professional Service Provider who is engaged as an Independent Contractor will bear the risk and costs arising from performance of the contract. Current certificates of currency for all insurances relevant to the Professional Services engagement (such as professional indemnity, public liability, workers’ compensation) must be provided to the University prior to the commencement of the contract.
The Professional Service Provider who is engaged as an Independent Contractor will be required to undertake the University’s mandatory Workplace Health & Safety induction program and any other safety requirement as and when requested to do so, or as required under the University’s .
The University may be subject to substantial financial penalties if it fails to meet its legislative obligations.
Non-compliance with the terms of this Policy may lead to disciplinary action.
Where the need for a Professional Service is identified by an employee within a Faculty or Department, they will consult the relevant Manager in the first instance.
Professional Service Providers shall not be used where the work undertaken is of a kind that should be undertaken by University employees during the normal course of operations of the Faculty or Department unless a business case determines otherwise. The business case provides an opportunity to describe how a solution/s to an identified need, which is outside the normal activities of the University, may promote the objectives of the Faculty or Department as well as the University’s objectives.
Where a business case is not required, and an in-principal agreement has been reached with the relevant Manager, the employee will then contact the relevant Procurement Officer to commence the appropriate procurement process.
The business case will demonstrate accountability for the resources being consumed (ensuring optimal utilisation of their potential) and also responsibility for the cost effective delivery of the solution/s as it relates to the delivery of programs and activities.
Within this context the business case will include the following information as a minimum:
Description of the identified need;
The name of the Faculty or Department;
Identification of the budget centre and its mapping (includes department identification, program number and project number if applicable);
Documentation of the risk profile associated with the identified need (this may require consultation with the University Lawyer and/or the Manager, Audit and Risk);
Description of the solution/s and estimated timelines;
The estimated budget commitment (this figure may require consultation and assistance from a Management Accountant and/or the relevant Procurement Officer);
Identification of the approval pathway (namely the relevant levels of financial delegation according to the level of estimated commitment).
Where the estimated cost is less than $10,000 the business case may be as simple as an email which contains all the required content (as listed above). Where the estimated cost is $10,000 or higher the business case may require more substantial detail regarding risk and resources; it may also require the involvement of the Management Accountant of the Faculty or Department to assist with the preparation of budget projections using estimates obtained by the Procurement Officer.
The employee will submit the completed business case to the relevant Manager for review. If the business case satisfies the criteria for responsibility and accountability and is in line with corporate objectives, then the Manager will progress it through the required levels of financial delegation to seek financial approval from the relevant financial delegate. The Schedule of Financial Delegations is located in the University’s .
If the business case has received financial approval from the relevant financial delegate, the employee will then contact the relevant Procurement Officer to commence the appropriate procurement process.
The Professional Service Provider will have a current ABN and should also be registered for GST. If a Professional Service Provider holds a current ABN but does not have current GST registration, then permission to proceed must be sought in writing from the Manager Financial Operations. The request for permission must give valid reasons for this selection. Only if written permission is received can the procurement process continue.
The Procurement Officer will advise the employee (who initiated the request) of the appropriate procurement process.
The is designed to assist in the classification of the Professional Services Provider as either an Independent Contractor (paid through accounts payable system) or as a Deemed Employee (paid through the payroll system). This classification is determined by the legislative requirements under which the University is bound.
There are eight categories of Professional Services which have been identified in the Professional Services Flowchart:- five categories are referred directly back into the procurement process with no USQ Contractor Questionnaire requirement, one category is referred directly to HR for an employment contract with no USQ Contractor Questionnaire requirement, while the remaining two categories will require the completion of the USQ Contractor Questionnaire in order to capture sufficient information in order to make the appropriate determination.
The category of Professional Service will assist in the identification of both the classification and the method of engagement:
Categories (i), (ii), (iii) and (iv) are for Professional Services which will include supplies as described. No USQ Contractor Questionnaire is required and the process moves directly to the procurement phase. The procurement process will require a purchase order to be raised, and may also require a written contract from Legal Office. When no written contract is required, an USQ purchasing card (with appropriate authorisation) may be used subject to the applicable threshold;
Category (v) is for a Professional Service that is predominantly “for labour” and provided by an individual or sole trader who does not hold a PSBD. No USQ Contractor Questionnaire is required and the process moves directly to the HR Client Services Team for advice on the appropriate employment contract. This process does not require a purchase order;
Category (vi) is for a Professional Service that is predominantly “for labour” and may be provided by a company, partnership, trust, or other incorporated entity, or an individual with a PSBD. Category (vi) is for entities with fewer than five staff. The USQ Contractor Questionnaire must be fully completed and sent to Legal Office where a written contract will be prepared. The procurement process continues with the raising of a purchase order;
Category (vii) is for a Professional Service that is predominantly “for labour” and is provided by a large entity or organisation which employs five or more staff. No USQ Contractor Questionnaire is required. The procurement process continues with the raising of a purchase order, and may also require the preparation of a written contract by Legal Office;
Category (viii) is for a Professional Service that is not already covered by the preceding seven categories. If after applying the other categories there is no suitable match, then a USQ Contractor Questionnaire will be required to be completed and sent to Legal Office to enable a determination on the nature of the engagement and the classification of the Professional Services Provider to be made. If the Professional Services Provider is classified as a Deemed Employee, the process will be forwarded direct to the HR Client Services Team for the appropriate employment contract. If the Professional Service Provider is classified as an Independent Contractor then a written contract will be required and the procurement process will continue with the raising of a purchase order.
It should be noted that the identification of the Professional Services Provider, especially in categories (v), (vi), (vii) and (viii), will be known only as a result of following the official procurement process. Refer .
When the Professional Service Provider is classified as an Independent Contractor, payments will be made through the accounts payable system.
A purchase order will be raised for the total cost of the engagement; this will apply to all engagements of all Independent Contractors.
In instances where there is no requirement for a written contract from Legal Office, the purchase order will form the contract between the University and the Independent Contractor.
Irrespective as to whether a written contract is required, no work is to commence until the purchase order has been received by the Independent Contractor (receipt of the purchase order is deemed to be consent).
At this point the employee who initiated the request (or their nominee) will assume the role of Contract Manager.
The Contract Manager will be responsible to ensure the University’s mandatory Workplace Health & Safety (WH&S) induction program is undertaken and other safety requirements are met prior to the contract commencement. Information and advice about this prerequisite may be obtained from the Manager, USQ Safe and by reference to the University’s .
It should be noted that in certain circumstances (especially with categories (vi) and (viii)) there may be additional costs generated because of various legislative requirements (for example, payroll tax). Both these categories will be required to complete the USQ Contractor Questionnaire which will be sent to Legal Office for assessment.
Legal Office will forward the completed USQ Contractor Questionnaire, along with a copy of the relevant written contract (if a written contract was required) to the Taxation & Insurance Accountant on a quarterly basis to enable the calculation and payment of any additional taxes that have been incurred on this engagement.
Engagements with Professional Service Providers have the potential to expose the University to risk. An evaluation and assessment of such risk will be undertaken as part of the responsibility of the employee or the initiating Faculty or Department and forms an essential component in the development of the business case.
Risk may manifest in a variety of guises such as physical risk to any person, reputational risk to the University, breaches of taxation legislation and regulations, breaches of environmental protection regulations and standards etc;
Assistance with the evaluation, management and mitigation of risk may be obtained from Legal Office as well as the Manager, Audit and Risk;
WH&S programs, various risk assessment tools as well as full risk management plans are available and may be obtained from the Manager, USQ Safe.
Insurance is one method of managing risk and the University carries a number of insurance policies to protect the University, its staff and students during the normal course of business. The University’s insurance policies have various statutory reporting requirements including the prompt reporting of certain events. Duties of disclosure and reporting requirements are contained in a document called ‘’. One of the preconditions of the University’s insurance is the requirement for all Professional Service Providers who are engaged as Independent Contractors to carry their own policies for professional indemnity, public liability and workers’ compensation insurance.
Professional indemnity insurance protects professionals against claims made against them by past or present clients and covers for costs, legal defence costs as well as any damages payable. Professionals are legally held to a higher degree of skill than other people and could be considered experts in their field; therefore if a client suffers loss that could be attributed to any failure to uphold professional standards, the expert risks being sued for a breach of their professional duty. The client’s loss may be material, financial or physical. The University requires Professional Service Providers to carry a minimum $5 million of professional indemnity insurance cover and will require a current Certificate of Currency to be provided prior to the commencement of the engagement;
Public liability insurance protects the business owner from damages and/or compensation arising from personal injury or damage to property caused by an occurrence in connection with their business. The University will require Professional Service Providers to carry a minimum $10 million of public liability insurance cover and will require a current Certificate of Currency to be provided prior to the commencement of the engagement;
Workers’ compensation insurance provides benefits for workers who suffer a work-related illness or injury under a statutory, no-fault system of compensation. It is compulsory for the employer to take out workers’ compensation insurance for all workers, which includes both employees and in many situations may also include contractors and consultants depending on the circumstances of their working arrangement or engagement. The University will require Professional Service Providers to carry this statutory insurance whenever they engage other workers. The Professional Service Provider will provide a current Certificate of Currency prior to the commencement of the engagement if requested by the University;
Certificates of Currency for all required insurances will be provided to Legal Office prior to the preparation of a written contract. Alternatively where the purchase order becomes the contract, the certificate/s will be provided to the relevant Procurement Officer. Queries or concerns regarding risk and contracts will be referred to Legal Office. Certificates of Currency will cover the full period of the engagement and must be provided prior to the commencement of the engagement.
The USQ Contractor Questionnaire is designed to capture essential information about the Professional Service Provider and must be completed by an entity or organization intending to engage with the University when requested to do so, or as required under the guidelines of the Professional Services Flowchart. The completed USQ Contractor Questionnaire will be forwarded to Legal Office for assessment. Information required includes the following:
Legal name, as well as trading name of the Professional Service Provider:- The provision of a trading name alone is not sufficient. If the entity type is a trust, then the legal name of the trustee must also be provided.
The ABN and GST registration status of the Professional Service Provider:- The University requires all Professional Service Providers to hold an ABN. If the Professional Service Provider does not hold GST registration status then special permission must be obtained from Manager Financial Operations before the process for engagement may continue.
The entity type or tax structure of the Professional Service Provider (for example, sole trader/individual, company, trust, partnership, or other incorporated entity):- The nature of the interposed entity, or the tax structure, has important implications on the assessment made.
When the Professional Service Provider is a sole trader/individual then the superannuation details must be accurately completed. Where the sole trader/individual is aged between 18 to 70 years and the labour component of their engagement comprises 50% or more of the total contract, the University has an obligation to contribute to their superannuation support. If these details are not correctly provided, the University will be obliged to contribute the required superannuation guarantee payment/s to a default superannuation fund. All questions regarding superannuation guarantee and Professional Service Providers may be directed to the Taxation & Insurance Accountant or to the University Lawyer.
Other questions on the USQ Contractor Questionnaire:- Capture information about current insurance policies held, whether there is advertising to the public at large, whether the crucial badges of business are present (for example, place of business, extent of business equipment etc) which indicate that a business structure exists and more than just labour is being provided.
The Professional Service Provider will accurately complete all questions on the USQ Contractor Questionnaire when requested to do so, or as required by the Professional Services Flowchart, otherwise the University will not continue with this process to engage with this external party.
PAYG withholding obligations are legislated by the Income Tax Assessment Act 1997 (ITAA 1997) and the Taxation Administration Act 1953 (TAA) and are required to be withheld from certain payments which the University makes. PAYG withholding is required, but not limited to, the following:
Payments of salary, wages, bonuses and certain allowances it makes to an individual as an employee;
The term “employee” under the PAYG system means an employee at common law (this is a concept developed over time by the Australian Courts) and includes the Deemed Employee;
In making such payments the University is required to withhold an amount from the payment it makes and remit that amount to the Australian Taxation Office (ATO). It is therefore essential in the context of this Policy that the nature of the engagement is understood as it determines the classification the University will apply to the Professional Services Provider;
If a Professional Service Provider has a current ABN (Australian Business Number registered by the ATO) this is not determinative of whether they will be classified as an Independent Contractor or as an employee (or Deemed Employee). A Professional Service Provider who holds an ABN and carries on a business in their own right may still be an employee in certain circumstance when performing work for another person;
Where the Professional Service Provider is classified as an employee or Deemed Employee, the University will also have a requirement to self-assess for fringe benefits tax liability on any benefits provided to this person.
Superannuation guarantee contributions are required under the Superannuation Guarantee (Administration) Act 1992 (SGAA) to be made towards the superannuation of employees.
The SGAA extends the meaning of employee to include a person engaged under a contract that is wholly or principally for labour. The meaning of employer is extended to include the other party to the contract, namely the organization paying the person under the contract. The contract is principally for labour if 50% or more of the value of the contract is for the person’s labour, irrespective of whether an ABN is held or not.
Where a Professional Services Provider holds an ABN, they may still be considered to be an employee under this legislation, and the onus is on the University to make the superannuation guarantee contributions on their behalf. The information necessary to make the superannuation guarantee contribution is requested on the USQ Contractor Questionnaire, however if this detail is not provided when requested, then the University may be obliged to pay the superannuation guarantee payment into a default superannuation fund rather than into their existing fund.
The SGAA does not apply when the Professional Service is provided via an interposed entity such as a company, partnership, trust or other incorporated entity. However the ATO has challenged this principle in recent times in the Australian Courts.
Workers’ compensation is a statutory, no fault system of compensation for work-related injuries. It is compulsory for the employer to take out workers’ compensation insurance. Each State has its own statutory body and WorkCover Qld is the body that has jurisdiction in Queensland.
The definition of a worker under the act is very broad. It covers not only full-time workers on wages and/or salary but also those who are part-time, casual etc. In many situations contractors and consultants may also be defined as workers, depending on the circumstance of their engagement.
Payroll tax is calculated on wages paid by an employer to its employees and is charged by all the Australian States and Territories. The definition of wages is very broad and includes, but is not limited to, wages, salary, allowances, commissions and benefits paid to employees but also includes payments made to certain independent contractors. The Queensland Payroll Tax Act 1971 deems contractors (Professional Service Providers) to be employees where a “relevant contract” exists and a payroll tax obligation arises.
Because the definition of “relevant contract” is wide, the USQ Contractor Questionnaire will need to be completed to enable a determination as to whether a liability to payroll tax is payable on the Professional Services being provided.
The Payroll Tax Act 1971 contains a number of exemptions for contractors (Professional Service Providers), however even when the Professional Service is provided via an interposed entity once the period of engagement exceeds 90 days, then the available exemption may be lost.
One day (under the act) may consist of any time in a 24 hour period where the Professional Service is provided, therefore if one hour is performed in a 24 hour period, this will count as one day.
The University’s Code of Conduct applies to all members of the University, irrespective of their position, and requires integrity as well as respect for the Local, State and Federal laws as well as University .
All University staff involved in procurement related processes must possess and demonstrate at all times a highly developed sense of professional ethics and standard of personal integrity, and consistently apply the University’s procurement thresholds, supporting standard processes and documentation, to all procurement related activities.
Procurement Officers shall ensure that to the best of their knowledge, information and belief, at the date of engaging a Professional Service Provider, no Conflict of Interest exists or is likely to arise in the performance of the Professional Service Provider's obligations under the engagement. If the Procurement Officer becomes aware of a Conflict of Interest, or of a potential conflict, then they must contact the University Lawyer in the first instance.
If during the period of the engagement, an employee becomes aware of a Conflict of Interest they must contact the University Lawyer in the first instance to report the incident.
The University Lawyer will advise the appropriate course of action. This may result in the termination of the contract unless the University Lawyer determines that the conflict of interest involved does not warrant this action.
Any failure to comply with the terms of this Policy will be managed and dealt with under the relevant University policy and procedure and employment contracts as applicable (). A failure to comply with this Policy may result in disciplinary action ().
Other entities, including Professional Service Providers, who do not comply with the terms of this Policy may have their engagement or association with the University terminated, and/or have any right of access to the University revoked ().
Peak Approval Authority:
Management Committee Owner*:
Governance and Legislation
Finance and Facilities Committee
Related Legislation / guidelines:
Strategic Plan/Goal & Objectives:
Supporting documents, forms:
Associated USQ policies:
Next Review Date*:
Expiry Date of Policy: