The Australian Public Service has rejected claims that it routinely abuses and exploits its contractors, saying its new standard-issue contract contains no unfair provisions.
Small business advocates said on Monday that the Commonwealth will have to end decades of unfair treatment of contractors with new "Unfair Contract" legislation due to come into force in November.
Experts believe that many of the Commonwealth's standard contracts, usually offered on a "take it or leave it" basis will fail the new fairness tests and have to be re-written.
But the Finance Department says the "Commonwealth Contracting Suite" arrangements already in force ensure that deals signed between small operators and the government are fair.
"Finance is responsible for the Commonwealth Contracting Suite, which includes a standard form contract to which the new legislation will apply when the latter takes effect from 12 November 2016," a departmental spokeswoman said.
"The Commonwealth Contracting Suite does not include unfair terms.
"For example, the termination for convenience clause enables either party to terminate the contract."
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The Australian Competition and Consumer Commission, which will police the rules, warned that not all contractors doing business with government would be protected and anyone with concerns about their treatment by an agency or department should contact the commission to see if they are covered.
Acting ACCC chairman Michael Schaper said the commission has formed a task force which will be contacting government departments and big businesses, where concerns had been raised, in the coming months as part of an education campaign.
Independent Contractors Australia executive director Ken Phillips, who has spent years lobbying and campaigning for the changes, says he and his colleagues hope the laws can end the culture of abuse and exploitation of contractors that has existed in the public service for decades.
Mr Phillips cited examples of contractors signing up for three months' work with a Commonwealth department being told after just one month that their services were no longer required.
The business advocate said contractors sometimes agreed deals and prices for a set amount of work and then had no choice but to comply when the department demanded extra tasks be undertaken for no extra money.
The new contract rules will apply to independent contractors and companies with less than 20 employees taking on contracts worth no more than $300,000 or $1 million for deals that run for longer than one year.
Mr Phillips says the thresholds will cover "vast quantities" of contracts across the Commonwealth, one of the heaviest users of standard form contracts and that unfairness was a "huge" issue when doing business with the government.
The advocate said contractors had been complaining for a long time of the "blatant abuse" they received at the hands of powerful government departments and that bad behaviour in the public service had a knock-on effect on private enterprise.
"They do it all the time and it's just blatant abuse," Mr Phillips said.
"This is standard practice, the Commonwealth thinks it can do what it likes because it is the rule-writer, it has got the big cheque book and the Commonwealth sets the standard for the private sector in this area."
Individual public servants were not to blame, Mr Phillips said, for enforcing institutional policies that were unfair to contractors.
"Individually, the officers and everyone in the public service are very nice people but as a collective with their policy processes and the way they manage contractors, it is just blatant abuse," he said.
"They think that they're nice people and they wouldn't do the wrong thing but I'm sorry, they do the wrong thing all the time."
Correction: An earlier version of this article incorrectly stated the new rules apply to contracts worth more than $300,000. The changes will cover contracts worth no more than $300,000.