In a move that will recast the IT employment market across Australia, Workplace Relations Minister Kevin Andrews is to introduce sweeping legislation to wrest the power to define the employment conditions of IT contractors away from state governments.

Known as the Independent Contractors Act, the legislation is currently being prepared by Andrews' office and aims to give the federal government a binding power of veto over a growing swag of state-based industrial laws and awards.

If successful, the new laws could legally allow enterprises, outsourcers and vendors to dramatically restructure the definition of permanent and contracted IT staff under federal workplace law. However, Andrews' office is adamant the new law will not allow employers to force-march permanent staff onto contract conditions, a practice currently illegal under existing industrial laws.

While there is no official figure on the total of current ICT contractors, workforce data from the Australian Bureau of Statistics puts the number of people employed in Australia's ICT sector at 335,200 people (2003-04), or 4 percent of the workforce.

According to the Australian Computer Society, 22 percent of its membership are contractors, a figure an ACS spokesperson said was broadly representative of the ICT industry at large.

While Andrews' office is remaining tight-lipped about what shape the Independent Contracting Act will take, or when it is likely to be introduced, a sure sign of the government's intention to legislate has emerged in the form a formal parliamentary "Inquiry into Independent contractors and labour hire arrangements".

According to the inquiry's terms of reference, it will examine "ways independent contracting can be pursued consistently across state and federal jurisdictions" and also look at ways to make sure contracting arrangements are legitimate.

Asked whether the contracting laws were intended to legislate over the top of the state employment laws, a senior source close to the legislation told Computerworld, "The government has never suggested otherwise."

The staffer said concerns also existed over "loopholes" in relation to the status of contractors, with government now considering what needs to be "changed or tightened", but stressed the inquiry will duly consider, with an open mind, the concerns of employees.

Parts of the recruitment industry have welcomed some of the changes. CEO of the Recruitment and Consulting Services Association, Julie Mills, said she hoped the new law "will provide guidelines to harmonize laws governing the use of contractors across Australia".

However, Mills warned parts of the contracting industry needed cleaning up, especially in regard to superannuation and workers' compensation.

"One of the concerns in the recruitment industry is unscrupulous operators which force their employees to work as contractors. We're hoping the [act] will restrict phony contracting arrangements and will give the opportunity to clean up the undesirable elements of the contracting industry," Mills said.

IT Contracting Recruitment Association executive director Norman Lacy welcomed the proposed new legislation, adding his organization hoped to play a pivitol role in structuring the new act and was in discussions with both the Prime Minister and the Workplace Relations Minister.