About the policy

What needs to be done

Engagement of contractors must be considered in line with the Public Service Commission’s Contingent Workforce Management Guidelines (PDF 291 KB) and with careful consideration of the current budgetary environment.

There are additional measures in place to further support the effective and appropriate use of contractors. These include:

• all contractor engagements, both new and extensions, must be approved by the relevant Deputy Secretary, and additionally by the Secretary in certain circumstances, via the Contingent Worker Approval Form (PDF 232 KB)
• additional guidelines to provide clarity on a number of contractor management issues that will strengthen the department’s management and engagement with this part of the workforce.

1. Resourcing and workforce strategy

The use of contractors needs to be considered as part of the department’s overall resourcing and workforce strategy to deliver on Our Plan for NSW Public Education.

2. Ensure appropriate use of contractors

Contractors must only be used where it is not possible to engage an employee due to one or more of the following reasons:

• there is clear and current evidence of a low supply of the required capabilities in the labour market and there is a short- or longer-term need to engage external labour
• the need is so immediate that a short-term solution is needed, pending recruitment action where appropriate – these situations should be avoided or minimised through effective forward planning
• there is a time-limited need for additional resources or specialised knowledge and/or skills that will not be required within the ongoing workforce.

When engaging contractors, hiring managers must use transparent and accountable approval processes, to ensure public trust in the department is upheld.

Hiring managers are responsible for evaluating the state of the current labour market, as outlined below.

Hiring managers should review existing contractor arrangements regularly. When an extension is proposed (refer to section 13 Extend contractors), they should determine if it remains appropriate to engage a contractor (instead of an employee) having regard to the factors above.

In relation to existing contractor arrangements, if following a re-evaluation of the labour market, an employee is now likely to be available in the current market, action should be taken to engage an employee instead of a contractor unless there is justification based on operational and business risks.

3. Inappropriate use of contractors

Contractors should not be used:

• on a long-term basis (as a guide, more than 6 months) or continually engaged without a re-evaluation of labour market conditions (as outlined above in ‘Evaluating the labour market’)
• to avoid undertaking a recruitment action
• to avoid increases in the agency establishment head count
• due to a lack of workforce planning or recruitment action
• due to reluctance to put a current contractor through an open, merit-based recruitment process
• where the role requires the role holder to make decisions that only an employee can make under relevant legislation, industrial instruments or policies
• to perform shadow roles and functions, where the roles and functions are already being performed by an existing corporate support area in the department (for example, HR or Finance functions).

4. Do not use contractors for PSSE roles and functions

Contractors must not be used:

• to perform the functions of an established PSSE role, other than in exceptional circumstances as approved by the Secretary of the Department of Education
• to perform the role of the department’s Chief Audit Executive (Director of Audit or similar)
• to avoid creating a PSSE role where it is appropriate to establish a role.

5. Approval of contractors

In all cases, the engagement of new contractors (or the extension of existing contractors) requires the approval of the Deputy Secretary using the Contingent Worker Approval Form (PDF 232 KB).

6. Use Contractor Central to engage and source contractors

If it is necessary to engage a contractor, and this can be engaged via the NSW Government’s Contingent Workforce Scheme, it must be done via Contractor Central (staff only). Business areas are not to liaise or make arrangements directly with a supplier.

Support for hiring managers is available from their business area’s dedicated Contractor Central consultant.

7. Source candidates

Contractor Central will source candidates for consideration based on the specifications submitted for the role and will negotiate the appropriate pay rate with suppliers.

The hiring manager may choose to engage a pre-identified candidate (a person who is not sourced independently by Contractor Central but who is known to and nominated by the hiring manager on the basis that they have the capabilities and proven track record to successfully achieve the deliverables of the role).

Where a candidate is pre-identified, the hiring manager must declare the following in writing on the Contingent Worker Approval Form (PDF 232 KB):

• the nature of their relationship with the pre-identified candidate
• any conflict of interest (real or perceived), and how this will be avoided or managed effectively with reference to section 5.7 of the department’s Code of ethics and conduct policy document.

Where it is proposed to nominate a pay rate for a pre-identified candidate that is higher than the range that would normally be paid to contractors performing similar work under the current market (as confirmed by Contractor Central), the hiring manager must outline the reasons on the approval form.

8. Induct contractors

Hiring managers are responsible for inducting contractors to their roles, and ensuring that contractors have read and understood their obligations under relevant NSW Government departmental policies, as outlined below.

Hiring managers must provide or arrange for any necessary training on agency-specific systems and processes.

Hiring managers are responsible for completing the Induction Checklist for Contingent Workers (PDF 178 KB) and uploading the signed form to the worker’s requisition in Beeline.

9. Delegations and limitations on contractor decision-making

Contractors are not employees of the department; they are employees of the supplier. The department’s contractual relationship is with the supplier.

Contractors cannot exercise any functions that only employees are authorised to make under legislation, industrial instrument (for example, Awards) or policy. This includes those outlined in the department’s Delegations (staff only) webpage.

Employees cannot delegate decisions to a contractor that only employees can make.

Hiring managers must make it clear to the contractor (and confirmed in writing) that on entering on duty, all decisions requiring employee delegations (for example, decisions relating to recruitment, leave applications, organisational design and workforce structure, and expenditure of funds) must be escalated to the relevant employee delegate as per the delegations webpage.

When a contractor attends department meetings with employees where decisions will be discussed and made (for example, organisational change strategy and financial decisions), they must disclose their status as a contractor at the initial meeting, and subsequent meetings (as appropriate):

• if a decision needs to be made by a relevant delegate (employee), contractors must defer that decision to the relevant delegate
• if a contractor is communicating a decision on behalf of the relevant delegate (who is not present at the meeting), there must be clear written evidence that the delegate made the decision. This must be stored as appropriate in accordance with the department’s Education support records (staff only) policy and system.

10. Supervision of contractors

All contractors must report to an employee with the appropriate delegation (having regard to the contractor’s role and level of responsibility) so that contractors can escalate and defer decisions that only employees can make to the appropriate delegate.

To ensure adequate and effective supervision, no more than 10 contractors should be supervised by any one employee (as a guide). If it is proposed for one employee to supervise more than 10 contractors, the relevant director is responsible for implementing an appropriate strategy to ensure adequate and effective supervision.

A contractor cannot supervise other contractors or be involved in decisions about other contractors that only employees can make (for example, decisions relating to the engagement of other contractors, or approving timesheets submitted by other contractors).

11. Contractor signature block

Contractors’ sign-off in any work correspondence (including briefings and emails) must clearly indicate that they are a contractor.

In addition, if a contractor is engaged to perform the work of an established role, their sign off must indicate that they are ‘acting’ in the role.

For example: John Smith, Acting Call Centre Supervisor (contractor)

12. Performance review and management

The role expectations (including deliverables and timeframes, and the process for monitoring progress and providing feedback) must be made clear to the contractor and confirmed by the hiring manager in writing.

Performance issues should not be discussed directly with the contractor. If there are any concerns regarding performance, hiring managers must contact Contractor Central (staff only) in the first instance.

Contractor Central will then raise performance issues with the supplier (who is the contractor’s employer and will therefore handle all employment aspects, including performance matters).

13. Extend contractors

To reduce the risk of contractors being deemed as employees, hiring managers must monitor the length of engagement to avoid ambiguity in terms of engagement/employment status.

Contractors should not be engaged on a long-term basis (as a guide, more than 6 months) or continually engaged without a re-evaluation of labour market conditions. Refer to section 2 (Evaluating the labour market) for related guidelines on how to evaluate labour market conditions.

The outcomes of the market re-evaluation must be recorded on the Contingent Worker Approval Form (PDF 232 KB).

14. Pay rate increases to only occur as part of an extension request

No pay rate increases will be approved during the term of a contractor engagement.

Any proposals to increase the pay rate currently paid to a contractor can only be made as part of an extension request.

• The extension must be based on a re-evaluation of labour market conditions (refer to section 2 [Evaluating the labour market]). The outcomes of the market re-evaluation are to be noted on the Contingent Worker Approval Form (PDF 232 KB).
• In relation to the proposed increase in pay rate, hiring managers must contact Contractor Central (staff only) for advice.

If the hiring manager proposes to pay a rate that exceeds the rate recommended by Contractor Central, the reasons for doing so must be provided in the approval form.

15. Convert a contractor to an employee

Hiring managers are strongly encouraged to consider opportunities to convert contractor engagements to employee engagements.

If a decision is made to cease engaging a contractor to perform the work required and to instead engage an employee (for example, following a re-evaluation of market conditions), the filling of the role by an employee will be subject to normal recruitment conditions.

In the above existing circumstances, an existing contractor can only be engaged as an employee in the role either:

• as a temporary employee on nomination for up to 12 months following a suitability assessment
• as an ongoing or temporary employee following a full comparative assessment process including the external advertisement of the role.

16. Conversion fee conditions

The supplier will be entitled to charge a conversion fee if a contractor is subsequently engaged by the department as an employee (whether in same or different role, or whether as an ongoing or temporary employee) if all the conditions below are met:

• the contractor commences employment as an employee within 12 months of the original start date of their initial engagement as a contractor –the fee will not apply if the contractor was continuously engaged in the same assignment for more than 12 months
• the contractor was sourced by Contractor Central – the fee will not apply if the contractor was referred to the supplier (for example, pre-identified candidate)
• the contractor’s engagement is terminated early (with the termination date occurring on or after 5 April 2023) – the fee will not apply if the engagement is terminated at the agreed end date.

To determine whether all the above conditions are satisfied for a particular contractor, the hiring manager must contact Contractor Central (staff only) for advice.

Whether a conversion fee is payable or not should not be a determining factor to the decision on whether to engage a contractor instead of an employee (which is assessed on the factors outlined in section 2. Ensure appropriate use of contractors).

If a contractor applies for an advertised department role, they must be considered on merit as with all other applicants. The fact that a conversion fee may be payable should the contractor be selected must not be a factor in the selection process.

Once Contractor Central confirms that all 3 conditions relating to payment of the conversion fee are met, the fee is determined as outlined in Table 1.

The conversion fee, if applicable and if an invoice is raised by the supplier, is paid by the business unit that engages the employee.

Table 1 Conversion fee determination

17. Early cessation of engagement

The engagement of a contractor can be terminated early for any reason (for example, because work or funding is no longer available). A minimum notice of one day must be provided to the supplier.

Hiring managers must contact Contractor Central (staff only) in the first instance. This should not be discussed directly with the contractor. Contractor Central will advise the supplier.

The supplier is responsible for informing the contractor that their engagement is ending early.

18. Working on weekends or public holidays

Contractors must not work on weekends or public holidays unless it is necessary, as determined by the hiring manager.

If the hiring manager determines that it is necessary for a contractor to work on a weekend or a public holiday, they must seek prior written approval from the relevant Deputy Secretary.

If approved, the contractor must attach the Deputy Secretary’s written approval with their relevant time sheet in Beeline.

The hiring manager is responsible for storing the Deputy Secretary’s written approval in accordance with the department’s Education support records (staff only) policy and system.

Contractors are not entitled to overtime for working on weekends or public holidays.

19. Off-board a contractor

Hiring managers must complete all the activities in the Contingent Worker Off-Boarding Checklist (PDF 124 KB) and upload the signed form on the contractor’s assignment in Beeline.

The hiring manager should also conduct an exit interview to document the learnings from the engagement and consider these as appropriate in improvement strategies.

20. Monitor and report requirements

Deputy Secretaries will closely monitor the use of contractors to ensure appropriate use within the context of section 2 and alignment with the department’s overall resourcing and workforce strategy to deliver on Our Plan for NSW Public Education.

The People Group will provide contractor data to the Offices of Deputy Secretaries on a monthly basis (and other times as requested).

Deputy Secretaries will provide insights on their division’s contingent use to the Secretary on a regular basis.

Record-keeping requirements

Mandatory documents

• Contingent Worker Approval Form (PDF 232 KB)
• Induction Checklist for Contingent Workers (PDF 178 KB)
• Contingent Worker Off-Boarding Checklist (PDF 124 KB)

Supporting tools, resources and related information

Policy contact