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 (staff only) (PDF 1 MB)
• 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.

A suite of strategic workforce planning resources, based on the Public Service Commission Framework, will help ensure the department has the right mix of skills, resourcing levels and employment types over a 2- to 3-year view. Leaders can contact their senior people business partner for access to these.

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 15. 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

3.1 Cases where it is not appropriate to engage 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)
• to perform core work, except in limited circumstances outlined in section 4. Engaging contractors for core work (below).

3.2 Engaging former employees as contractors

Hiring managers must not engage former employees as contractors immediately after their separation from the department in roles that are the same (or substantially the same) as their previous role. As a guide, a minimum 3-month gap should elapse between the end of their employment and any subsequent contractor engagement in the same or substantially the same role.

Hiring managers should ensure this is clearly noted on the Contingent Worker Approval Form (staff only) (PDF 1 MB), with the rationale recorded in the ‘Rationale for Engaging a Contractor’ section.

Excess employees who separate from the department and receive a redundancy payment must not be engaged as contractors providing services to the department within the period covered by their redundancy payment, unless they repay the relevant portion of their redundancy payment.

4. Engaging contractors for core work

The department engages in whole-of-sector core work and agency core work (refer below for definitions). All core work must be carried out by government sector employees, and not by contractors, except in limited circumstances, as outlined in this section.

4.1 Limitations on engaging contractors for core work

Contractors can only be engaged in core work in the following circumstances:

• where short term requirement cannot be met internally
• where the required capability is not available through hiring or internal government networks
• for providing specialist analysis or advice to support core work delivery
• to deliver support capacity for ‘emergency’ as defined in the State Emergency and Rescue Management Act 1989 (NSW)
• to provide necessary independence from government operations
• to avoid harm or risk to vulnerable populations.

4.2 Monitoring and reporting on contractors engaged for core work

All agencies must monitor and report on contractors delivering core work.

When submitting a request to engage a contractor or extend an existing contractor, the hiring manager must confirm, on the Contingent Worker Approval Form (staff only) (PDF 1 MB), whether the contractor will perform sector core work or agency core work – and if so:

• the type of core work – in selecting the type of core work, only one type can be selected so use the type that most closely aligns with the work’s primary purpose and accountabilities
• the reason for engaging a contractor instead of an employee (based on the limited circumstances outlined above).

Hiring managers enter the approved Contingent Worker Approval Form in Beeline as part of the request to engage a new contractor or to extend an existing contractor.

The department reports annually, using the information recorded in the Contingent Worker Approval Form:

• to the Premier’s Department, sharing data on the use of contractors to deliver sector core work
• to Cabinet, reporting on targets and agency progress against targets.

The required data on the use of contractors to deliver sector core work or agency core work is collected via the Contingent Worker Approval Form (staff only) (PDF 1 MB).

5. Do not use contractors for PSSE roles and functions

Contractors must not be used:

• to perform the functions of an established public service senior executive (PSSE) role, other than in exceptional circumstances as approved by the Secretary of the NSW 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.

6. 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 (staff only) (PDF 1 MB).

6.1 Additional approval controls

Additional approval is required from the Secretary if either of the 2 conditions outlined below applies.

1. The contractor pay rate (the proposed rate paid directly to the contractor) meets or exceeds the following thresholds:

• PAYG contractors: $1,110 per day or more, or $157 per hour or more
• ABN contractors: $1,243.20 per day or more, or $178 per hour or more.

The rate paid to PAYG contractors does not include superannuation (this is paid separately by the supplier). The rate paid to ABN contractors includes superannuation. The threshold for ABN contractors outlined above is higher than the threshold for PAYG contractors to account for this difference and enable a standardised approach to determining which requests are to be submitted to the Secretary.

For advice on determining the correct contractor pay rate, contact the Contractor Central team (staff only).

If it is not known whether the contractor will be engaged as PAYG or ABN, the engagement must be assessed using the PAYG threshold for the purpose of the Contingent Worker Approval Form.

2. The total budget allocated to the new contractor engagement or extension meets or exceeds $250,000 (based on the rate paid to the supplier)

Total budget allocation must be calculated using the supplier bill rate (which includes agency fees).

For assistance calculating the supplier bill rate or total engagement spend, contact the Contractor Central team (staff only).

6.2 Pay rates

Hiring managers and approvers must seek advice from the Contractor Central team (staff only) on appropriate rates, including interpreting rate cards in Beeline and current market benchmarks. The Contractor Central team will confirm the appropriate rate for both the proposed daily or hourly rate paid to the contractor and the total rate paid to the supplier, which includes agency fees. This ensures rates are aligned with market expectations and are accurately reflected on the approval form.

The rate paid to the contractor must be within the Beeline rate card range unless the Contractor Central team confirms it is necessary to offer a higher rate due to current market conditions at the time of being sourced. If a hiring manager proposes to pay a rate exceeding the recommendation provided by the Contractor Central team, they must clearly state the reasons for doing so in the Contingent Worker Approval Form.

6.3 Using the prior endorsed approval form to engage a new contractor

The same approval form that has already been endorsed can be re-used to engage a new contractor in the following cases (a new approval form is not required):

• if a contractor leaves before the end of the engagement period and a new contractor must be engaged for the remaining period
• if a request to engage a pre-identified contractor has been approved, and the business area subsequently decides not to proceed with that pre-identified candidate (for example, the candidate withdraws) but instead elects to have candidates sourced by Contractor Central.

In both cases, the following key engagement conditions must remain unchanged:

• pay rate
• budget allocation
• assignment duration
• scope of work.

The hiring manager must complete and sign a Conflict of Interest (COI) Declaration Form for Contractor Engagements (PDF 2 MB) for the successful candidate before they begin work.

7. 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 team (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.

8. 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 is required to explain on the Contingent Worker Approval Form (staff only) (PDF 1 MB) why the pre-identified candidate is suitable for this role and the rationale for nominating this candidate rather than Contractor Central independently sourcing a suitable candidate.

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.

9. Conflicts of interest

In accordance with the department’s Code of ethics and conduct procedure, all parties involved in approving the engagement of a contractor (regardless of whether the candidate is sourced by Contractor Central or pre-identified by the hiring manager) are required and expected to act ethically, lawfully and in the public interest.

Without limiting the standards of behaviour in the department’s Code of ethics and conduct procedure, acting in the public interest means:

• treating all candidates being considered to provide services as a contractor equally without prejudice or favour; and with honesty, consistency, impartiality and respect
• placing the public interest over personal interest
• providing transparency to enable public scrutiny.

A conflict of interest exists when a department employee’s public duty conflicts, or may be perceived to conflict, with their personal interests.

9.1 Managing conflicts of interest

All parties involved in requesting and approving the engagement of a contractor are required to avoid or manage an actual or perceived conflict of interest and cooperate in their management.

The Conflict of Interest Declaration Form for Contractor Engagements (staff only) (PDF 2 MB) must be completed and signed by the hiring manager, the relevant director, the relevant Executive Director and submitted to the Deputy Secretary in the following circumstances:

• For new pre-identified contractors, the conflicts of interest declaration must be completed and attached with the Contingent Worker Approval Form (staff only) (PDF 1 MB)
• For new contractors sourced by Contractor Central, the conflicts of interest declaration must be completed when the successful contractor is selected and before the contractor commences work.
• When extending an existing contractor, only submit a new conflicts of interest declaration if there is a new or significantly changed conflict of interest that needs to be declared and avoided or managed, or a contractor pay rate increase is proposed as part of the extension.
• If a new conflict of interest arises at any time during the contractor’s engagement or if a previously declared conflict of interest can no longer be managed or the risks have changed, a new conflicts of interest declaration must be completed. This applies regardless of whether the contractor’s engagement continues or is terminated following the new declaration.

In all the cases above, the completed and signed Conflicts of Interest Declaration Form for Contractor Engagements must be uploaded on the contractor’s assignment in Beeline. Contractor Central will not proceed with the contractor’s engagement unless the fully completed and approved form is submitted.

9.2 Assessing declared conflicts of interest

The relevant Deputy Secretary is responsible for assessing declared conflicts of interest (actual or perceived) and for endorsing the Action Management Plan (if the actual or perceived conflict can be avoided or managed effectively).

For guidelines on avoiding or effectively managing declared conflicts of interest, refer to Conflicts of Interest (staff only).

If a Deputy Secretary has a conflict of interest to declare, this will be disclosed to the Secretary in accordance with the department’s Code of ethics and conduct procedure and existing processes, not via the above declaration form.

10. 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 department 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 (staff only) (PDF 847 KB) and uploading the signed form to the worker’s assignment in Beeline.

11. 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 Records management procedures (staff only) and system.

12. 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).

13. Contractor signature block and contact details

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

For example, John Smith, [business area], 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)

14. Performance review and management

The role and 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.

If there are concerns about the contractor’s understanding of these expectations, hiring managers are encouraged to discuss the issues directly with the contractor in the first instance to clarify expectations and provide feedback. If issues persist following this discussion, there are 2 options – either:

• hiring managers can contact the Contractor Central team (staff only) who will then raise the issues with the supplier (who is the contractor’s employer and will therefore handle all employment aspects, including performance matters)
• if the above option is not practicable (for example, due to the length of the engagement and critical timeframes), the appropriate resolution may be to end the contract engagement. In this case, the hiring manager should contact the Contractor Central team (above) who would then advise the contractor’s supplier of the early cessation of the contract. A minimum notice of one day must be provided to the supplier (refer to section 19. Early cessation of engagement).

15. 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. Ensure appropriate use of contractors > Evaluating the labout 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 (staff only) (PDF 1 MB).

16. 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. Ensure appropriate use of contractors > Evaluating the labour market). The outcomes of the market re-evaluation are to be noted on the Contingent Worker Approval Form (staff only) (PDF 1 MB).
• In relation to the proposed increase in pay rate, hiring managers must contact Contractor Central team (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.

17. 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.

18. 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's initial assignment is terminated for convenience before the original contract end date and within 12 months of the assignment start date –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).

To determine whether all the above conditions are satisfied for a particular contractor, the hiring manager must contact Contractor Central team (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

19. 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 team (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.

20. Working on weekends, public holidays or mandated shutdown periods

Contractors must not work on weekends, public holidays or mandated shutdown periods 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, public holiday or during the mandated shutdown period, 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 Records management procedures (staff only) and system.

Contractors are not entitled to overtime for working on weekends, public holidays or during the mandated shutdown period.

21. Off-board a contractor

Hiring managers must complete all the activities in the Contingent Worker Off-Boarding Checklist (staff only) (PDF 176 KB) and upload the signed form on the contractor’s assignment in Beeline.

21.1 Exit survey and work evaluation

An exit survey will be sent to the contractor at the conclusion of their engagement. This survey offers an opportunity for the worker to provide feedback on their experience with the department. Participation is voluntary but strongly encouraged. All responses are anonymous, confidential and will be reported in aggregate for internal use by the department to help inform improvement strategies.

In addition to the above, the hiring manager must complete a worker evaluation in Beeline once a contractor has finished their assignment. The hiring manager will receive a notification from Beeline at the conclusion of the contractor’s engagement.

21.2 Knowledge transfer

The manager must ensure that a transfer of knowledge is undertaken with the contractor, as needed, before the assignment is concluded to facilitate appropriate employee capability building.

Knowledge transfer may cover:

• processes and workflows
• best practices discovered from experience
• case studies
• other learnings (for example, mentoring, shadowing and training strategies).

As part of a knowledge transfer and capability development strategy, hiring managers should ensure the information is documented and shared with staff as appropriate to embed the new knowledge and learnings in the business area’s ways of working.

22. Monitor and report requirements

Deputy Secretaries will:

• closely monitor the use of contractors to ensure appropriate use within the context of section 2. Ensure appropriate use of contractors and alignment with the department’s overall resourcing and workforce strategy to deliver on Our Plan for NSW Public Education
• provide insights on their division’s contingent use to the Secretary on a regular basis.

The People Group will:

• provide monthly contractor data to the Offices of Deputy Secretaries and the Secretary (and other times as requested)
• conduct regular audits to monitor adherence to the department’s use of this policy, including audits on
  • contingent worker approval forms
  • conflict of interest declarations
  • validation of pay rates
  • onboarding and offboarding checklists
  • hiring manager training completion rates
  • exit survey responses.

Record-keeping requirements

Mandatory tools and templates

• Contingent Worker Approval Form (staff only) (PDF 1 MB)
• Conflicts of Interest Declaration Form for Contractor Engagements (staff only) (PDF 2 MB)
• Induction Checklist for Contingent Workers (staff only) (PDF 847 KB)
• Contingent Worker Off-Boarding Checklist (staff only) (PDF 176 KB)

Supporting tools, resources and related information

Policy contact