ATO ‘same job, same pay’ case puts Australia outsourcing model at risk

NORTH SYDNEY, AUSTRALIA — A dispute over pay equality at the Australian Taxation Office (ATO) could dramatically reshape the government’s reliance on outsourced contact center workers, according to a report from Accountants Daily. 

A “same job, same pay” application lodged by an ATO phone operator employed through business process outsourcing (BPO) firm Probe Operations has raised questions about the cost and structure of labor outsourcing across the public sector.

Pay gap between in-house, outsourced staff under scrutiny

The Fair Work Commission (FWC) recently held a preliminary hearing for the case, which challenges the wage disparity between BPO contractors and public sector employees performing the same work. 

According to James Witcombe, director of SMAART Recruitment, the case could upend the business model that made labor outsourcing profitable and set a precedent across the Australian contact center industry.

“The ATO outsources this type of work for a number of reasons, but one of the large reasons is that these providers can do the work more cheaply, basically. It’s certainly not the only reason, but it is definitely one of the main reasons. And they have to pay their own staff a lot more than these BPOs do,” Witcombe explained.

SMAART Recruitment’s 2025 Contact Centre Best Practice Report shows the average public sector customer service agent earns AUD 70,475 (US$46,600) plus super, compared with AUD 53,240 (US$35,200) plus super for BPO staff. 

The Community and Public Sector Union (CPSU) estimates up to 2,000 contractors work for the ATO through firms such as Probe, Concentrix, and Serco. Should the FWC rule in favor of equal pay, labor costs for BPOs could rise by approximately AUD 34.5 million (US$22,900,000) annually.

How equal pay could hit ATO outsourcing costs and call quality

Witcombe predicted that increased wages may ultimately fall on the ATO, as BPOs would struggle to match public sector salaries without renegotiating contracts. 

“Whoever is going to have that contract now has to pay their employees a lot more, they have to charge the ATO a lot more. The margins are extremely thin on these contracts,” he said.

The issue of low pay is also linked to high turnover at BPOs, which can affect service quality. 

“There’s no doubt they have high turnover. But again it’s because BPOs pay the lowest in the whole contract center industry,” Witcombe added. 

Tax Ombudsman Ruth Owen’s review found that external contractors handled over 85% of calls to tax agents, with only 44% of staff having tenure beyond 12 months, leading to inconsistent advice and dissatisfaction among agents.

The CPSU argues that contractors perform “core work” for the ATO, with duties and KPIs set by the agency. Success will hinge on whether the FWC considers the work as labour supply rather than a contracted service.

The case highlights broader challenges in the outsourcing industry, particularly how cost-cutting procurement practices affect wages, employee retention, and service quality. 

“The government has asked them to quote lower and lower and then you end up with any employee on a very low salary. And that has got us to the place we’re in now,” Witcombe noted.

The outcome could influence not just public sector outsourcing but the contract labor market across Australia, reshaping how BPOs negotiate and deliver services in an era increasingly focused on fairness and quality.