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  • Writer's pictureZmarak Zhouand

How wrong is ASQA’s position on third party arrangements?

Updated: Apr 24, 2021

Dead Wrong!

Third party arrangements are beneficial, especially for small RTOs that wish to engage other organisations to carry out services or training for them. Third party or agency arrangements are clearly anticipated and permitted by the National Vocational Education and Training Regulator Act 2011 (Cth) (NVR Act) and the Standards for RTOs.

ASQA issued this General Direction—third-party arrangements for training and or assessment of VET courses, aspects of which many people believe to be wrong.

But how wrong is it?

The ASQA General Direction states that if a principal RTO wishes to engage a third-party RTO to act as an agent and assist in delivering training and assessment of a qualification, the third-party RTO must have that qualification on its scope of registration. This rule only applies where both parties (principal and agent) are RTOs.

Sounds wrong, right?

ASQA’s rationale

ASQA is well aware of the laws of agency. In fact, the General Direction states:

Principal RTO is responsible for all activity by third parties. The existence of a third party agreement does not absolve the principal RTO of responsibility for compliance with relevant regulatory obligations. In all circumstances, the principal RTO is fully accountable for the actions of the third party as they relate to the delivery of relevant services, regardless of any part of a third party agreement that may suggest otherwise.

But for some reason this position excludes third-parties that also happen to be RTOs.

ASQA explains the rationale for its position arises from sections 93 and 94 of the NVR Act. These sections state that it is an offence for an RTO to provide, or offer to provide, all or part of that VET course without registration. Based on these provisions, ASQA says that a principal RTO cannot engage an agent RTO to deliver a course on the principal’s behalf, unless the agent has the same course on its scope of registration.

According to ASQA, this means that an RTO cannot engage another RTO to deliver a VET course, unless the third-party RTO has that VET course on scope.

The common sense interpretation of sections 93 and 94

Undoubtedly sections 93 and 94 of the NVR Act prohibit an RTO from delivering a course it does not have within the scope of its registration. The clear intention of these provisions is to prevent RTOs delivering training without first obtaining the proper approval. The aim being to protect student’s interests to ensure the RTO has adequate resources and processes in place to deliver the training to a satisfactory standard.

The right to enter into a third-party arrangement is a general right at law that all RTOs have. This right is contemplated by the NVR Act and the RTO Standards. The meaning of third party is defined in the RTO Standards as: any party that provides services on behalf of the RTO. The important words here are “any party”, making it clear that other RTOs are not excluded from this definition.

Section 93 and 94 were clearly not intended to be read in the restrictive sense that ASQA has construed (or skewed!). Every provision within a legislative framework must be construed consistently with the language and purpose of the statute, viewed as a whole and in its context.[1]

The law of agency vs ASQA’s position

In addition to the laws of statutory interpretation, we can also turn to the law of agency to demonstrate the error in ASQA’s reasoning.

The law of agency says that a principal (including an RTO) can engage an agent (including an RTO) to act on behalf of the principal in almost any commercial capacity. From a compliance and liability perspective, the principal RTO must ensure that the delivery of the training and assessment is consistent with applicable law, regulation and standards. However, there is nothing that generally prevents a principal RTO engaging another RTO to deliver training and assessment on its behalf.

ASQA’s reliance on sections 93 and 94 of the NVR Act is misplaced. On a proper application of the law, those provisions do not restrict the general right of an RTO to appoint an agent (including another RTO) to deliver training and assessment on its behalf.

Based on this, an RTO can appoint any person to act as its agent in the delivery of training and assessment. Whilst the training and assessment is delivered by the agent (be it another RTO or a non-RTO), that delivery is on behalf of the principal RTO (not on behalf of the agent). Because the delivery is on behalf of the principal RTO, which has the relevant item on scope, there is not need for the agent RTO to have the same item on scope.

Way forward

If you believe that you are or may be affected by ASQA’s General Direction on this issue, it you should immediately seek legal advice on your specific situation – do not rely on this article.

Under the NVR Act, the General Direction is generally binding on RTOs unless it is set aside by a court or the Administrative Appeals Tribunal (AAT) in a case before it.

However, the vast majority of RTOs, understandably, wish to avoid going to court or the AAT and would rather concentrate on their core function of delivering training and assessment.

Fortunately, there are very simple structural changes that RTOs can make to their third-party arrangements to fall into compliance with ASQA’s General Direction.

But for those of you who wish to challenge the validity of the General Direction, you may wish to consider the following with advice from your lawyer.

(1) Submitting a complaint through ASQA’s internal channels.

(2) Going to the AAT. The Standards for RTOs require RTOs notify ASQA within 30 days of entering into an agency agreement with a third party. If you apply to have your agency

agreement approved by ASQA and it gets denied, you can appeal this decision through the AAT. You can then challenge the validity of the General Direction at the AAT.

(3) Another option is to challenge ASQA’s interpretation of section 93 and 94 of the NVR Act in the Federal Court by invoking your rights under the ADJR Act and section 39B of the Judiciary Act.

For advice on your rights and assistance, speak with your lawyer.

[1] Project Blue Sky v Australian Broadcasting Corporation (1998) 194 CLR 355 at 381-382 [69]-[71], 384 [78] per McHugh, Gummow, Kirby and Hayne JJ.

Disclaimer: This article has been based on Australian law and practices current as at the date of publication. Information contained in this article constitutes legal information and should not be viewed as legal advice. You should consult with a lawyer before you rely on this information.

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