Navigating the Complexity of Third-Party Arrangements across Different Jurisdictions

The landscape of regulatory requirements for Registered Training Organisations (RTOs) can be a complex one, especially when it comes to managing third-party arrangements across multiple jurisdictions and different funding bodies.

Whether it's the Standards for RTOs 2025, the NSW Smart and Skilled program, the QLD DTET SAS contract, or another state or territory funding body, RTOs often find themselves in a labyrinth of regulatory obligations, each with its own interpretation of what constitutes a third-party arrangement. The question every RTO faces is:

How do you ensure compliance when the rules seem to contradict, overlap, or add layers of confusion?

With each department having their own set of requirements and interpretations when it comes to third-party involvement in marketing, recruitment, student eligibility and enrolment, training, assessment, and the engagement of other external services, is the burden of navigating these regulations too heavy? And more importantly, how can RTOs stay compliant in a sector so red-taped that even the regulators seem to have conflicting interpretations and requirements?

Come with me on a journey to explore the alignment and contradictions between the Standards, NSW Smart and Skilled, and QLD DTET as I try to unpack the confusion and determine how RTOs can succeed despite the complexity.

Before we start digging, I need you to consider this… forget everything you thought you knew about third party arrangements. And if you are going to dig deeper into our rabbit hole, don’t refer to any old contracts, standards, guidance materials or other non-regulated sites, people, or other materials in your research… look at the facts.

The Core Issue: Conflicting Rules and Compliance Confusion

The heart of the problem lies in the fact that the various regulatory and department bodies have different definitions of what constitutes a third-party arrangement and what needs to be reported or documented.

Definitions are a hot topic at the moment, so let’s dig ourselves a little rabbit hole…

Standards for RTOs 2025 – Compliance Requirements:

According to the Standards, a third party is any “person” involved in the delivery of training, assessment, or training support services on behalf of an RTO.

You read that right… “Person”.

But surely not in the true sense of the word?

Typically, "person" refers to an individual (a natural person) - but not here. According to the definition provided in the Acts Interpretation Act 1901:

The final version of the standards as we know them right now refers to a “person” as per the image above. Whereas the draft version of the Standards referred to a Third Party being an “entity”.

Why the change? If the term “entity” and "person" are interchangeable, why not leave it? It was much clearer.

And what about the Standards for RTOs 2015? What did they say about “persons” and “entities”?

Now, we know that these arrangements need to be reported to the regulator. Not approved… but reported. And we do this through ASQANet. 30 days prior to the implementation of the third party services taking effect.

As I mentioned, this is a journey - we will come back to the third party services a little later. Stick with me… it gets better.

With that said, let’s look at NSW.

NSW Smart and Skilled:

The NSW Department of Education are clearer on their definition of a Third Party:

The Operating Conditions go on to say that third party arrangements are with another individual or organisation. Now that is clear… and supports our earlier assumption of the intention of the Standards.

NSW DET provides even more clarity by describing brokering a subset to Third Party arrangements, and we will circle back and cover the activities under these later. For now, though, let’s define NSW “Brokering” arrangements:

However, the Smart and Skilled Third Party (Brokering arrangements) policy throws a spanner in the works:

The use of Facilities and equipment are considered a third party arrangement? Really?

Yet it is only Brokering Arrangements that need to be reported to NSW DET. Well, actually, the broking arrangements must be applied for 28 days prior and ultimately approved.

But not the third party arrangements. That goes to ASQA.

Except for arrangements for the use of facilities and equipment… ASQA mentions in Clause 1.8 (a) and (b) that facilities and equipment can be provided by Third Parties, however the definitions of the services third parties can provide exclude this.

ASQANet does not also allow, at the time of writing this, for the reporting of third party arrangements for the use of facilities and equipment but does allow for the selection of "Issuance of qualifications" - which we know is incorrect. Oh, and the selection of a rando RTO - but let's ignore that.

Confusing.

Anyway, according to NSW DET, Third party arrangements and brokering are two different things. And the differences are around the services provided. But we’ll come back to that.

Let’s head north to QLD. Again, this is a journey.

QLD DTET SAS:

At first glance, it seems that QLD DTET is even more defined when it comes to what is a third party:

They go on to provide an example whereby a third party is any other company with a different Australian Company Number (ACN) to the SAS. You have 10 days to declare these arrangements

Then here is where it gets muddy again… what about a sole trader? Or a partnership? They have an ABN, but not an ACN… so a “person” is not a third party?

Maybe this is a good time to now consider what is NOT a third party… a backwards approach might help us get on the front foot.

What a third party is NOT.

The Standards for RTOs 2025:

A third party does not include:

We will come back to what constitutes “employees” and “experts” later. With the help of a government expert!

NSW DET Smart and Skilled:

A third party does not include:

What is a “contract” I hear you say? Our government expert will help us with that too.

QLD DTET SAS

Ok, so “contractors”… trainers and assessors who are not necessarily employed by the RTO, but are contracted for a period… Not a third party.

The Standards for RTOs 2015:

Let’s jump back in time for a second, and see what the Standards used to say:

So contracted trainers/assessor used to be external to the Third Party arrangements, but now they’re not explicitly mentioned? Why?

Enter the Australian Tax Office – our “expert” - and their explanation of the differences between employees and contractors.

So, a trainer/assessor who operates under their own ABN (entity), who issues your RTO with an invoice = contractor.

An employee who provides services under the name of your RTO and is on the payroll (PAYG) = employee.

With this example:

-          Standards 2015 = Contractor Trainer = Not a third party

-          Standards 2025 = Contractor Trainer = Unsure at this point - but I will clarify shortly.

-          NSW DET = Contractor Trainer = third party. Unless a definition of "employee" says otherwise?

-          QLD DTET = Contractor Trainer = Not a third party.

What if the “employee” was from a labour hire company?

Contractor Trainer from a labour hire company = Third Party.

QLD DTET agrees:

Wait... maybe it depends on if a person has a written contract?

Clearer? No?

Maybe now is a good time to look at what an “expert” is and see if we can rule them out of the Third Party puzzle.

What is an “expert”?

We actually don’t know for sure. There is no definition. Enter own definition here.

Based on the context and common industry usage, an expert (Subject Matter Expert – SME) refers to an individual with a deep knowledge or skill in a particular field, who provides consultative services rather than direct training or assessment. OR do they?

Imagine an RTO contracts an external expert (SME) to review its training package for a particular qualification.

The expert is not involved in the actual delivery of training or assessment. They simply provide consultative input on how the content could be enhanced to better meet industry standards.

However, if the expert were to engage directly in training delivery or assessments, does this shift them into the category of a third party?

Maybe it’s about the services actually provided?

Let’s look at that.

JOURNEY, people.

The Standards:

NSW DET Smart and Skilled:

QLD DTET SAS

 Let’s break it down.

We all agree that training and assessment services and activities are consistently covered as a third party provision. As are student support services with marketing, recruitment and student onboarding included there as well (I will remind you, in NSW DET these are considered “brokering” arrangements).

NSW and QLD go on to include any other services provided where your contract responsibilities are… outsourced? Deferred? These include management and admin services, RTO consultants… but NOT accounting or taxation professionals.

Thanks QLD DTET.

Let’s now see if we can make sense of this with some examples. Let’s start with the easy ones:

Is a contracted SME who provides insight into my training a Third Party?

In the eyes of ASQA? No.

NSW DET? Again, No.

QLD DTET? No.

Great! We can all agree on that.

When my SME delivers training and assessment on behalf of my RTO, is this a Third Party?

ASQA? No, because a contracted person and an employee are considered the same thing.

NSW DET? Yes, but it does not have to be reported to NSW DET.

QLD DTET? No, they can be considered a contracted trainer/assessor.

My trainers and assessors come from labour hire. Is this a third party?

ASQA? We assume so, as the arrangement would be with the labour hire company, not with the individual.

NSW DET? Probably – they revert back to the Standards.

QLD DTET? Yes. Definitely.

I outsource admin processing of student enrolments, data and reporting. Is this a Third Party?

ASQA? Yes, if they are enrolling your students.

NSW DET? Yes, as a brokering arrangement, if they are enrolling students. But reporting activities is absolutely not permitted under these arrangements. This must be maintained by the RTO.

QLD DTET? Yes. But tread carefully, particularly with offshore suppliers.

I engage a marketing firm to help me market my courses and gain enrolments. Is this a third party?

ASQA? Yes. This arrangement must be declared, and tight control needs to be retained.

NSW DET? Yes – a Brokering application must be submitted.

QLD DTET? This is actually a prohibited subcontracting arrangement. Not allowed.

Is my RTO Consultant a third party?

In the eyes of ASQA? No.

NSW DET = well, that depends on how much day-to-day responsibility they have in your RTO.

QLD DTET? Yes.

Now for the big question…

Is a contracted (not employed) individual trainer/assessor a third party?

ASQA: It may seem like it, as it is not clearly described, but I have written confirmation from ASQA that a contracted trainer/assessor is considered an "employee", even though there is no formal or legal definition of the term.

NSW DET: Yes.

Because they are delivering training or assessment services on behalf of the RTO, but these arrangements are not required to be reported to the department – only ASQA.

QLD DTET: No.

If the trainer/assessor is contracted, they are considered part of the RTO’s operations and are not considered a third-party arrangement.

Ok. Still with me?

Is it All Red Tape or Just Misalignment?

The question many RTOs are asking is, “Why does the sector seem to have so much overlap, yet so many gaps in terms of clear guidance?” The complexity is not just a matter of red tape, it’s a case of misalignment across the various state and federal frameworks.

This misalignment leaves RTOs in a difficult position. One might think they're fully compliant under ASQA's regulations but find themselves out of sync with NSW Smart and Skilled or QLD SAS reporting requirements.

We face some key challenges:

• No single unified framework exists that spans all jurisdictions. This creates inefficiency and confusion, especially for RTOs operating across multiple state boundaries.

• With different jurisdictions imposing varying requirements, RTOs are often required to maintain multiple sets of documentation, each reflecting the nuances of the different regulations.

How are RTOs supposed to navigate this confusion?

Let’s explore some more scenarios to understand how RTOs handle this confusion.

Scenario 1: The case of a third-party trainer

An RTO engages an external trainer to deliver subsidised training for a Certificate III qualification. The trainer operates as an independent contractor and not an employee.

• ASQA: The RTO can engage this individual without documenting a third party arrangement as the contractor falls under the direct instruction of the RTO.

• NSW Smart and Skilled: Since the third-party is not involved in recruitment or marketing, the RTO does not need to report this as a brokering arrangement to NSW DET.

• QLD SAS: The RTO would not need to declare this arrangement. However, if the arrangement was with an entity (rather than an individual contractor), the RTO would need to ensure that no more than 50% of the training is subcontracted out, and the arrangement would need to be reported in accordance with SAS requirements.

Scenario 2: Marketing and recruitment by an external agency

An RTO contracts a third-party marketing agency to manage student recruitment for its subsidised programs.

• ASQA: ASQA requires marketing or recruitment activities to be reported as part of third-party arrangements. The RTO must ensure that the agency complies with ASQA’s Standards for marketing, does not use the NRT logo, and does not use the RTO’s branding.

• NSW Smart and Skilled: The RTO must report this arrangement as part of the brokering activities (recruitment).

• QLD SAS: Marketing and promotion of SAS programs are prohibited by a third party.

Scenario 3: Using external facilities and equipment

An RTO uses an external training facility to deliver training as part of its funded programs.

• ASQA: No, not third party but an arrangement must be in place if facilities and equipment are being leased.

• NSW Smart and Skilled: Apparently, yes, but not really sure how.

• QLD SAS: Not that is obvious, no.

Wrapping Up the Third-Party Conundrum

The VET sector is undoubtedly burdened by red tape, and the confusion around third-party arrangements across ASQA and other jurisdictions can make it seem nearly impossible to stay compliant. However, understanding the similarities and differences between these playing fields can help RTOs… strive to comply, while maintaining the integrity of their training and assessment services.

Here is my advice:

• Understand your funding agreements. READ THE CONTRACT and any other policy documents, terms and conditions, as well as the evidence and audit requirements under these funding programs.

• Draw a line in the sand. In your Third Party Management policy document, clearly explain what is and what is not, a third party – and explain why. Reference the compliance guidelines, do your best at interpreting the definitions, consider how they apply to you, your RTO and the fields you play on.

• Write it down. Ensure formal written agreements are in place that reflect the requirements for each jurisdiction, for all third-party (non-employee/contractor) arrangements that relate to:

  • Recruitment of prospective students.

  • Enrolment of students (incl. fee receipting).

  • Provision of educational or support services.

  • Delivery of training and/or assessment.

• Try to understand the State requirements. Understand the reporting requirements for each stakeholder, particularly regarding timeframes for commencement and termination of arrangements.

And for goodness’ sake, monitor the arrangements carefully. And regularly. With a comprehensive review tool. And fix the issues you identify.

It’s not easy, but with the right approach, it is possible for RTOs to stay compliant and continue delivering high-quality education without getting bogged down by regulatory confusion.

Just try to do the right thing.