- by Anna Pha
- The Guardian
- Issue #2070
Photo: pxfuel.com public domain.
In the face of the big rip-off of Australian workers, the Albanese government’s attempted makeover of the industrial relations system continued on 4th September, when Workplace Relations Minister Tony Burke introduced an omnibus bill that he claims will close many of the loopholes in the Fair Work Act that employers use to rob workers of their due entitlements and boost profits at the expense of workers’ health and safety.
In an opportunistic response to the deadly exploitation and carnage in the gig economy, Burke said the bill was needed “to close loopholes that have undercut secure jobs, better pay and safe workplaces.” His department estimates that it would see gig economy workers pocket up to a total of $404 million extra a year and labour hire workers up to $511 million a year. These figures, in fact, amount to an estimate of just how much workers are being ripped off by their capitalist bosses.
The bill contains a raft of reforms covering a wide range of industrial relations issues. This part 1 of 2 examines some aspects of the legislation.
SAME JOB SAME PAY
Labour hire workers are not directly employed or paid by the company (host) that they work for. They are employees or ‘self-employed’ subcontractors, with ABNs (Australian Business Number), working for a labour hire firm.
Labour hire was originally used to fill the short-term or specialist needs of a company or government agency, but in recent decades it has become a widely used business model. It is commonly used to undercut wages and other labour costs, especially where the worker is a ‘self-employed’ subcontractor. This cuts costs as the worker then becomes responsible for funding their own insurance, superannuation, annual leave, etc.
It is used extensively in mining, construction, aviation, manufacturing, logistics, and other sectors of the economy.
As occurs at Qantas, which set up its own labour hire companies, workers from different labour hire companies and direct employees work alongside each other, doing exactly the same work but with very different wage rates, rights, and entitlements.
According to the Australian Bureau of Statistics 84 per cent of labour hire workers do not have paid leave entitlements. Labour hire workers are less likely to be unionised or covered by enterprise agreements.
The bill states that if an employer already has an enterprise bargaining agreement (EBA) in its workplace, then employees, unions, or the host company can apply to the Fair Work Commission (FWC) for an order giving workers employed by labour hire companies doing the same or similar work the same pay.
The FWC must be satisfied it is ‘fair and reasonable’ in the circumstances to give an order for the pay arrangements in the EBA to be applied. Arguments over what is or isn’t ‘fair and reasonable’ could be a goldmine for lawyers.
Full rate of pay includes bonuses, loadings, monetary allowances, overtime and penalty rates, and ‘any other separately identifiable amount.’ There is no entitlement to non-monetary benefits such as rostered days off, and there are grey areas regarding other entitlements.
There are exemptions including for businesses with 15 or less employees, where the employment is for a period of three months or less such as seasonal work; short-term requirements, or to fill positions where someone is on maternity leave, etc.
A company could set up a number of small businesses to avoid having to pay the going rate.
These provisions do not apply to ‘independent contractors’ (with ABNs) who are not direct employees of the labour hire company but supplied by a labour hire company. In industries such as construction, where the use of subcontractors is rife, this exemption is a serious shortcoming. In other industries such as logistics where workers are directly employed by a labour hire company, these provisions could prove to be a positive development. Apprentices in training are also excluded.
The bill contains provisions that are intended to prevent labour hire outfits from replacing labour hire workers every three months to avoid paying the EBA rates.
The ‘same job same pay’ provisions only come into effect when the FWC has issued an order following an application. The bill does not legalise the negotiation of EBAs that would see all workers in a workplace regardless of form of employment get the same rate for the same job.
GIG & ROAD TRANSPORT
Gig workers are found in rideshare, food delivery, the NDIS and other caring occupations, and an increasing number of other industries. They all have in common use of an app or website or other digital setup to arrange, allocate or facilitate the provision of labour services.
On some platforms, workers compete for work, driving down wages for their services.
The bill enables unions and workers to apply to the Fair Work Commission for orders for minimum standards in the gig economy, including wages, penalty rates, superannuation, record-keeping, insurance and what is known as ‘deactivation.’
Deactivation is the process of removing a gig economy worker from an app, ending their ability to earn income. The platforms have this control over workers despite claims workers are ‘independent’ of the platform. Deactivation may occur where workers are not deemed fast enough or not prepared to work certain hours when requested.
The reforms are of limited use to digital platform workers who have low bargaining power, or receive pay at or below the rates of comparable employees. These workers are referred to as ‘employee-like workers.’
The FWC will have similar powers for road transport industry workers who are employee-like workers, such as owner drivers. There will also be a road transport advisory group and the transport minister will establish a Transport Industry Termination Code. The FWC will be empowered to deal with disputes over the unfair termination of a road transport contractor’s services contract by a road transport business.
Digital labour platform operators and road transport businesses can also make consent-based collective agreements with trade unions.
Sham contracting, where employers misrepresent the form of employment as an independent contracting arrangement, has increasingly become a business model. It has been sold to workers as ‘be your own boss,’ ‘have control over your work.’ In determining whether sham contracting is occurring, factors such as how the work is carried out are taken into consideration.
In practice, sham contractors do not have control over such things as the work they do, when they do it, how they do it, etc. It amounts to an extreme form of exploitation.
The worker is required to take out an ABN and is denied many of the entitlements of other workers that are covered in modern awards and enterprise bargaining agreements.
The bill strengthens existing provisions around sham contracting. The onus of proof that it is not sham contracting is shifted onto the employer, so that an employer would need to prove that they reasonably believed that the contract was a contract for services.
The bill proposes a new criminal offence of wage theft which is defined as failure to pay the required amount on or before the day when it is due. But it does NOT cover contributions payable to a superannuation fund; for long service leave; paid leave as a result of being a victim of crime; paid jury duty; or emergency services duty.
In addition, it will be necessary to prove beyond reasonable doubt that the employer intentionally engaged in the relevant conduct – an extremely high bar to clear!
Small businesses are off the hook if they comply with a “voluntary small business wage compliance code” to be drawn up by the Fair Work Ombudsman (FWO).
Where underpayments are accidental, inadvertent, or based on a genuine mistake it is not deemed to be wage theft. This is a whopping loophole, an opening for big business to cry that the system is too complex, that there was a system error, etc.
Deliberate underpayment is a criminal, not civil, offence. The penalty for an individual is a maximum of ten years’ imprisonment or a fine of up to the greater of either three times the underpayment amount, or 5000 penalty units (currently $1,565,000) or both. For a company, the penalty is either three times the underpayment amount or not more than 25,000 penalty units (currently $7,825,000).
There is a six-year limitation period.
CASUAL TO PERMANENT
This section sets out to overcome decisions of the High Court in 2022 when the focus on defining casual shifted from looking at the various conditions of employment in practice to one of focusing on the wording of the employment contract.
The bill specifies that a worker is a casual employee if the employment relationship does not specify a firm commitment to continuing and indefinite work and the worker is entitled to a casual loading, or a specific rate of pay for casual employees under the terms of employment. A casual employee cannot be engaged on a fixed term contract.
The bill details a number of factors to be taken into consideration when establishing whether the employment is casual.
Workers who believe their work is ongoing and regular, may after six months (twelve months for small business) seek to become part-time or full-time employees.
Any employer refusing the request must give reasons. If there is dispute over the status of the worker, it may be taken to the FWC where it can be settled by arbitration.
Many of the above provisions, while purporting to give workers more rights and better pay, are extremely complex and in some instances unclear. It will take a number of court cases to resolve their exact application.