The Guardian • Issue #2087

Rules for exploitation

  • by Anna Pha
  • The Guardian
  • Issue #2087
Food delivery bikers. Most gig workers must pay their own insurance and cover their own sick leave, annual leave, and superannuation.

Most gig workers must pay their own insurance and cover their own sick leave, annual leave, and superannuation. Photo: Taylor Herring – flickr.com (CC BY-NC-ND 2.0).

Labor’s second tranche of the Closing Loopholes Bill laying down the rules for exploitation, was finally passed on 12 February following Labor’s acceptance of the Greens’ ‘right to disconnect’ amendment and more than 20 amendments from independent Senator David Pocock. The media have focused on the ‘right to disconnect’ provisions, but there is much more to the bill.

As with the first tranche which was passed in December 2023, there are a number of positive reforms, and others which fall short. The legislation is also noteworthy for what it does not include. The original bill was broken into two tranches when Labor realised it would not be passed by the Senate last year.

The first tranche contained the relatively non-contentious issues of the original bill, including ‘same job, same pay’ for labour hire workers, certain workplace delegate rights, criminalisation of intentional wage and superannuation theft, enhanced discrimination protections, regulation of silica-related disease, conciliation conferences prior to industrial action, a new federal criminal offence of industrial manslaughter, and right of entry changes for union officials assisting health and safety representatives.

When the original bill was presented in September 2023, employer bodies and anti-worker media outlets such as News Corp and the Australian Financial Review (AFR) ran a hysterical scare campaign warning the bill would bankrupt businesses, undermine the economy, and spell the death of tradies. They even dishonestly claimed that union officials would be raiding employers’ homes!

It is no different this time, with more false claims and hysteria.

CASUAL TO PERMANENT

There are 2.73 million casual workers. More than half a million of them want to be permanent. Over recent decades casualisation has become a method of doing business, enabling bosses to intimidate and threaten workers who seek better pay and working conditions, or who want to join a trade union. Casuals are insecure and vulnerable, at the mercy of their bosses.

The Closing Loopholes Act (CLA) sets out to overcome decisions of the High Court in 2022 when the focus on defining casual work shifted from looking at the various conditions of employment in practice to focusing on the wording of the employment contract.

A casual employee is defined as one for whom there is  firm commitment to continuing and indefinite work, and who is entitled to a casual loading or a specific rate of pay for casuals as specified in an agreement.

The definition does not exclude workers with a regular pattern of work. The focus is on the totality of the employment relationship. The CLA also specifies how a worker may seek to become an ongoing part-time or full-time employee.

Casual employment or labour hire should only be an option for top-up labour, or a replacement for someone on temporary leave, not a business model.

DEFINITION OF EMPLOYMENT

For the first time the Fair Work Act (FWA) defines the term ‘employment.’

One of the aims is to end what is known as ‘sham contracting’ whereby workers to all intents and purposes are employees but are required to become self-employed as contractors with an ABN and loss of many basic rights that other workers have.

The courts will have to consider the ‘reality’ of the situation, not the contract, in determining if a worker is an employee and entitled to back pay.

The onus of proof will be on employers to prove they reasonably believed the contract was a contract for services.

“EMPLOYEE-LIKE” WORKERS

More than 15 gig workers have died on Australian roads since the gig economy began in 2017. These workers are ‘independent contractors,’ deemed to be providing services for a company, and technically not employees of that company. Gig work is unregulated and undercuts awards and enterprise agreements at the same time as making it extremely difficult to unionise workers.

Workers are required to take out an ABN and are denied many of the entitlements of other workers who are covered in modern awards and enterprise bargaining agreements. They must pay their own insurance and cover their own sick and annual leave and superannuation. Sham contracting is rampant in the construction industry.

Under Closing Loopholes, gig workers or trade unions can now apply to the FWC for a minimum standards order for pay and conditions. These conditions may include payment terms, deductions, consultation, insurance, delegates’ rights and recovery of costs.

However, rosters, overtime rates, penalty rates, and payments for time prior to the acceptance of an engagement or between engagements are excluded. Workers’ flexibility to work when they choose cannot be affected.

This applies where the pay is at or below the rate of an employee performing comparable work, or when a worker has low bargaining power in negotiations in relations to their services contract under which the work is performed.

It does not include workers who have a high degree of bargaining power, are comparatively well paid, or have a significant degree of control over their work. For example, it excludes tradespeople even if they work on a digital platform.

Instead of minimum standards orders the FWC can make minimum standards guidelines. These are non-binding and are restricted to the same areas as binding orders. Time will tell just how big a loophole this is.

A Digital Labour Platform Consultation Committee will be established so that representatives of government, digital labour platform operators, and workers performing digital platform work can consult on workplace relations matters.

The Closing Loopholes covers unfair deactivation where workers are cut off the platform unfairly. They may be reinstated if found to be unfairly sacked, but not compensated. Gig workers such as delivery drivers are under pressure to beat the clock if they want to gain work at the busiest times and hence earn more income or avoid being cut off.

Just how this will work in practice remains to be seen, but it could prove to be riddled with loopholes. An employer might give a worker next to no work rather than disconnecting them. The difficulty in unionising gig workers remains an issue.

ROAD TRANSPORT

In 2023, 54 truck drivers lost their lives on the road. The FWC will be able to make guidelines setting standards for road transport employee-like truckies such as owner drivers. The Transport Workers Union has fought hard for companies using owner drivers and other contractors to be regulated.

There are unfair termination provisions which apply after six months of a service contract in accordance with a Code to be drawn up by the relevant minister. Unfair termination could result in reinstatement or compensation if deemed appropriate.

Unions representing platform-based workers or truckies can make consent-based collective agreements with platform operators and businesses. There are provisions for the FWC to be involved in determining whether contract terms are unfair.

RIGHT OF ENTRY

Under the anti-worker Australian Building and Construction Commission entry permits were weaponised. Dozens of union officials had their permits suspended, revoked, or not renewed and hence their right to enter workplaces to carry out their duties denied.

Since Labor abolished the ABCC and transferred its responsibilities to the Fair Work Ombudsman, a number of trade union officials have regained their permits but limitations on right of entry remain.

Under the FWA, a union official must normally give the employer 24 hours before entering a workplace. The Closing Loopholes enables a union to obtain an exemption certificate from the FWC when they reasonably suspect wage theft.

It does not apply where non-union members are involved. This is a weakness, in not only being able to check on payment of non-members but in a workplace with low trade union density as it identifies who are members – a serious loophole that remains to be closed.

It should not be necessary to go to the FWC first or to give 24 hours’ notice. Such restrictions have not always existed.

The CPA advocates for the elimination of the Permit system for Right of Entry. Workers should have the right to be represented at any time during working hours at their request when required.

On a positive note, it will become unlawful for an employer to refuse to deal with a workplace delegate.

BARGAINING

Where bargaining around a new agreement has continued for more than 9 months, the FWC will be able to arbitrate. The decision must be no less favourable than each term of the previous agreement.

The scope of multi-employer agreements will be further extended, but still does not go far enough. The CPA campaigns for industry bargaining.

Under Closing Loopholes an enterprise agreement can be replaced by single interest employer agreement if it has not passed its nominal expiry date.

WHAT’S MISSING

Closing Loopholes takes a number of steps towards restoring basic trade union rights that have been eroded over the past 30-40 years. More needs to be done to tackle the rampant exploitation of workers and strengthen the rights of trade unions.

Australia has some of the most draconian labour laws in the developed economies. The laws are partly responsible for the decline in union membership which today sees only 1 worker out of 10 belonging to a union.

The previous tranche contained a new criminal offence of wage theft, defined as failure to pay the required amount on or before the day when it is due. But it did 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. This needs to be rectified.

The new legislation also fails to legislate for the unfettered right to strike or repeal the right of employers to lock out workers – critical reforms that would strengthen the hand of workers and their trade unions in struggle.

The right to strike is necessary to enforce the provisions of this legislation.

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