Australia: How Australia is combatting worker exploitation

Over the last 12 months, inquiries into the labour hire sector in Victoria, Queensland and South Australia have all come to the same conclusion: there is widespread exploitation of vulnerable workers and this requires a regulatory response.

The independent Victorian Inquiry into Labour Hire and Insecure Work identified underpayments, non-payment of tax and superannuation, and health and safety breaches as being particularly evident in three sectors: horticulture (in particular fruit and vegetable picking), meat processing and contract cleaning.

In Queensland and SA, parliamentary committee inquiries found evidence of 'phoenixing' (which typically involves the winding up of a non-compliant entity and starting up a new company), sham contracting, unlawful undercutting of employment conditions and unsafe work practices in the horticulture, meat, cleaning, security and hospitality industries (among others).

The findings of these state-level inquiries are consistent with those of investigations by federal parliamentary committees and the Fair Work Ombudsman, along with a stream of media reports in the last two years. Major corporate brands including 7-Eleven, Caltex and Domino's Pizza have been implicated in significant workplace law contraventions.

THE NEED FOR REFORM

Introduction of licensing

Licensing of labour hire providers or contractors is considered a necessary step because, as all three state inquiries found, there are very few (not to mention low) barriers to entry to the labour hire industry in Australia. While federal and state laws setting minimum employment and safety standards apply to labour hire companies in the same way as they do to other employers, the inquiries identified high levels of non-compliance with those laws among parts of the labour hire sector.

Disreputable labour hire contractors, e.g. many who supply workers to the farm sector, use technology (the internet and mobile phones) to avoid detection of underpayments and unlawful practices. In many instances, they advertise work on the internet and do not operate through a registered business or corporate entity.

Licensing schemes, with strict standards attached to obtaining and maintaining a licence to provide labour hire services, are common in many other countries. In the United Kingdom, in particular, the licensing framework overseen by the Gangmasters and Labour Abuse Authority has proven to be an effective mechanism to combat labour abuses, forced labour and human trafficking for over a decade.

The objective of licensing is to eliminate 'rogue' operators from the labour hire sector at source. In this respect, the imposition of obligations on both labour hire providers (to obtain a licence) and host companies (only to use the services of a licensed operator) is critical. So, too, are effective monitoring and enforcement of the licensing scheme and the imposition of substantial civil and criminal penalties for non-compliance.

Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Cth)

The Coalition Government has introduced the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (the Bill) into Parliament. The Bill proposes to introduce a number of amendments to the Fair Work Act 2009 (Cth) (FW Act), implementing the Coalition's 2016 election policy to address underpayments and other forms of exploitation identified in various inquiries by the FWO and federal and state parliamentary committees.

The most significant changes proposed by the Bill include:

  • Introducing higher civil penalties for 'serious contraventions' of prescribed workplace laws, to address concerns that civil penalties under the FW Act are currently too low to effectively deter employers who exploit vulnerable workers.
  • Clarifying and increasing the applicable penalties for provisions relating to the failure by employers to maintain accurate employee records and payslips.
  • Expressly prohibiting 'cash-back' arrangements through which employers unreasonably require their employees to make certain payments.
  • Strengthening the evidence-gathering powers of the FWO and introducing new offences for hindering or obstructing investigations, or providing false or misleading information to the regulator.
  • Making franchisors and holding companies responsible for contraventions of certain workplace laws by their franchisees or subsidiaries, where they knew or ought reasonably to have known of the contraventions and failed to take reasonable steps to prevent them.

RECOMMENDATIONS OF THE STATE LABOUR HIRE INQUIRIES

The members of the Queensland inquiry could not agree on a licensing proposal. Their report made one, fairly modest, recommendation: that the State Government urge the Federal Government (through COAG) to address the issuing of Australian Business Numbers as a device for labour hire companies to avoid their obligations to workers.

However, the Victorian and SA inquiries proposed bolder reforms, recommending the introduction of labour hire licensing schemes including assessment of whether providers are run by 'fit and proper' persons and can demonstrate past and future compliance with workplace laws.

The Queensland Government has moved beyond its inquiry's limited recommendation, becoming the first state to introduce labour hire licensing legislation into Parliament:

  • The Labour Hire Licensing Bill 2017 (Qld) would prohibit any provider of labour hire services in that state from operating without a licence. It would also prohibit persons from using the services of an unlicensed provider.
  • The maximum penalties attached to both these prohibitions would be $126,000 for an individual or three years' imprisonment, and $365,700 for a corporation.
  • To obtain and keep a licence, a labour hire provider would need to show that it is a financially viable business; run by fit and proper persons (including no past convictions for relevant criminal offences or involvement in failed businesses); and has a history of compliance with workplace, health and safety, tax, superannuation and migration laws.

The Victorian Government announced in May this year that it would implement 33 of the 35 recommendations of its independent Labour Hire Inquiry (Inquiry), including the establishment of a licensing scheme. The Government is now consulting with industry stakeholders on the optimal model for licensing, and whether the scheme should be limited to the sectors highlighted in the Inquiry or extended across the labour hire sector.

Most recently, the SA Government indicated that it will soon introduce labour hire licensing legislation, noting that another recent investigation (by ReturnToWork SA) has found evidence of significant avoidance of workers' compensation obligations by labour hire companies.

THE CHALLENGES OF LABOUR HIRE REGULATION FOR THE VICTORIAN GOVERNMENT

Acting on the evidence from its own independent Inquiry, the key challenge for the State Government is to come up with a licensing scheme that:

  • implements much-needed protections for vulnerable, low-paid workers
  • ensures minimal disruption to the large number of reputable labour hire companies
  • preserves a reliable source of workers for growers and other end users of labour hire services.

Victoria has indicated that (along with Queensland and SA) it will continue to push through COAG for a national labour hire licensing scheme. This would be a preferable solution, offering businesses a uniform approach, but state-level regulation is imminent in the meantime.

While these regulatory initiatives will focus on improving workplace law compliance in domestic supply chains, momentum is also building with the Australian Parliamentary Inquiry for an Australian equivalent to the UK's Modern Slavery legislation which aims to increase transparency in the global supply chains of major corporations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Chambers Asia Pacific Awards 2016 Winner – Australia
Client Service Award
Employer of Choice for Gender Equality (WGEA)

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.