Victorian labour hire inquiry

In September 2015, the Victorian Minister for Industrial Relations, Natalie Hutchins, announced an inquiry into the labour hire industry and insecure work in Victoria. The purpose of the inquiry was to investigate the practices of labour hire companies, insecure work, sham contracting and the abuse of visas to avoid workplace laws and undermine minimum employment standards.

The inquiry heard from a total of 221 individual witnesses during 113 hearing sessions (over 17 days of hearings from November 2015 to March 2016) and received submissions from more than 695 organisations and individuals.

Labour hire

Labour hire has been the subject of an increasing focus. Recent data indicates there are around 5,798 labour hire enterprises across Australia, with around a quarter located in Victoria. While labour hire is a lawful means of engaging workers, many labour hire operators engage in exploitative behaviour, and those operators and the “host” companies which engage them often use labour hire arrangements to avoid legal obligations such as workplace laws or tax, and to undermine the wages and conditions of workers directly employed by the host.

Findings

The final report was formally tabled in Parliament on 27 October 2016.

There were a number of ways in which labour hire workers were treated as if they were a ‘second class’ of worker. The inquiry found evidence of exploitative behaviour, arrangements to avoid legal obligations, widespread underpayment of wages, tax avoidance, non-payment of superannuation and poor health and safety practices.

The outcomes for workers in the labour hire industry included financial insecurity, difficulty planning and saving for the future and stress. While the overwhelming mode of engagement is casual employment, many workers said they accepted labour hire engagements as the only choice open to them and would prefer permanent positions.

Worryingly, some labour hire workers do not exercise their rights to report safety incidents, risks or hazards in the workplace largely due to concerns that they may jeopardise their future engagement at the host’s worksite, or their employment with the labour hire agency.

Recommendations

The Inquiry made a total of 35 recommendations to the Victorian government. The recommendations had to take into account the limitations of the State’s regulatory powers in the area.

The key recommendations included:

1. The establishment of a licensing scheme (horticulture, meat and cleaning industries only)

The scheme would require that any person or organisation supplying a worker to another person/organisation in specific industries (subject to expansion as required) must have a licence. To obtain a licence, the operator (and its key personnel) would need to:

• pass a ‘fit and proper person’ test having regard to past convictions for offences involving fraud, dishonesty or violence and past involvement in insolvent businesses or breaches of workplace or occupational health and safety laws; and
• demonstrate that its pay and conditions are in compliance with applicable industrial instruments and/or legislation.

2. The creation of a voluntary code of practice

A code would be developed through a process involving government, representatives of the labour hire industry and representatives of labour hire workers. The code would establish best practice requirements in respect of:

• the abolition of contractual arrangements that prevent or hinder a labour hire employee from obtaining direct employment or require an employee to pay a fee or commission to a labour hire company to obtain work;
• the adoption of fair processes in the dismissal of labour hire employees which do not use the contractual relationship between the labour hire agency and host to defeat the rights of a dismissed employee to seek a remedy;
• the rostering of workers with sufficient notice and planning of shifts for the mutual benefit of all parties;
• the adoption of a best practice approach to the use of piece rates which do not use piece rates as a device to pay workers below minimum pay.

3. The adoption of procurement policies by the Victorian government which gives preference to businesses that adopt more secure forms of work

These policies would give force to procurement principles or standards for successful tenderers for contracts with government departments and agencies. These principles would be aimed at ensuring:

• tenderers predominantly engage workers in secure employment;
• employees are provided the rates and conditions required under industrial instruments and legislation; and
• there would be an examination of the cost structure of the tender to demonstrate that workers' entitlements can be met across the life of the contract.

Other recommendations included:

• The development of targeted data collection to investigate the prevalence and nature of labour hire employment within the State;
• Advocacy for the removal of obstacles that prevent labour hire employees from having the opportunity to be covered by an enterprise agreement applying at a host’s workplace;
• Amendments to the Equal Opportunity Act 2010 (Vic) to clarify that the protections from discrimination in respect of engaging in employment activity, and reasonable adjustments for an employee with a disability, apply in the context of a host’s relationship with a labour hire employee;
• Regulating to provide for worker representation and to protect workers against victimisation for asserting their rights in Occupational Health and Safety Act 2004 (Vic) matters, by either a labour hire agency or a host;
• Regulating to provide the same access to rights of representation in relation to occupational health and safety issues. The existing Act offers only limited protection for labour hire workers, particularly in respect of their treatment or representation at the host’s worksite.

Government response

To date, the Victorian government has committed to introducing a labour hire licensing scheme. The Department of Economic Development, Jobs, Transport and Resources will consult further to develop the structure of the scheme and the industries to be regulated. The remainder of the recommendations are still being considered.