rct
RYANCARLI SLETHOMAS
L A W Y E R S
Professor Forsyth Chairperson
Inquiry into Labour Hire Industry and Insecure Work
your ref:
our ref: SJ0::21502275
18 December 2015
Dear Sir
Inquiry into Labour Hire Industry and Insecure Work
We refer to the Inquiry into the Labour Hire Industry and Insecure Work ("the Inquiry"). We have reviewed the submissions provided by the National Union of Workers' ("the NUW") and write to express our general support of those submissions. In particular we support a licensing system which we believe would be a practical and effective way to regulate the Victorian labour hire industry.
The issues arising from the casualisation of the Victorian workforce are not in dispute. They include workers not receiving entitlements such as sick leave, the displacement of permanent workers, a lack of job security, and an increase in workers being injured (for example due to working long shifts, a lack of training or being posted to unfamiliar work places).
The labour hire industry represents a significant portion of Victoria's casual workforce and encounters many of the abovementioned issues. Despite this, there is no law that specifically regulates who can operate a labour hire agency in Victoria.
With the abovementioned issues in mind we agree with the NUW's submission that the labour hire industry ought to be subject to a licensing scheme (NUW submissions, p. 12).
Whilst a licensing scheme would not provide a solution to every issue faced by a labour hire worker, it would in our view provide an effective mechanism for regulating labour hire agencies and reduce the impact and prevalence of unscrupulous operators. In particular, a licensing scheme that
contains effective compliance monitoring would ensure labour hire agencies adhere to their statutory obligations (for example with respect to the Occupational Health and Safety Act 2004 (Vic)).
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IN ASSOCIATION WfTl1 STRJNGER CLARK
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Fair Work Commission SJO: 21502275
18 December 2015
Indeed, licenses are regularly employed by state government to regulate industries in which the public has significant interest. For example, estate agents must be licensed under Part Ill of the Estate Agents Act 1980 (Vic). The Rooming House Operators Bill 2015, introduced by the current state government, is currently before the Victorian Parliament to be considered when Parliament resumes in the New Year. In our submission the Bill provides a useful example of the type of statutory mechanisms the Inquiry might consider with respect to regulating the Victorian labour hire industry. Section 1(a) of the Bill stipulates the Act's purpose is 'to foster professionalism and reduce exploitative and undesirable practices within the rooming sector'. The Act would do this by establishing a licensing scheme that only allows fit and proper persons to obtain a licence, by holding operators to account under the Act, and by protecting the rights of rooming house residents (section 1(a)(i) - (iv)). The fit and proper person test , as a component of a license scheme, would act as a safeguard in preventing individuals with a poor track record (for example with respect to adhering to statutory obligations or paying employees) from operating in the Victorian labour hire industry.
We also commend to your inquiry the NUW's submission regarding a bond and threshold capital requirement for labour hire agencies (NUW submissions, p. 12 and 13). We believe it would be an effective counter measure to phoenixing. As you would be aware, broadly speaking, phoenixing is the deliberate avoidance of liabilities (including employee entitlements) by liquidating a corporate entity only for it to re-emerge under a different corporate veil. Employees in the labour hire industry are particularly susceptible to being underpaid as a result of phoenixing. Indeed, the Australian Taxation Office has stipulated that often it is the labour hire component of a complex corporate structure that liquidates and re-emerges in an attempt to avoid paying employee entitlements (see, for example, Action against Fraudulent Pheonix Activity: Proposals Paper, Australian Government (Treasury) 2009 , p. 3). The economic cost to employees caught up in labour hire phoenixing is substantial : the Fair Work Ombudsman concluded in 2012 that phoenixing cost Australian employees $191 to $655 million per annum (see Phoenix Activity : Sizing the problem and matching solutions, Fair Work Ombudsman/Price Waterhouse Coopers, June 2012 , p. 2). As a matter of logic, bond and capital requirements would serve as protection against this practice by ensuring labour hire agencies are appropriately funded and by reducing incentive to liquidate.
Whilst we recognise the Inquiry is Victorian based and is limited in what recommendat ions it can make - given the federal regulation of industrial relations - we nonetheless note the NUW's concerns
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Fair Work Commission SJO: 21502275
18 December 2015
about the difficulty labour hire workers face in enforcing rights and entitlements under their host's enterprise agreement. Enterprise agreements are a key mechanism by which terms and conditions of employment are regulated and enforced . As the inquiry is aware often in labour hire employment situations the host, rather than the employer, exerts a large amount of control over a worker 's day to day activities. This control can impact workers in various ways including in discipline issues and workplace safety. Whilst labour hire workers can be subject to the enterprise agreements of their employers this often provides little utility when it is their host to whom they answer. A consideration by any future industrial relations review of changes to the Fair Work Act that provide for the application of host enterprise agreements to its labour hire workers ought to be recommended by
the Inquiry to remove the disconnect between workers and host enterprise agreements .
Philip Gardner Partner
RYAN CARLISLE THOMAS
Sebastian O'Meara Lawyer
RYAN CARLISLE THOMAS
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