Victorian Inquiryintothelabourhireindustryandinsecurework

20November2015

TheChairman

Victorian InquiryintotheLabourHireIndustryandInsecureWork

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MilduraVictoria3500

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MilduraVictoria3502

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DearProfessorForsythACN086804015

ABN48086804015

RE:SUBMISSIONTOTHEINQUIRY INTOTHELABOURHIREINDUSTRY

InpreparationforourattendanceatthehearingbeforeyouonTuesday23November2015,weprovidethefollowingwrittensubmissiontoassist youinyourinquiryintothelabourhireindustryinVictoria.

MADECisacommunitybasednotforprofitbusinessdeliveringemployment,trainingandcommunitydevelopmentinitiativesthroughoutVictoria,SouthAustralianandNewSouthWales.

Ourvisionisstronger communitiesandourmissionistodevelopanddeliverinnovativeandresponsiveeducationtrainingandemploymentsolutions.

Importantly,inrelationtothisinquiry,wemaintainstrongvalues.Thesearevalueswhichwebelieveshouldbeinherentinany'labourhire'servicewithinVictoriaandarevalueswhichallowustoholdourheadhighinaregionwhereotherlabourcontractorsmaynot.

MADECValues

Theupholdingoftrust,honestyandindividualandorganisationaccountabilityinallwedo andsay

Therightofeachandeverypersontobetreatedwithrespectanddignity

•Theinitiativeand creativepotentialofindividualsandthecontributiontheymaketoMADEC

•Theprofessionalgrowthanddevelopmentofboardmembers,managementandstaffthatwillenhancetheirskills,knowledgeandexperience

Thedevelopmentanddeliveryof highqualityservicestoourclientsandcustomersthroughcontinuousimprovementsandorganisationaldevelopmentprocesses

Theprinciplesandpracticesofeconomic,socialandenvironmentalsustainability

Labourhireisonlyone partofourorganisation'sserviceofferingandwasestablishedtotakepartintheSeasonalPacificWorkerProgrambackin2009.However,givenlocaldemandforprofessionallabourhireservices,wenowprovidelabourhireservicesbeyondthatprogramwithapproximately50%ofourlabourhirebusinessbeinggeneratedthroughthesupplyofseasonalpacificworkersasanApprovedEmployer.Theremainderofourlabourhireservicesareprovidedtoavarietyof

'StrongerCommunities'

industriesincludingwineries,viticulture,horticulture,intensivefarming,livestockproduction,foodandbeverageprocessing,construction,localgovernment,tourism,retailand mining.Weemployarangeofoccupationaltypesacrossthoseindustriesincludingapprentices,trainees,tradespersons,labourersandotherskilled,semi-skilledandunskilledoccupationaltypes.

Wethoughtitwouldbebeneficialtotheinquirytoprovideadditionalinformationonourlabourhireserviceandthebroaderlaboursupplyarrangementsinaquestionandanswerformat.We look forwardtoprovidingfurthersupportinginformationtotheinquirybothinpersonon24Novemberand,asrequested, infurthercorrespondence.

1.Whichoccupationaltypesdoweengageaslabourhire?

•Principallyunskilledoccupations.

•Sometraditionaltradese.g.fittersandturnersandconstructiontrades.

•OutsideofthePacificSeasonalWorkerProgram(PSWP),weengageworkingholidayvisaholdersandassignthemtothehorticultureandfoodprocessingindustries.

•WefinditverydifficulttogetAustralianstoperformsomeofthelessdesirablework.

•Wehavetotestthelocalmarketbeforeengagingpacificseasonalworkers,yetwefinditveryhardtofindlocals.

2.Doweemployapprenticesandtrainees?

•Yes,inlabourhire,justlikeaGroupTrainingSchemeprovider.

•Wearecommittedtotrainingourworkers.

•Wecurrentlyemploy10apprenticesand,on average,another5trainees.

•Ourexperienceisthatourclientsdon'tuselabourhireemployeesinsteadoftrainingtheirownworkers.Tradespeople,particularlyinmoreremoteareas,don'ttakeonapprenticesbecausetheytellusitistoohard.Thatiswhytheyengageourapprentices.

3.Howdoweengageourlabourhireworkers?

•Allourlabourhireworkersareemployed.Wedonotengageon-hireindependent contractors.

•Approximately4%ofourlabourhireworkersareon-hirepermanent fixedtermemployees.Wechoosetoengageemployeesinthiscapacitywhere ourclientcan provideongoingregularandconsistenthours.Thisisoften notthecaseandthereforewehavetoemploy ourlabour hireworkersascasualemployees.

•Almostallemployeesareemployedforlessthan12months.Wedonothave'career' labourhireworkers.

4.Onaverage,howmanylabourhireemployeesdoweassigntoclientseachweek?

•190employeesonanFTEbasis.

•Wehire1,000individualworkerseachyearofwhich400arePSWemployees.

5.Aresomeindustriesmoreinclinedtouseunlawfullabourcontractorsinourexperience?

•Yes,horticultureindustryandsomefoodprocessing organisations.

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•Thisisbecauseitischeaplabourinanindustrywhere marginsarethinandthereispressuretokeepcostsdown.Insomecircumstances, itisalsobecausethey cangetworkersfromaparticularcountrywhoarebetteratpickingcertaintypesof vegetableorfruit.

•Weregularlyapproachgrowerstoofferservicesthatarelawfulandfindthatwearepricedoutofcompetitionasothercompaniesareofferingrateswellbelowtheawardwage.Somelargerclientsarenowagreeingtouseusbecausetheydon'twanttobeinvolved in

unethicalpracticethatcoulddamagetheirprofileorreputation.

•Thefearofpenalty doesn't worrytheunlawfullabourcontractorsorgrowers toomuchaspenaltiesaren'tsignificant.Itisthedemandsideimplicationsforcontractsthatinfluencethem. Reputation andupstreampressurethereforeimpactsmorethanpenalty.

•SmallergrowersIclientsaren'tcomingtousforworkerslikethelargeronesare.

6.Whydoclientsuseourlabourhireservices?

•Manyofourclientsdon'thavethesystemsorcapacityto manageaflexibleworkforceandtheythereforecometoustodoitprofessionally,lawfullyandinaccordancewithgoodpractice.

•Convenience,workloadandriskmanagement(FairWork,WorkersCompensation,administration,payroll,sourcinggoodstaff,flexibilitytoscaleupandscaledown)arethemainreasonstheyuseus.

•Regionalclientslikesomebodylocaltotalktoandtrustourtrackrecordand commitmenttocommunity.

•Inhorticulture,workforceneedsarehighlyvariableforthegrower.Theycouldbepickinggrapesforexportandtheirclientsputordersonholdwithnonotice.Theythereforeneedtobeabletoflextheworkforceaccordingly.Itissimilarintermsofwhenthepackagingshedscantakefruitornot.Theweather/seasonalinfluencesaresignificant,butitisalsoduetovariableclientdemand.

•Manycroptypessuchasalmonds,are lesslikelytobeimpactedbythesevariables.However,theyemployverylargenumbersofworkersfor shortseasonalperiodsandthereforeneedthesupportoflabourhireservices.Theseseasonallabourhirerequirements arenottypicallyreplacingdirecthirepermanentworkers.

7.Whatdoesthecommondisreputablelabourcontractorlooklike?

•Youcan'tfindthem-theyareinvisible.

•Individual,maybehusbandandwife.

•Operateoutofa car.

•Rarelyhaveabusinessname.

•Cash-in-handpayments.

•Norecords.

•HaveworkersindenturedtolocalhousingIaccommodation.

•Typicallythesame nationalityasthelabourtheyareusing.

•Oftenyoungworkerssourceddirectlyfromoverseas(typicallyAsian).

8.Istherea differencebetween'labourhire'andlabourcontracting?Whatarethedefiningcharacteristicsandwhydoesitmatter?

•Labourhireinvolvesaworkerbeingassignedtoaclienttoworkundertheirsupervisioninapartneringarrangementbetweenthefirmandthehost.Thisistypicallyanhourlyratefee.Contractingisoftenlumpsum(foracreage)andthehosttakesnoresponsibilityforthe

P age1 3

worker,commonlyturningablindeyetotheworkerandonlydealingwiththecontractorrepresentative.

•Therearesomereputablecontractors-typicallycontractorswillworkwithlargergrowersandoftensupplyplantandequipment.Theypriceonacreagebutdoitlawfullyandarepayingpeoplecorrectly.Insomecaseswesupplycontractorswithlabourhireworkersonanhourlyrate.Theyofferarangeofotherservicesthatareverybonafide.

9.Whatarethekeywaysinwhich wethinkthe industryandStateGovernmentcanaddressindustryuseofunlawfullabourcontractors?

•Usethedemandside toinfluencepracticesinthelabourmarket. Inparticular,workwithexportersandlargersupermarketsencouragingthemtoenforce ethicalprocurementstandards.Theyexerciseasignificantamountofinfluenceinthemarketgenerally, includingstandardsinrelationtothesupplytogeneralmarkets.Increasinglyweareseeinglargergrowersimprovingtheiremploymentandlabourhirepracticesbecauseofthis.

•Continuemediaattentionontheissueandworkwithindustryassociationstoimprovetheconsistencyofthemessage.Alsocontinuetoeducategrowers.Manygrowerswouldn'tknowthehorticultureawardrate.Theyhavelosttouchwiththedetailthroughprolongeduseoflabourhirecompaniesandthereforetheydon'tknowwhatis'toocheaptobereal'.

•Wedon'tthinklicensingwillchangethepracticesoftheunlawfullabourcontractors-Demandsidepressurewill.

10.Dowesupporttheintroduction ofalicensingsystemandwillitwork?

•Amandatorycertificationprocessforlabourhirewouldbereallyuseful.

•Alicencingsystemwithoutcertificationwouldbeawasteoftime.Thelabourhirefirmshouldberesponsiblefor gettingthecertification andpayingforit,likean150orHACCPaccreditationrunbytheindustryandvettedbythegovernment. Itwouldalsorequirerigourandopendisclosureofthedetailratherthanjusthavingthe'systemsinplace'.

•Certificationwillmakeiteasierfortheclientstoassesshowgenuinealabourhirecompanyis.Clientsmaystillusenon-certifiedagenciesbutitwilldefinitelyreducehowcommonitis.

•Therehavealwaysbeendodgylabourhireoperatorsinsomeindustriesanditisunlikelytheywilleverbeeradicated.Mandatorycertificationwouldhelptosignificantlyreducetheissueifgrowerswerecompelledbycompaniespurchasingtheirproducttouseacertifiedlabourhiresupplier.

Yourssincerely

LaurenceBurt

ChiefExecutiveOfficer

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