VictorianGovernment
VictorianInquiryintotheLabourHireIndustryandInsecureWork
Submissionof
RecruitmentandConsultingServicesAssociation(RCSA)January2016
RecruitmentConsultingServicesAssociationLtdRCSAHeadOffice
POBox18028CollinsSt.EastMelbourneVictoria8003
T:0396630555
E::
RCSA SubmissionHighlights
TheRecruitmentConsultingServicesAssociation(RCSA)ispleasedtomakethissubmissiontotheVictorian InquiryintotheLabourHireIndustry andInsecureWork.Keypointsofthissubmission include:
1.RCSA submitsthattheVictorian governmentshould beexamining waystoharnessthebenefitsofgenuineprofessionalon-hireworkerservicesratherthan restrainthembyintroducing newformsofnegativeregulation whichwill dolittleto prevent non-compliantbehaviouramongstexploitativelabourcontractors.
2.That‘Labourhire’is an impreciseand commonlymisusedterm.Theabsenceof preciseandconsistent terminology intheemployment servicesindustryiscontributingto confusion,especiallywhen weexamineexploitationof vulnerableworkersbylabourcontractorswithin thehorticultureand food processingindustries.
3.RCSA Members, in theprovision ofprivateemployment services,provideworkopportunitiesand improvedworking lives onalevelwhichcannotbeignored. Theon-hireworkerservicessectoremploysover300,000employeesandgenerates$19billionin revenuefortheAustralianeconomy.
4.Theevidencefrom regulatoryagenciesis thatgenuine on-hireworkerservicefirmsdemonstratehigh levelsofcomplianceand, in fact,arecommonlybetterperformers inworkplacerelationsand WHScompliancethandirecthireemployers.Therefore,there isnojustification fortheintroduction ofnegativelicensing which willonlyincreasecostsandmakenon-compliantlabourcontractorscomparativelycheaperand thereforemoreattractivetounsophisticated end-users.
5.It ismisleading andcounterproductive iftradeunionsand certain politicalgroupsmisrepresentflexibleformsof workas ‘precarious’.Flexibleformsofemployment arekeyenablersforbusinessestoretainandcreatejobswhilststaying adaptableand competitive.
6.RCSAandemployersinternationallyare concerned bythe lackofclarity andusefulness ofthedefinitionof ‘precariouswork’and particularlybysuggestionsthatflexibleformsofemployment aresystematicallyprecarious.
7.TheESI Codeadopts amoreproactiveapproach thatcan, in concept, utilisetheaccreditationofemploymentservices asthe principalmeansof balancing supplysideand demand sidepressureandresponsibilityfortheachievementof positiveoutcomes.
8.TheESI Codewould, without the need forlicensingormorerestrictiveformsofregulation,articulateprofessionalstandardsofEqualOpportunityDiversity,Service;IntegrityGoodFaith,Co-operation,andAssuranceindealingsforthesupplyandacquisitionofemploymentservicesandwouldprovideaccesstoconsumerandunfaircompetitionremediesincircumstanceswherelabourmarketexploitationoccurred in contraventionof theCode.
Introductionto RCSA
TheRecruitmentandConsultingServicesAssociationAustraliaNewZealand(RCSA)istheleadingindustryandprofessionalbodyfortheprivateemploymentservicessectorinAustraliaandNewZealandwhichincludesrecruitmentservices,on-hireworkerservicesandHRservices.Itrepresentsover3,800corporateandindividualMemberswithover60%ofAustralia’son-hireworkersbeingengagedbyRCSAcorporate members.
RCSAmembersassign(on-hire)andplaceemployeesandindependentcontractorswithinbusiness,governmentandnot-for-profitorganisationsoperatingwithineveryindustryandState inAustralia.TheyalsoprovideworkforceconsultingandHRservicestoimprovetheproductivecapacityofAustralianbusiness inan ever-changing globaleconomy.
TheRCSAmembershipisfocusedonpromotingpositiveoutcomesforbusiness,workersandgovernmentsacrossAustralia.TheRCSAsetsthebenchmarkforrecruitmentandon-hireindustrystandardsthroughtheestablishmentofcodes,representationoftheindustry,educationofmembersandstakeholder,researchand businesssupport.
RCSAmembers,asprofessionalemployersandlabourmarketfacilitators,operateinaccordancewithAustralianworkplacelawandrelevantstandards.Theirknowledge,understanding,interpretationandsupportof the law isevident in everydaydealingswithclients,employees and independent contractors.
AllRCSAmemberorganisationsandAccreditedProfessionalsagreetoabidebytheACCCauthorisedRCSACodefor ProfessionalConduct.
RCSA CodeforProfessionalConduct
RCSAhasaCodeforProfessionalConduct(theCode)whichisauthorisedbytheACCC.InconjunctionwiththeRCSAConstitutionandByLaws,theCodesetsthestandardsforrelationshipsbetweenMembers,bestpracticewithclientsandcandidatesandgeneralgoodorderwithrespecttobusinessmanagement,including compliance.Acceptanceof,andadherenceto,theCode is a pre-requisiteofMembership. TheCodeissupportedbyacomprehensiveresourceandeducationprogramandtheprocessisoverseenbytheProfessionalPracticeCouncilappointedbytheRCSABoard.TheEthicsRegistrarmanagesthecomplaintprocessandprocedureswiththesupportofavolunteerEthicspanelmentoredbyRCSA'sProfessionalPracticeAdviser,BarristerAndrewWood.
RCSA’sobjectiveistopromotetheutilisationoftheCodeandourproposedEmploymentServicesIndustryCodetoachieveself-regulationoftheon-hireworkerservicessector,whereverpossibleandeffective,ratherthanseetheintroductionofadditionallegislativeregulation.TheEmploymentServicesIndustryCode(ESIC)would, ifapproved, becomea prescribedindustrycodeunderAustraliancompetition law.
AcopyofthecurrentRCSACodeforProfessionalConductisattachedasAttachment1andfurtherinformationisavailableuponrequest,includinginformationontheprocessforresolutionandenforcement.
What is‘LabourHire’?
‘Labourhire’isanimpreciseandcommonlymisusedterm.RCSAhasnotused,norencouraged,theuseofthetermformanyyearsandutilisesandpromotestheterm‘on-hire’whichwasincorporatedintoAustralia’sModernAwardsin 2010.
The confusion associatedwiththe use ofmultiple terms to describe on-hireworkerserviceshasresultedinconfusion asto the method ofengagementand the provision ofcorrectentitlements toworkers.
We areopposedto theuseofthe term‘labourhire’forthefollowingreasons.
- Theterm is impreciseandnon-descriptive.
- Thetermis,almostwholly,usedtodescribebluecollaroccupationswithinindustriessuchasmanufacturing,construction,logisticsandmining.Thetermfailstoaccountforthemajorityofon-hireoccupationswithinindustriessuchashealth,businessadministration,telecommunications,informationandcommunicationstechnology(ICT),professionalservices,education,financeand hospitality.
- Thetermhasgrown,ingeneraluse,todescribeallformsofoutsourcedlabourserviceincludingcontractingservicesanddoesnotaccountforthetrueelementsofgenuineon-hireworkerserviceswhere a worker is assigned toperformworkunder the general guidanceand instructionof a hostorganisation.
- Thetermdoesnotaccountforthemethodofengagementadoptedi.e.employeeorindependentcontractor.
Workerson-hiredtoa clienttoworkunderthe client’sgeneralguidance,instructionandsupervisionareoftenreferredalsoreferredtoas‘agencyworkers’,‘temporaryemployees’,‘contractors’andarangeofothertitles.
Outlinedbelowisaselectionoftermsusedwithindifferentindustriesandoccupationstoassisttheinquirytohave amoreinformeddiscussion.
Industry/Occupation / Common TermsforOn-hire WorkersManufacturing andLogistics / Labourhireworker
Construction andMining / Labourhireworker
Health / Agencyworker
Media andCommunications / Agencyworker
ICT / Contractor
Professionale.g.engineers,scientists,managers / Contractor
Hospitality / Temp’
OfficeSupport / Temp’
Agricultureand Horticulture / Labourhireworker
Cleaning services / Contractor
Securityservices / Contractor
RCSApromotestheuseofthetermon-hireemployeeforemployeesandon-hirecontractorindividualindependentcontractorsassignedtoworkforahostorganisation.Collectivelywedescribebothformsason-hireworkers.Thisterminologyallowsustobemoredescriptive.Seebelowforanexampleofthedescriptiveterminologyweusein discussionswithmembers,theirworkersandotherstakeholders.
Term / DescriptionOn-hire casualemployee / Themostcommon formofon-hireemployment
On-hirepermanentemployee / Anemployeeemployedonapermanentbasisandon-hiredtoaclientor multipleclientsperformingan averageof 38ordinaryhoursperweek
On-hirepart-timeemployee / Anemployeeemployedonapermanentbasisandon-hiredtoaclientor multipleclientsperformingan averageoflessthan38ordinaryhours perweek
On-hiremaximum-term employee / Anemployeeemployedonapermanentbasisforaspecifiedtermyet,withthecapacityoftheemployertoendtheemploymentearlierwithnoticeinaccordancewiththerelevantlegalinstrument.
On-hirecontractor(individual) / Anindividualindependentcontractorengagedasanindividual(soletrader)independentcontractor.UnderAustraliantaxationlawthehirer(engagingfirm)isrequiredtowithholdPAYGWithholding taxand submit it to the ATO.
On-hirecontractor(incorporated) / AnindividualindependentcontractorengagedasanemployeeofacompanywhichistypicallycontrolledbythesameindividualasasoleorjointDirector.Thereareexampleswheretheindividualwillbeanemployeeofalarger,multipleemployee,companywherethe companynominates a keyperson for the completion of theworkonassignment.
On-hireworker / Ageneraltermusedtodescribeeitheranon-hireemployeeor contractor.
Hostorganisation / Theclientreceiving theon-hire worker servicewhichisalsoresponsibleforprovidinggeneralguidance,instructionandsupervisiontotheon-hireworker/s.
RCSAsubmitthattheabsenceofpreciseandconsistentterminology intheemploymentservicesindustryiscontributingtoconfusion,especiallywhenweexamineexploitationofvulnerableworkersbylabourcontractorswithin thehorticulture and foodprocessing industries.
RCSAhasbeeninstrumentalindevelopingandpromotingmodernterminologyandcategoriesof servicewithaviewtoimprovingthecapacityofallstakeholdersto haveaninformedandconstructivediscussionon thespecialresponsibilityand contributionoftheon-hireworkerserviceprovider withinAustralia.
RCSAsubmitthata properexamination of the employmentservicessectormustbe more precise andrequires anunambiguousunderstandingof the servicesprovidedand the providers,particularly inrelation to on-hireworkerservicesand contracting.
ThefollowingdefinitionsandcategoriesofserviceweredevelopedbyRCSAtopromoteabetterinformedmarketplaceandamoreprecisedescriptionofon-hireemploymentservices.Theycanalsobefoundat RCSADefinitions andCategoriesof Service
Understandingthe Difference between On-Hire Servicesand ContractingServices
Despiteitsmisuse‘labourhire’initspureform,isasimpleconceptwhichischaracterisedbyindividualworkersbeingemployedor,inthecaseofindividualindependentcontractors,engagedbyanon-hirefirmandthenassigned,oron-hired,toaclientcontrolledworkplacetoperformworkonanhour-by-hourbasisunderthatclient’sgeneralmanagementandinstruction.Inreturnfortheon-hireofaworkeronanhourlybasis theon-hirefirmreceives a feefromthe clientwhich is baseduponthe numberofhourstheworkerworksonassignmentfortheclientor,inthecaseofon-hirepermanentemployees,thenumberofdaysor weeksworked. Thefee structure istypicallyinclusiveofthe followingcomponents:
a)an hourlyorweekly wagerate;
b)allowances,penaltiesand loadingsfromanindustrial instrument(whereapplicable);
c)superannuation;
d)a workers compensation premium loading based upon the relevant insurance premiumpercentageestablished by the relevantinsurer inthatState orTerritory;
e)payrolltax;
f)a general insuranceloading (in somecases);and
g)margin (tocoveroperatingexpensesandprofit).
Inanon-hirearrangementtheclient,orservicerecipient,iscommonlydescribedasthe‘host’becausetheclienttakesresponsibilityforsupervisinganddirectingtheon-hireemployeemuchastheywouldtheirowndirectlyhiredemployees.Theuseoftheterm‘host’,ratherthan‘principal’,ascommonlyusedintypicalcontractingservices,providesakey insightintothedifferencebetweenan“on-hire” arrangementand typical formsof“contracting”.
Inanon-hirearrangementtheclienttakesonsignificantlymoreresponsibilityforanon-hireworkergiventheworkeris,ineffect,onloantotheclientandisnotpresentedinawaywherethecontractorisresponsibleforsupervising,instructinganddirectingtheperformanceofthelabourandthecontractedoutcomes.Inanon-hirearrangementaworkerison-hiredwithoutadditionalintegratedservices,propertyorspecialknow-how.Additionalservicesmaybeprovidedtoaclienthowever;thoseservicesdonotfallwithinthescopeofon-hireservices,arenotintegratedwiththeon-hireservicesandareeffectivelyancillary in nature.
The keyindicia of agenuine on-hire arrangementare outlined below.
a)A WorkerisemployedorengagedbytheOn-hireworkerserviceprovider.
b)TheOn-hireworkerserviceproviderpaystheWorkerandisresponsibleforpayingwork-relatedcosts,feesandchargessuchaswages,penalties,allowances,publicholidaypayments,leavepayments,workerscompensationinsurance,superannuation,payrolltax(whereapplicable)andportableleaveentitlements(whereapplicable).
c)TheWorkerisassigned toaclient, whichisotherwise knownasa‘host’(Client/Host), andperformspersonallabourservices(thework)forthehostemployeronanhour-by-hourbasisor,inselectcircumstances,fora specifiedterm.
d)TheWorkerperformstheworkunderthegeneralguidanceandinstructionoftheclientorarepresentativeof theclient.
e)TheOn-hireworkerserviceproviderdoesnotdirectlysupervise,instructnordirecttheWorkeronan hour-to-houror day-to-daybasis.
f)Inselectcircumstances,theOn-hireworkerserviceprovidermay,attherequestoftheClient/Hostalsoassignateamleaderonanon-hirebasisandthatteamleadermayleadtheWorkerinrelationtodefinedscopesofwork.IncircumstanceswhereateamleaderisalsoassignedtoaClient/Hostthatteamleaderwillbedirectlysupervised,instructedanddirectedbytheClient/Hostorarepresentativeof theClient/Host.
g)TheOn-hireworkerserviceproviderdoesnotprovideplant,equipmentorotherworkrelatedmaterialswiththeWorker,otherthanpersonalprotectiveequipmentor,incircumstanceswheretheWorkerisatradesperson,worker-ownedtradetools.TheOn-hireworkerserviceprovidermayprovideotherservicestotheClient/Hosthowever,thoseservices are ancillaryorcomplementaryinnatureratherthan being an inherentcomponentofan “on-hire”service.
h)RostersfortheperformanceofworkaretypicallypreparedbytheClient/Host andcommunicatedtothe WorkerandOn-hireworkerserviceprovider.
i)TheClient/Hostwill typicallymaintain thediscretion as to whetheradditional‘labour’ is required.
j)TheOn-hireworkerserviceproviderdoesnotprovidesystemsofwork,managementsystems,intellectualproperty,workplanning,othernon-labourservicesorpropertytotheClient/Hostasaninherentcomponentoftheservice.
k)ThecontractbetweentheClient/HostandtheOn-hireworkerserviceproviderprovidesforthepaymentofservicesonthebasisofanhourlyfeeattributabletotheperformanceofworkbyeachWorkerassignedtoworkfortheClient/Hostonanhourlybasis.Thismay,inselectcircumstances,extendto weeklyfeepayment arrangements.
l)ThecontractbetweentheClient/HostandtheOn-hireworkerserviceproviderwouldrarelyincludecommercialtermswherebytheOn-hireworkerserviceprovider’sfeeiscontingentuponthecompletionof a scopeofworkor delivery of aresult.
m)Inrecognitionofthelabour-only,andunsupervised,natureoftheservices,thecontractbetweentheClient/HostemployerandtheOn-hireworkerserviceprovidertypicallyindemnifiestheOn-hireworkerserviceprovideragainstliabilityfortheinadequateperformanceofworkbytheWorkeronassignment.
ContractingServices inContrast
ThekeyelementofContractingServices,incontrasttoon-hireemployeeservices,isthattheserviceproviderreceivesafeeforcompleting‘adefinedscopeofwork’.Thisfeeiscommonlyalumpsumorfixedfee,ratherthananhourlyfee.Impliedinthisisthecommercialriskassociatedwiththecompletionofthatscopeofwork.Unlikeon-hireemployeeservices,wheretheon-hireworkerserviceprovidertypicallyreceivesafeebasedoneachhourthatanon-hireemployeeperformsworkfortheclient/hostonassignment,aContractingServiceProviderpaymentisconditionaluponthecompletionofscopesofwork.
On-hire ChargeRates Unpacked
Thereare a lotofmisconceptionssurrounding thecalculationof a client chargeratewhen itcomestothe provision ofon-hireworkerservices.Whilst recruitmentandon-hire firmsare in businessandthereforeseekto make a fair profitfromthe servicestheyoffer, it ishelpfultounpack thetypicalchargerate tobetterunderstandwhat goes into themark-up of theworkershourlyrate ofpay.
RCSAis aware of alotofmisunderstandingamongstindustriessuchasagriculture andhorticulturewhen itcomes to the formulation ofcharge rates.ManySMEclients donotunderstand the true costofemploymentand perceive thaton-hire firms are markingwageratesup unreasonably.Thisisfarfromthe truth.
When you unpackan on-hireworkerchargeratetheprofitmargin istypically a relativelysmallcomponent ofthetotal,especiallywhenyoutake operating expensesoutof the grossmargin.
GROSSMARGIN(Before operatingcosts)
STATUTORYEXPENSES
ON-COSTS
PAY RATE /FEE
On-hireWorkerServices–Makinga KeyContribution
RCSA Members, in theprovision ofon-hireworkersservices,contributeto productiveAustralianworkplaces and improvedworking lives.It isessential that thiscontribution,whenprofessionallyoffered,byreputablefirms,is notrestrainedwith negativelicensingwithina contemporarylabourmarket.
Theon-hireworkerservicesindustryisa significantcontributorto the Australianeconomy
ResearchcompletedbyIBISWorldin20141 confirmsthattheon-hireworkerservices(TemporaryStaffServices)industrygeneratesrevenuesinexcessof$19billionwithinAustralia,morethanthatofaccountingservices($17billion).WhencombinedwithEmploymentPlacementandRecruitmentServices($11 billion)2therevenuesexceed$30 billion.
The on-hireworkerservicessectoremploysover 300,000employeesand generates$19billionin revenue forthe Australian economy.
Australian’s areadapting tochanging economicconditions andsocialpressures and acceptthatwe haveto workdifferentlyto howour parents, andearliergenerations,worked.It iscritical thatthe Victorianand Australian regulatoryframeworkrespects andaccommodatesthosesocial and economicchanges.Being locked in to an ideologicallyconstrainedframework basedontheretention of traditionalemploymentmodelsis nolonger aviableoption if Australia is toremainprogressiveandinternationallycompetitive.
RCSAarecommittedto achievingthe rightbalance between the protection ofvulnerable workersand the promotion of a responsive and flexible regulatoryframeworkto ensureVictorianbusinessescancompete inthe nationaland internationalmarketand underchangeable economicconditions. However,anyregulation mustbeproportionaland targeted.
The corecontribution ofon-hire workerservices
1.On-hireworkerservicesfacilitateanefficientallocation of labour andmanagementbysourcing,matching,assigningandsupporting thebestindividuals forthe job athandwithin themosteffectiveengagementmodelforboth worker andhirer.
2.Aslabourmarketintermediaries, on-hireworkerservicesfacilitatethefreeflowof informationbetweenbusinessand workersto ensuretheyareableto makequick and informedworkandbusinessdecisions.
3.Asspecialistemploymentoutsourceserviceproviders,on-hireworkerservices allowAustralianbusinessand government,largeand small,toreduceundueadministrativeandcompliancecoststoallowthemtofocuson corebusiness.
4.On-hireworkerservicesenableadaptation tochangein increasinglyvolatile andcomplexlabourmarketsby morerapidlyandeffectivelymatching laboursupply with labourdemand followingsuchchange.
1IBISWorld,TemporaryStaffServicesMarketResearchReport|ANZSICN7212|Nov2014
2IBISWorld,EmploymentPlacementandRecruitmentServicesMarketResearchReport|ANZSICN7211|Nov2014
5.On-hireworkerservicesreducestructuralunemployment,bycreating newjobs,and frictionalunemploymentbyensuring a betterand fastermatchbetween supplyand demandin labourmarkets.
6.On-hireworkerservicesdrivedownsegmentationof labourmarketsbyproviding a stepping-stonefunction thatenablesindividuals to transition fromeducation to work,fromunemploymenttoemploymentandfrom jobtojob.
7.On-hireworkerservicesdeliverdecentworkthrough amarriageofflexibility andsecurity,wherebydisparatedirecthirecasualand contractwork canbepooledthrough anemploymentserviceprovidertobecome apermanent orsemi-permanentengagement.
It is essentialthat theVictorianGovernment,policymakersandstakeholders alikeunderstand how on-hireworkerservicesoperate in practice.Itis importanttoovercome thefearofthenon-standardworkform and tobetterunderstand howthe labourmarketintermediary,whenoperating professionally,contributestoa bettereconomy andsociety.
RCSAsubmitsthattheVictoriangovernmentshouldbeexaminingwaystoharnessthebenefitsofgenuineprofessionalon-hireworkerservicesratherthanrestrainthembyintroducingnewformsofnegativeregulationwhichwilldolittletopreventnon-compliantbehaviouramongstexploitativelabourcontractors.
Werelyuponthefollowingargumentstosupportourcasefortheprotectionandpromotionofon-hireworkerserviceswithinVictoria.
Beyond the Rhetoric- On-hireWorker Services
On-hireemployment,as apercentage ofallemployees,isstableand non-threatening
Despite theclaimsof somestakeholders,‘labourhire’is not growingat an alarming rate.In fact,according to the recentlyreleasedProductivityCommission reportontheworkplace relationsframework(page1092) on-hireemployeesareof“small magnitude”at1.8%oftheemployedworkforce.
The estimatesofthe proportionofemployedpersonspaidthroughlabourhirearrangementsareofasimilar(small)magnitude,butvaryslightlybetweenthe ABS FOE and HILDAsurveys.The ABSreportsthatin 2011, 1.3percentof employedpersonswerepaidthrough alabourhirearrangementandtheestimatefrom HILDAfor2013-14is 2.4percent.Thelatterisbroadlyinlinewith a 2002 HILDAestimateof2.9 percentpresentedin a ProductivityCommissionstaffworkingpaper(Laplagne,Gloverand Fry 2005).
The labourhirecategoryinboththe FOEandHILDAsurveysappearstoincludeemployees,independentcontractorsand businessoperatorswho arehiredbylabourhirefirms.However,itis onlyemployeeswho are engagedthroughalabourhirearrangementwho are of interest.Restricting the HILDAestimatestothisgroup(and to avoiddoublecounting), itisestimatedthataround1.8 percentofemploy ed persons areemployeeson labourhirearrangements(HILDAadjusted,figureD.6).
On-hire employmentcreatesjobsand doesn’tnecessarilyreplace directhireemploymentopportunities
RMITUniversity research found that51%oforganisationsusing on-hireemployeeswould notnecessarilyemploy anequivalentnumberofemployeesdirectlyiftheywereunable to useon-hireemployees. In fact19%oforganisationssaidthey would rarely doso. Furthermore,19%of RCSAMembers’on-hireemployeeseventuallybecomepermanentemployees ofthehostorganisation theyare assignedto workfor.
The on-hireworkerservicesindustryismakingtangible and genuine effortsto promote increasedprofessionalismacrosstheglobe and to drive anagenda forongoingimprovement
SeetheBoston Consulting Groupand InternationalConfederationofPrivateEmploymentAgencies(CIETT)reportattachedasAttachment2.
Seealsothesection withinthissubmissionon theRCSApursuit ofthe EmploymentServicesIndustryCode(ESIC).
Moston-hire workers areeitherskilled orprofessionaland,therefore, lesslikelytobevulnerable
RMITUniversity researchinto on-hireworkerservicesconducted in 20033found that61%of RCSAon-hireemployees areskilledor professionalworkerswith theremaining 39%beingsemi-skilledorunskilled.It iscriticalthattheVictorian governmentdoesnotintroduceregulation which inadvertentlystiflesthissignificantsegment oftheindustryinorderto respond to exploitativebehaviourof labourcontracting firms in thefreshproducesectors.
3Brennan,L.Valos,M.andHindle,K.(2003)On-hiredWorkersinAustralia:MotivationsandOutcomesRMITOccasionalResearchReport.SchoolofAppliedCommunication,RMIT University,DesignandSocialContextPortfolioMelbourneAustralia
On-hire workersare primarilyemployees,notcontractors
Thereisa commonmisconceptionthaton-hireworkers areprimarilyengaged asindependentcontractors andtherefore,not receiving employmentprotections.RMITUniversityresearchfound thatthemajority ofon-hireworkersareemployeesandthat on-hireworkersengaged as independentcontractors areprimarilyprofessionals.RCSA doesnotaccept theengagementofunskilled andsemi-skilledworkers asindependent contractors.RCSAisof theopinion thatsuch workers aretypicallyincapable of fulfilling theindicia required tosustain agenuinebusinesstobusinessrelationship whenworking as an individual.
An increasingnumberofon-hire employees areemployed on a permanentbasis
RMITUniversity research found that16%ofon-hireemployees arenowemployed onapermanentbasis. On-hirepermanentemploymentismoreprevalentamongstlargerfirmsthat are abletopoolclientassignmentsandreducethechancethat anon-hireemployeewillbe leftwithouta suitableassignment.There arealso examplesofwhereclient’swish for an on-hireemployeetobeassigned onan ongoing basistothemand arewilling toagreetoaminimumperiodof noticeof terminationtoensure an employerof anon-hirepermanent employee can providetherequisiteperiodofnotice
Where on-hire employeesare employed on acasualbasistheyhaveimprovedopportunitiesforongoingworkasthey aresupplied to alternativeworkplaces
RMITUniversity research found thathalfof allon-hirecasualemployeesemployedbyRCSAMembersare immediatelyplacedinanother assignment following thecompletion oftheirinitial assignment. Thatis, theyenjoy‘backto back’assignmentswithouthaving tosearchfornewworklikethoseengaged indirecthirecasualemployment.
Individuals arechoosing towork ason-hireorcasualemployeesand the reasonsfortheir choicearenotwhatyoumayexpect
RMITUniversity research found that67%ofon-hireemployeeschoseto workasan on-hireemployeeand 34%preferthisform ofworkoverpermanentemployment. Themostimportantreasonsforchoosing on-hireemployment werediversity ofwork,toscreenpotentialemployers,recognitionofcontribution andtoreceivepayment for overtimeworked.
In 2014FlindersUniversityconducted research intoworkers’experiencesof nonstandardemploymentandhowitrelated tohealth andwellbeing4and foundthat “ourmoststriking findings werethatthemajorityoftheparticipantsmadea deliberatechoicefor casualemployment andto explain this,almostmostof thesecited improvedhealth andwellbeing asa motivation”.Thefindingsidentified thatoverhalf of theparticipantsdescribedbeing ‘deliberatecasuals’and had chosencasualemploymentdespitehaving theoption ofpermanency in thesameorverysimilarjob.Almostathird of all participantsintheresearchexplainedthat theyhad deliberatelychosencasualworkbecauseitwasprotectiveof theirhealthand wellbeing.Reducedresponsibility,less‘workplacepolitics’,lesswork-lifeconflict,and lessjobstressthanin theirprior (permanent)job weredetermining factors intheir decision.
TherecentlyreleasedProductivityCommission reportontheWorkplaceRelationsFrameworkobserved,on page208,that“givennoteverybodywantsto workunder thesameconditions,thesealternativeemploymentformspartlysatisfy thewidevarietyof preferencesacrosstheworkforce.Whether it betheautonomyofindependent contracting,theflexibility and thehigherwage rate ofthecasualworker
4Keuskamp,D,MackenzieCR,ZierschAM,BaumFE.Deliberatelycasual?Workers’agency,health,andnonstandardemploymentrelationsinAustralia.JournalofOccupationalandEnvironmentalMedicine,2013
or thereduction in job searchcostsforthelabourhireworker,eachof theseemploymentformshassomeappealtoa largenumberofworkers”.
Businessuseson-hire to help with recruitmentand urgentlabourrequirements,not to reducecostorpay
RMITUniversity research found thatthemainreasonthatorganisationsuseon-hireemployeeservicesis to resourceextrastaff(30%),coverin-houseemployeeabsences(17%),reduce theadministrativeburden of employment(17%) andovercomeskillsshortageissues(9%).Only2%oforganisationssurveyedindicated thattheprimaryreasonforusing on-hire employeeswas related topay.
TheNationalInstitute of LabourStudieswithinFlindersUniversityfound, in itsNovember2014analysisof theUseofAgencyStaffin Residential AgedCare,that themainreason given byfacilitiesforusingagencynurses andagencypersonalcareattendantsisthatrecruitmentofemployeeswithinthe facilityistoo slow, andtheyneedspecialist skillsthathavebeen hard torecruit5.
Businessismore productive and competitive because of theuse ofon-hireworkers
RMITUniversity research found that76%oforganisationsusing on-hireworkersweremoreproductiveand competitiveas aresult of suchserviceuse.
On-hire drivesdown segmentation oflabourmarkets by providing astepping-stone function thatenablesindividualsto transition fromeducation to work,fromunemploymentto employmentandfrom jobtojob
Basedon datafromtheHILDASurvey6for2001to 2010, on average,about30%ofon-hire workerswillstillbe in thatstateoneyear laterand 38%will havemovedto permanentemployment.After10yearsonly4%willstill be anon‐hireworkerand 56%willbe in permanentemployment.Furthermore, theHILDASurvey hasidentified thatcasualmaleemployees arefarmorelikelyto obtain permanentemploymentcomparedwith being unemployed.Therefore, ifyou havea choicebetweenlooking forworkin casualemploymentand looking forworkwhen unemployed,as amale,you arefarbetteroffbeing employedcasually.
The2015IntergenerationalReportclearlyoutlinesthat“continuedeffortsto encouragehigherparticipation acrossthecommunitywould havewidespreadbenefitsforAustralia’seconomyandsociety”and RCSAmembers areat theforefrontof workforceparticipation facilitationwith membersfinding andmatching individualsand workopportunitieseveryday.
Theworkcreation attributes oftheindustryarefurtherexplored inthe Boston Consulting Group Reporton ‘Adapting toChange’ attached as Attachment2.
Casualemployees arenotpaid lessthan permanentemployees
HILDAfound thatmenandwomen havehigherwages(wagesperhour) in casualemploymentthan fulltimeemployment(5%higher). However,withmenpermanentemploymentwagesperhour areslightlyhigher thancasualbutnotmarkedly.AsProfessorSueRichardson,of theNationalInstituteofLabourStudies at FlindersUniversity observed,this isoppositetotheimagethatparttimeand casualemploymentis lowerpaidworkandis not afinding you would getin othercountries.
5Wei,Z,andKnight,G,(2014)UseofAgencyStaffinResidentialAgedCare,NationalInstituteofLabourStudies,FlindersUniversity,page14.
6TheHousehold,IncomeandLabourDynamicsinAustralia(HILDA)Survey
Flexible formsofworkarenecessarycomponentsofdynamicand inclusivelabourmarkets
Flexibleformsof employment such asfixed-termcontractwork,part-timework and temporaryagencyworkarecomponentsof inclusiveand dynamiclabourmarkets,which arenecessaryand usefultocomplementopen-endedfull-timeemployment. Theyareimportantnotonly as elementsof flexibilityforemployers,butalsobecausetheycontributetotheimprovementof thequality ofworking lifeandtothe employability ofpeoplebyfacilitating a betterwork-lifebalance,byreinforcing theabilityof workersto find newemploymentwhen existing jobsdisappear andbyincreasingtheir opportunitiestoacquireprofessionalexperience.
In particular,flexibleformsofemployment can help themostvulnerablegroups,namelyyoung peopleat thestartoftheircareers,thelong-termunemployed andlow-skilledworkers,toregainafoothold inthe labourmarketbygiving them thechanceto acquireworkexperienceand newskills.Flexibleformsof employmentarealsokeyenablersforbusinessestoretain andcreatejobswhilststaying adaptableand competitive.
It is thereforemisleading and counterproductive iftradeunions andcertain politicalgroupsmisrepresentflexibleformsofwork as ‘precarious’.According totheInternational Trade UnionConfederation(ITUC),precariousworkis characterised byatypical employmentcontracts,with limitedor nosocial benefitsand statutoryentitlements,highdegreesof job insecurity,lowjobtenure,lowwagesandhigh risksofoccupationalinjuryand disease7.
RCSAandemployersinternationallyare concerned bythe lackofclarity andusefulness ofthedefinitionof ‘precariouswork’and particularlybysuggestionsthatflexibleformsofemploymentaresystematicallyprecarious.
Precariousness, as definedby ITUC,prevails in theinformaleconomy. RCSAisstronglycommittedtofundamental principlesandrightsatwork.They thereforebelievethat illegalemploymentandjobswhichclearlydonotrespecttheseprinciplesmustbeunreservedlydiscouraged.
In responding tobroaderclaimsof insecureemployment, RCSAreliesupon thePosition Paperof theInternationalOrganisationof Employers,attached to thisSubmissionas Attachment 3.
7ITUC-WorldDayforDecentWork2011(
LeadingGoodPractice in On-hireWorkerServices
The RCSAengage inasignificantamountof professionaldevelopmentand businesscomplianceeducation andtraining formembers.In additiontothemaintenanceofstandards viathe RCSACode,both currentand proposed (ESIC),the RCSApromotescompliancewithin workplacerelations,workhealth safety,EEO,privacy,immigrationand a hostofotherlegal andgood practicedisciplinesviaspecificallyfocusedMemberWorking Groups andourProfessionalDevelopmentfunction.
RCSA have Working Groupsdedicatedto thefollowing:
-WorkplaceRelations
-Safetyand Risk
-Immigration
-Independent Contracting
-Taxation
RCSAalso workcloselywith thefollowingorganisationswithin Victoriatopromotegreatereducationand compliance.
-TheFairWorkOmbudsman
-WorkSafeVictoria
-VictorianEqualOpportunityand HumanRightsCommission
-Australian CompetitionandConsumerCommission
-Australian TaxationOffice
-TheTaxPractitionersBoard
-Officeof theAustralian InformationCommissioner
-WorkplaceGenderEqualityAgency
RCSA hasbeeninstrumental in promoting thedevelopmentof guidanceandtools to supportbothemployersofon-hireworkersand hostorganisationsto meettheir,often, jointlegal obligations.Someexamplesof howRCSA hasinspired an improvedunderstanding of on-hireworkand theassociatedobligationscan befound here.Click on thelinktobetaken to the documentor relevantweb-page.
-Questions toask a RecruitmentorOn-hire Firm PriortoEngaging their Services(RCSAGuide)
ThisdocumentwaspreparedbyRCSAtoguideclientsandprospectiveusers ofon-hireworkerservicestodifferentiatebetween a reputableand compliantfirmandnon-compliantlabourcontractors.
-Placing Workers in SafeWorkplaces(WorkSafeVictoriaGuide)
RCSA developedthisguidein conjunction with the SouthAustralianregulator andthenpromotedits adoption byWorkSafeVictoria.It provides a comprehensiveoutlineof theobligationsof anon-hirefirmandhostunderWHSlegislation anda rangeof toolstofulfilthoseobligations.
-Understanding On-hire EmployeeServices–A GuideforOn-hireBusinessesandHostOrganisations (FWOGuide)
ThisdocumentwaspreparedbyRCSAandtheFWOfollowingan approachfromRCSA toincreasethe awarenessofhostorganisations’obligationsundertheFairWorkActwhenengaging on-hireworkerservicefirms.A numberof prospectiveand existing clientswerepursuing servicetermswhichwereunsustainablewhen considered againsttheFairWorkAct.
-WorkforceInfoLine(RCSAcomplianceadvisorytelephoneservice)
Thistelephoneadvisoryserviceto corporatemembersof RCSAwaslaunched in2013 andreplacedthe previousemail basedservice. Itwas launched in responsetotheneed forindustryspecificguidanceonworkplacerelations,WHS,EEOand independent contractorcompliancewithinAustralia andhasbeen a hugesuccess.
-Industryspecificcomplianceand workforcemanagement training
Giventhe unique,triangular,employment relationshipbetweenemployer,on-hire workerandhost/clientithasbeen necessarytoestablisha suiteofspecifictraining courseswhichcan becustomisedto theparticularneedsof RCSAmembersand non-membersoperating in the on-hireindustry. Thesecoursescovereverything fromworkplacerelationsandWHSto complaintresolution andsetting client chargerates correctly.
Levels of Compliancein On-hireWorker Services
It is common forthosethatfavourtraditionalworking arrangementsto opposeon-hireworkingarrangements. One of thegrounds foropposition is theargument thatthere is a higherdegreeofnon-compliancewithinAustralian work lawthanwithintraditionalwork.RCSAsubmitthatthereis littleevidenceof a higherincidenceofnon-compliancewith labour lawswithinon-hireand thatargumentssuggesting otherwise arefoundedin ideologicalopposition andprotection ofaworkforcethat iseasierto organiseand recruitforunion membership.
WorkHealthSafetyandWorkersCompensation
Levelsofworkhealthsafetycompliancewithintheon-hireworkerservicessectoraredifficulttoassess.TheRCSAwasinstrumental inestablishing a‘labourhire’IndustryReferenceGroup withinWorkSafeVictoriahowever,owingto increasedcompliancethisgroup wasdisbandedbyWorkSafeVictoria in2012.
Thebestavailabledataavailable forassessing workhealth andsafetyperformance in Victoria comesfromWorkSafeVictoriaclaimsstatistics.
WorkSafe Victoriadata tells us that ina significantnumberofindustrieson-hire workers arelesslikelyto have aclaimthan theirdirecthirecounterpartsemployed byclients.
Thefollowingtable,suppliedby WorkSafeVictoriademonstratesthat‘labourhireemployersexperienceless workerscompensationclaimsper$Mofremuneration than non labour-hire.
Claimsper$mRemuneration
Apr11-Mar12Apr12-Mar13Apr13-Mar14Apr14-Mar15
0.20
0.20
0.21
0.19
0.170.18
0.17
0.18
LabourHireNonLabourHire
Thefollowingtable,supplied byWorkSafeVictoria,illustrateshow‘labourhire’employersexperiencelessworkerscompensationclaimspermilliondollarsofremunerationthannon-labourhireemployersinthemanufacturingindustryandtransport,postalandwarehousingindustry.
Claimsper$mRemuneration
Apr11 -Mar12Apr12 -Mar13Apr13 -Mar14Apr14 -Mar15
WorkplaceRelations
Whilst statisticsoncomplaintsofworkersby workertypeand industryarenotfreelyavailablefromtheFairWorkOmbudsman,the RCSA recentlyconducteda webinarwherebytheDirectorof KnowledgeSolutionswas interviewedon theon-hireworkerservicesindustry andits levelsofcompliance.
The FairWorkOmbudsman hasadvisedthe RCSA thatthere is noevidence ofhigherlevelsnon-compliancewith Awardsorthe FairWorkActby on-hire firms.
If FairWorkOmbudsman compliancecampaignsarean indicationof non-complianceconcernsofthestatutorybody,theabsence ofa campaign focussingon theon-hireworkerservicesindustry could onlybetaken as an indirecttickof approvaland,at least,dispels themyththat therearehigherdegreesofdemonstrablenon-compliancewithintheon-hireindustry.In fact, theonlycompliancecampaign thatintersectswith theon-hireindustryin anygreatwayistheFWOcompliancecampaignof 2010-2011whichfocusedon employerscoveredbythe Clerks–PrivateSectorAward.Thiscampaign focusedon“accountancyandrecruitment associatedbusinessesasbothofthesesectorsemployclericalstaffcovered bytheClerks(PrivateSector)Award 2010and importantlyinfluenceotherbusinesses”.
This FWOcompliancecampaign identified thatthelabour supplyservices sectorrecorded thehighestcomplianceratewith justover88%ofemployersfound tobe compliant,whichwashigherthan accountingservicesand office administrativeservices.
RCSA submitthatit is critical to avoid being influenced byideologicallyinspire rhetoric in yourexaminationofcompliancewithin theon-hiresectorsand,importantly,toseparateoutlabourcontracting firms,thatmakeeveryeffortto avoid legal compliance,fromreputable on-hireworkerservicefirmsthat areexpertemployersandspecialistsin compliance.
Regulation ofOn-hireWorker Services
In Australia,labourmarketexploitation ischieflyaddressed through theproperfunctioning ofa lightlyregulatedlabourmarketanda liberalmarketforemploymentservices8. Australiahassofarresistedtherestrictiveregulatorymeasuresencountered in otherjurisdictions–such aslicensing,bonds andguarantees,quotas,maximumlengthof assignment,site-rateparity (with orwithoutderogation byreasonof payment between assignments),sectoral bans,prohibitionson replacing striking workers,andrestrictionson reasonsforwhichemployment servicesmaybeacquired.
Typically,lighterregulationhasbeenassociatedwithhigherlevelsof complianceandlowerlevels ofinformalorundeclaredwork9.
RCSAisconcerned thathigherlevelsofregulationwillonlyincrease businesscostsforbusinesseswhich aredemonstratinghighdegreesofcompliance,asevidencedearlierin oursubmission,andwillonly justifyfurther clientuse of‘cheaper’optionsoffered by non-compliantlabourcontractors.
InternationallyAustraliaratesveryhighlyon the SmartRegulationIndex.
TheSmartRegulationIndex wasdevelopedbythe Ciett andtheBoston Consulting Group backin 2011as a benchmarkto gaugetheappropriatenessofthe regulationof theemploymentand recruitmentsector in different countriesaround theworld.Updated in 2015toinclude35countries,theindexlooksatfollowing fourkey dimensionswithin theregulatoryframework.
1.Freedom ofestablishment –including easeofset-up and any limitationson services.
2.Freedom toprovideservices andcontracts–with rangeand scopeofoperations.
3.Freedom tonegotiationandsocial protection,such asmeaningful social dialogue.
4.Freedom to contributetolabourmarketpoliciesincluding publicprivatepartnerships,accesstotraining andcommitmenttofightillegalpractices.
Strong performersfall primarilyintotwocategories:marketswithahigh levelof social dialoguesuch asthe Netherlands andScandinaviancountries; andcountrieswithAngloSaxon,market-driveneconomiessuch as Canada, US,Australiaand UK. Bothmodels strike a good balancethat deliversflexibility andsecurityforbothcompanies andworkers.
Countriessuch as Italy,Greece,Spain,Franceandeven Argentina,which havemadesignificantlabourmarketreformsoverthe pastfouryears, haveseentheirranking onthe SmartRegulation Indeximprove.Meanwhile,
legislatordriven economieswithrelatively highlevelsofcentrally-setregulation,and alsoemergingmarketeconomies,withlittle oroutdatedlegislation,lieatthe verybottomof theindex.Theyarelimitedin theirability tocreatejobsand deliverinclusivelabourmarketsthatprovideworkerswith decent,secure employment.Thisdamagessocialjustice bylimitinglabourmarketaccessandalso damages the competitivenessoftheireconomy.
Efficientlabourmarketsare a crucialfactor in globalcompetitiveness andRCSA arguesforsmartregulationof theemployment servicesindustry andthepreventionofunjustified restrictionsonthe
8DrJenniferFerreira:Exploringtheglobalregulatorymosaicofthetemporarystaffingindustry:temporaryagencyworkinBRICS,PresentationatILORegulatingDecentWorkConference,GenevaJuly2015.
9Ibid.
sector inorderthat itcan createjobsand supportgovernmentsworkersandeconomies in navigating achanging worldof work.
When Australiaisconsideredagainstinternationalbenchmarksweare verywellplaced intermsofthebalanceofregulation andflexibility.Increasedregulation would reduce ourglobalcompetitiveness.
Nevertheless,thereisevidencethat,lefttothemselves,marketshavebeenunsuccessfulineradicatingallformsoflabourmarketexploitation10andtheeffectivenessofmarketmechanismsisincreasinglybeing questionedbyintereststhatfavourregulationthat ismorerestrictive.
10SupportedbyRCSAcomplaintsexperienceandanecdotally.
Labourmarketexploitationincludes all formsof unlawful orunconscionableconductthat negativelyaffectsthe abilityof thelabourmarkettoregulate,efficientlyand equitably,thesupply of jobs,accesstojobs,or theconditionsorpriceaccording to whichlabour isoffered andacquired.