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2019-2020-2021
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
Fair Work Amendment (Same Job, Same Pay) Bill 2021
EXPLANATORY MEMORANDUM
and
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
(Circulated by authority of Hon Anthony Albanese MP)
Fair Work Amendment (Same Job, Same Pay) Bill 2021
OUTLINE
This Bill will amend the Fair Work Act to ensure that workers employed through labour hire
companies will receive no less than the same pay as workers employed directly - same
job same pay.
The use of contracting to provide labour is widespread and most often has as its singular
objective the reduction of labour costs by avoiding legitimate regulatory minimum
standards, especially those set by enterprise agreements.
The objective is to protect the integrity of enterprise agreements, and the integrity of the
associated regulatory regime, from being undermined and to ensure that people who are
provided to do the same or similar work or work as part of the same enterprise or business
as those engaged under an enterprise agreement receive the same pay and conditions as
a direct employee of the host employer would receive.
The labour hire structure is a triangular relationship between the labour hire business, the
employees and the host, an entirely different employment relationship from the traditional
employer/employee one.
The use of temporary labour hire to help employers manage increased demand during
surge periods or replace absent workers has been around for decades. This Bill will not
disturb that business model.
A new business model based on a labour hire service provider being able to profit from
wage arbitrage where they deliberately source lower cost labour than would be available to
the host through a direct employment model has distorted the labour market and
undermined the enterprise bargaining system.
The wage arbitrage business model has given rise to substantial worker exploitation and
inequities leading to the introduction of statutory labour hire licensing systems in
Queensland, Victoria, South Australia and the ACT. However, a comprehensive solution to
the problems of wage arbitrage cannot be satisfied with a licensing system that only
ensures that minimum safety net standards are met.
Many labour hire companies do the right thing, so there are workers in the industry who
are paid their legal entitlements, including, where applicable, the casual loading. This
means in some instances these workers are paid more than their directly employed
counterparts. The policy is not intended to impact on these workers and when
implemented will not affect these existing arrangements.
The Bill includes exemptions for small businesses defined as employing less than 15
employees or meet the definition of small business entity within the meaning of the Income
Tax Assessment Act 1997.
FINANCIAL IMPACT
The bill will have no financial impact.
NOTES ON CLAUSES
Clause 1: Short Title
1. Clause 1 sets out how the new Act will be cited - the Fair Work Amendment (Same Job,
Same Pay) Act 2021.
Clause 2: Commencement
2. The whole of this Act will commence the day after the end of the period of 6 months
beginning on the day the Act receives the Royal Assent.
Clause 3 - Schedules
3. Clause 3 provides that the Act that is specified in the Schedule is amended or repealed
as set out in the applicable items in the Schedule concerned, and any other item in a
Schedule to this Act has effect according to its terms.
Schedule 1 - Amendments
Fair Work Act 2009
Item 1
4. Section 12 of the Act contains the Dictionary. This item inserts new references to the
definitions of host, labour hire business and same job, same pay obligation as set out
in new Division 11A - Same job, same pay; obligations of labour hire businesses;
Subdivision A - Definitions.
Item 2
5. Inserts a new paragraph (ia) to subsection 61(2), which serves to identify same job,
same pay as a matter to which the National Employment Standards relate.
Item 3
After Division 11 of Part 2-2
6. Inserts a new Division 11A - Same job, same pay; obligations of labour hire
businesses.
Subdivision A - Definitions
7. Section 123A provides that the meanings of employee and employer have their
ordinary meanings.
8. Section 123B (1) provides the meaning of labour hire business. A labour hire business
is defined as a person who, in the course of carrying on a business, supplies a worker
or workers to perform work for another person.
9. Section 123B (2) provides the meaning of host. A host may be a national system
employer or any other constitutional corporation, that engages, or proposes to engage
a labour hire business. The definition of host is central to ensuring that the conditions
for workers agreed in enterprise agreements are not undermined by labour hire
arrangements.
Examples:
(1) XYZ Pty Ltd has an enterprise agreement which applies at its food processing
workplace, which provides rates of pay above the award, particularly for night work.
XYZ stops hiring workers directly to perform night shift work and enters into an
arrangement with a labour hire business to supply it with night shift workers instead.
XYZ is a host.
(2) EFG Pty Ltd has an enterprise agreement at its manufacturing workplace, which
contains a "jump up clause", requiring it to ensure that labour hire workers receive
pay and conditions no less favourable than those provided to its direct employees.
EFG's holding company, which is not bound by the enterprise agreement, enters
into an arrangement with a labour hire business to supply workers to EFG's
workplace to perform the work ordinarily performed by EFG's employees. The
holding company is a host.
10. Section 123C sets out the same job, same pay obligation of labour hire businesses.
The same job same pay obligation is intended to benefit labour hire workers. The
obligation is intended to ensure those workers receive pay conditions which are no less
favourable than those that apply to other employees doing the same work, where those
other employees are directly employed by an employer or an associated entity thereof
which entered into a contract or arrangement with a labour hire business.
Subdivision B - Obligations of labour hire business
123D Obligations of labour hire businesses
11. Section 123D imposes the requirement on a labour hire business to comply with the
same job same pay obligation. This is enforceable as a civil remedy provision pursuant
to in Part 4-1. The requirement to comply is imposed in subsection (1) on labour hire
businesses that are National System Employers, and separately on labour hire
business that are constitutional corporations in sub-section (2). Sub-section (2) is
intended to capture labour hire businesses who are not employers of the workers they
arrange to supply, or any other persons.
Subdivision C - Limits on scope of this Division
123E Limits on scope of this Division
12. Section 123E provides for circumstances in which Subdivision B will not apply. There
are three such circumstances.
13. Firstly, a small business exemption is provided in subsection (1) for businesses either
entering into a labour hire arrangement as a host as defined in paragraph (a) of the
definition or as the employer of associated employees as set out in paragraph (b) of
that definition.
14. Secondly, an exemption is provided in subsection (2) for circumstances in which labour
hire workers supplied under a particular contract or arrangement are temporarily filling
the roles of employees who are on paid or unpaid leave up to a period of three months.
This is to ensure longstanding arrangements between businesses and agencies who
provide temporary workers to fill short term vacancies are undisturbed by the
provisions.
15. Thirdly, an exemption is provided in subsection (3) to ensure arrangements between a
labour hire business and a host to manage surge periods in a business (up to three
months) are unaffected. Surge capacity is identified by reference to demand for goods
and services and distinguished from a need for additional workers being brought about
by a deliberate reduction in workforce size. The exemption contains at paragraph (c) an
anti-avoidance measure to ensure that businesses already utilising labour hire and
complying with the provisions of the Bill cannot escape regulation merely by entering
into a second labour hire arrangement that deals exclusively with surge capacity.
Item 4
16. Item 4 inserts a new Part 2-7A - Same job, same pay; obligations of hosts provision
within Part 2-7 of the Act relating to Equal Remuneration within the National
Employment Standards.
Division 1 - Obligations of hosts
17. Section 306A outlines the obligations of the host with regards to (a) providing the
labour hire business it has engaged with all the information the labour hire business
would require in order to comply with the same job, same pay obligation; (b) ensuring
the labour hire business it has engaged has agreed to comply with the same job, same
pay obligation and (c) ensuring that during the course of the engagement with the
labour hire business it takes all reasonable steps to ensure the labour hire business is
complying with the same job, same pay obligation. A civil remedy provision applies to
this section.
18. Section 306B has the effect of ensuring contracts or arrangements between a labour
hire business and a host do not contain terms that would prohibit the host from offering
employment to a labour hire worker either over a particular period or any period. This
provision is included because such terms within contracts or arrangements have the
effect of preventing the enablement of pathways to secure employment. Any such term
within a contract or arrangement is a contravention and will have no effect. The
accompanying note states that this is a civil remedy provision.
19. Section 306C specifies that a host must ensure information concerning vacancies in its
enterprise are available not only to its employees, but also labour hire workers. This
provision ensures labour hire workers are not deliberately excluded from the
opportunity to seek a pathway to secure employment. The accompanying note states
that this is a civil remedy provision.
20. Section 306D specifies that a host must permit labour hire workers to access the same
amenities and collective facilities at the workplace as the host's direct employees are
entitled to access. Types of facilities include canteens and bathrooms. The
accompanying note states that this is a civil remedy provision.
Example:
BMK Pty Ltd operates a meat processing facility which is staffed by its direct
employees as well as labour hire workers. Its direct employees are permitted to utilise
a tearoom and bathrooms in the facility. Labour hire workers are required to consume
meals outside and utilise porta-loos in the car park. The Bill would require that the
labour hire workers be permitted to access the tearoom and the indoor bathrooms.
21. Section 306E specifies that a host must allow labour hire workers to access the same
training, under the same conditions as is offered at the workplace to direct employees.
The accompanying note states that this is a civil remedy provision.
Example:
GHK Pty Ltd operates a call centre which is staffed by its direct employees as well as
labour hire workers. The enterprise agreement which applies to direct employees
provides a higher rate of pay for employees who complete training on dealing with
difficult customers. GHK seeks expressions of interest from its employees to participate
in that training. The Bill would require the labour hire workers to also be extended that
invitation.
22. Section 306F specifies that a host must provide labour hire workers with the same
rights as a direct employee (or an associated employee, in the case of a host within the
meaning of paragraph 123B(2)(b)) over the determination of hours and location of
work, including but not limited to, rights to consultation, reply and notice. The
accompanying note states that this is a civil remedy provision.
Example:
ULG Pty Ltd operates an elevator repair business through a combination of direct
employees and labour hire workers. All of the workers have regular rosters according
to rotating roster system. ULG proposes to alter the start and finish time of shifts by
two hours and is required, under the terms of an enterprise agreement, to consult with
its employees about this proposal. The Bill would require ULG Pty Ltd to also consult
with labour hire workers who have been supplied to it.
Division 2 - Limits on the scope of this part
23. Section 306G outlines the exemptions applying to Division 1 in the same terms as
those in Section 123E.
Division 3 - Miscellaneous
24. Section 306H provides that the meanings of employee and employer have their
ordinary meanings.
Items 5 & 6
25. Subsection 539(2) (after table item 5) inserts the civil remedy provisions for non-
compliance with the same job, same pay obligation outlined in sub-section 123D(2).
26. Subsection 539(2) (after table item 9) inserts the civil remedy provisions for non-
compliance with the same job, same pay obligations of hosts as outlined in Part 2-7A.
Item 7
After section 550
27. Item 7 inserts a new clause 550A within Division 4--General provisions relating to civil
remedies. This clause states that a host that contravenes section 306A is jointly and
severally liable with the relevant labour hire business to compensate a worker for non-
compliance with a same job same pay obligation in respect of work performed for the
host's benefit. This measure will ensure that worker's losses (such as underpayments)
which are a result of contraventions of the same job, same pay obligation are
recoverable through the entire supply chain.
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Fair Work Amendment (Same Job, Same Pay) Bill 2021
This bill is compatible with the human rights and freedoms recognised or declared in the
international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011.
Overview of the bill
The Fair Work Amendment (Same Job Same Pay) Bill 2021 will amend the Fair Work Act
2009 to ensure workers employed through labour hire companies will receive no less than
the same pay as workers employed directly.
The Bill seeks to address an inequality currently being experienced by certain workers
engaged through labour hire contracts or arrangements with a host employer that see
them working alongside directly employed workers, doing the same job, the same hours
with the same skills but paid less, and with less favourable conditions.
Human rights implications
The Bill engages the right to work and to just and favourable conditions of work under
articles 6 and 7 of the International Covenant on Economic, Social and Cultural Rights
(ICESCR).
The Bill will positively advance Australia's protection of the right to remuneration which
provides all workers with:
• fair wages and remuneration for work of equal value without distinction of any kind;
• equal opportunity for everyone to be promoted in their employment; and
• rest, leisure and reasonable limitation of working hours and periodic holidays with
pay, as well as remuneration for public holidays.
The provisions of the Bill will achieve these ends by imposing positive obligations to
ensure labour workers are treated no less favourably in respect of these matters than the
workers they work alongside with performing the same duties.
Conclusion
This bill is compatible with human rights because it advances the protection of human
rights.
Hon Anthony Albanese MP